xoma424b5_051909.htm
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Prospectus
Supplement
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Filed
Pursuant to Rule 424(b)(5)
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(To
Prospectus dated October 21, 2008)
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Registration
No. 333-148342
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XOMA
Ltd.
Units
Consisting of an Aggregate of
11,764,706
Common Shares and
Warrants
to Purchase 5,882,353 Common Shares
Pursuant
to this prospectus supplement and the accompanying prospectus, we are offering
up to 11,764,706 units, each consisting of one common share and a
warrant to purchase 0.50 common shares. Our common shares are quoted
on The Nasdaq Global Market under the symbol “XOMA”. On May 14, 2009, the
last reported sale price of our common shares on The Nasdaq Global Market was
$0.85 per share. As of May 18, 2009, we had 142,333,493 common
shares outstanding. The warrants are not, and will not be,
listed for trading on any securities exchange or quotation system. We
will receive net proceeds from the sale of these units of approximately
$9,150,000.
We are
offering the units on a best efforts basis to one or more accredited
investors.
Investing
in our securities involves a high degree of risk. Before buying any securities,
you should read the risk factors contained in our most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q, as well as any amendments thereto,
as filed with the Securities and Exchange Commission.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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Per
Unit
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Maximum
Offering Amount
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Public
Offering Price
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$0.850
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$10,000,000
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Placement
Agents’ Fees
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0.051
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600,000
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Proceeds,
before expenses, to us
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0.799
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9,400,000
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We
estimate that the total expenses of this offering, excluding placement agent
fees, will be approximately $250,000.
Consent
under the Exchange Control Act 1972 (and its related regulations) has been
obtained from the Bermuda Monetary Authority for the issue and transfer of
XOMA’s shares, options, warrants, depositary receipts, rights, loan notes and
other securities to and between non-residents of Bermuda for exchange control
purposes provided our shares remain listed on an appointed stock exchange, which
includes the Nasdaq Global Market. This prospectus supplement may be filed with
the Registrar of Companies in Bermuda in accordance with Bermuda law. In
granting such consent and in accepting this prospectus supplement for
filing, neither the Bermuda Monetary Authority nor the Registrar of Companies in
Bermuda accepts any responsibility for our financial soundness or the
correctness of any of the statements made or opinions expressed in this
prospectus supplement.
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Canaccord
Adams
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Wedbush
Pac Grow Life Sciences
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The date
of this prospectus supplement is May 19, 2009
TABLE
OF CONTENTS
Prospectus
Supplement:
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ABOUT
THIS PROSPECTUS SUPPLEMENT
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S-1
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THE
OFFERING
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S-2
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RISK
FACTORS
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S-2
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FORWARD-LOOKING
INFORMATION
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S-2
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USE
OF PROCEEDS
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S-3
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DESCRIPTION
OF SECURITIES WE ARE OFFERING
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S-3
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PLAN
OF DISTRIBUTION
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S-4
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LEGAL
MATTERS
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S-5
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EXPERTS
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S-5
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WHERE
YOU CAN FIND MORE INFORMATION
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S-6
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Prospectus:
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ABOUT
THIS PROSPECTUS
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1
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ABOUT
XOMA
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1
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RISK
FACTORS
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1
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THE
SECURITIES WE MAY OFFER
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2
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FORWARD-LOOKING
INFORMATION
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4
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FINANCIAL
RATIOS
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5
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USE
OF PROCEEDS
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6
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DESCRIPTION
OF SHARE CAPITAL
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7
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DESCRIPTION
OF DEBT SECURITIES
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11
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DESCRIPTION
OF WARRANTS
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18
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LEGAL
OWNERSHIP OF SECURITIES
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20
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PLAN
OF DISTRIBUTION
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23
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LEGAL
MATTERS
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27
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EXPERTS
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27
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WHERE
YOU CAN FIND MORE INFORMATION
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27
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ABOUT
THIS PROSPECTUS SUPPLEMENT
You
should rely only on the information incorporated by reference or provided in
this prospectus supplement and the accompanying prospectus, or to which we have
referred you. We have not authorized anyone to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. This prospectus supplement and the accompanying
prospectus do not constitute an offer to sell, or a solicitation of an offer to
purchase, the units offered by this prospectus supplement and the accompanying
prospectus in any jurisdiction where it is unlawful to make such offer or
solicitation. You should not assume that the information contained in this
prospectus supplement or the accompanying prospectus, or any document
incorporated by reference in this prospectus supplement or the accompanying
prospectus, is accurate as of any date other than the date on the front cover of
the applicable document. Neither the delivery of this prospectus supplement nor
any distribution of securities pursuant to this prospectus supplement shall,
under any circumstances, create any implication that there has been no change in
the information set forth or incorporated by reference into this prospectus
supplement or in our affairs since the date of this prospectus supplement. Our
business, financial condition, results of operations and prospects may have
changed since that date.
This
document is in two parts. The first part is the prospectus supplement, which
adds to and updates information contained in the accompanying prospectus. The
second part, the prospectus, provides more general information, some of which
may not apply to this offering. Generally, when we refer to this prospectus, we
are referring to both parts of this document combined. To the extent there is a
conflict between the information contained in this prospectus supplement, on the
one hand, and the information contained in the accompanying prospectus, on the
other hand, you should rely on the information in this prospectus
supplement.
Before
purchasing any securities, you should carefully read both this prospectus
supplement and the accompanying prospectus, together with the additional
information described under the heading, “Where You Can Find More Information,”
in the accompanying prospectus.
Unless
the context otherwise requires, references in this prospectus supplement to
“we”, “us” and “our” refer to XOMA Ltd. and its consolidated
subsidiaries.
THE
OFFERING
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Units
offered by us consisting of:
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11,764,706 common
shares and
warrants
to purchase 5,882,353 common shares
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Common
Shares to be issued and outstanding after the offering
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154,098,199 common
shares*
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Use
of Proceeds
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We
intend to use the proceeds to continue development of our XOMA 052 product
candidate and for other working capital and general corporate
purposes.
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Risk
Factors
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You
should carefully consider the information set forth in the risk factors
contained in our most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q, as well as any amendments thereto, as filed with the
Securities and Exchange Commission before deciding whether to invest in
our securities.
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*
Excludes 22,851,672 common shares issuable upon the exercise of outstanding
options, the warrants offered hereby or the conversion of outstanding preference
shares as of May 18, 2009.
RISK
FACTORS
Please
refer to our Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2009 and our Annual Report on Form 10-K for the fiscal year ended December
31, 2008 for information regarding the risk factors associated with investing in
our securities.
FORWARD-LOOKING
INFORMATION
Certain
statements contained or incorporated by reference herein related to discussions
with our lenders regarding our Goldman Sachs loan, the sufficiency of our cash
resources, and our efforts to enter into a collaborative arrangement with
respect to XOMA 052, as well as other statements related to current plans for
product development and existing and potential collaborative and licensing
relationships, or that otherwise relate to future periods, are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. These statements
are based on assumptions that may not prove accurate. Actual results could
differ materially from those anticipated due to certain risks inherent in the
biotechnology industry and for companies engaged in the development of new
products in a regulated market. Among other things, discussions with our lenders
may not result in an agreement to restructure our loan facility on acceptable
terms, or at all, and our lenders could accelerate payment of the loan at any
time; the period for which our cash resources are sufficient could be shortened
if our lenders accelerate payment of our loan from Goldman Sachs, if
expenditures are made earlier or in larger amounts than anticipated or are
unanticipated, if anticipated revenues or cost sharing arrangements do not
materialize, or if funds are not otherwise available on acceptable terms; and,
we may not be able to enter into a collaborative arrangement with respect to
XOMA 052 on acceptable terms by the end of 2009, or at all. These and other
risks, including those related to the results of preclinical testing; the timing
or results of pending and future clinical trials (including the design and
progress of clinical trials; safety and efficacy of the products being tested;
action, inaction or delay by the United States Food and Drug Administration
(“FDA”), European or other regulators or their advisory bodies; and analysis or
interpretation by, or submission to, these entities or others of scientific
data); changes in the status of existing collaborative relationships; the
ability of collaborators and other partners to meet their obligations; our
ability to meet the demand of the United States government agency with which we
have entered our government contracts; competition; market demands for products;
scale-up and marketing capabilities; availability of additional licensing or
collaboration opportunities; international operations; share price volatility;
our financing needs and opportunities; uncertainties regarding the status of
biotechnology patents; uncertainties as to the costs of protecting intellectual
property; and risks associated with our status as a Bermuda company, are
described in more detail in our reports to the SEC on Forms 10-K, 10-Q and
8-K.
USE
OF PROCEEDS
We
estimate that the net proceeds to us from the sale of the common shares and
warrants offered by this prospectus supplement and the accompanying prospectus
will be approximately $9,150,000, after deducting the placement agents’ fees and
estimated offering expenses.
We intend
to use the net proceeds from the sale of the common shares and warrants offered
by this prospectus supplement and the accompanying prospectus to continue
development of our XOMA 052 product candidate and for other working capital and
general corporate purposes. Pending application of the net proceeds for the
specified purposes, we expect to invest the proceeds in interest-bearing
accounts and short-term, interest-bearing securities.
DESCRIPTION
OF SECURITIES WE ARE OFERING
Each unit
offered by this prospectus supplement and the accompanying prospectus consists
of one common share and a warrant to purchase 0.50 of a common
share. The common shares offered by this prospectus supplement and
the accompanying prospectus are described in the accompanying prospectus under
the heading “Description of Common Shares.” The warrants offered by
this prospectus supplement and the accompanying prospectus are described in the
immediately following section of this prospectus supplement.
Common
Shares
The
material terms and provisions of our common shares and each other class of our
securities which qualifies or limits our common shares are described under the
caption “Description of Share Capital” starting on page 7 of the
accompanying prospectus.
Warrants
The
warrants offered in this offering will be issued pursuant to a Securities
Purchase Agreement between us and each investor purchasing units in this
offering. You should review a copy of the form of Securities Purchase Agreement
and the form of warrant, each of which has been filed by us as an exhibit to a
Current Report on Form 8-K filed with the Securities and Exchange
Commission in connection with this offering, for a complete description of the
terms and conditions applicable to the warrants. The following is a brief
summary of the material terms of the warrants and is subject in all respects to
the provisions contained in the warrants.
Exercisability. The holder
may exercise the warrants beginning on May 20, 2009 and at any time up to the
date that is five years after such date. The warrants will be exercisable, at
the option of each holder, in whole or in part by delivering to us a duly
executed exercise notice accompanied by payment in full for the number of our
common shares purchased upon such exercise (except in the case of a cashless
exercise as discussed below). Unless otherwise specified in the applicable
warrant, the holder will not have the right to exercise any portion of the
warrant if the holder (together with its affiliates) would beneficially own in
excess of 9.80% of the number of our common shares outstanding immediately after
giving effect to the exercise, as such percentage ownership is determined in
accordance with the terms of the warrants. Any holder (together with its
affiliates) beneficially owning in excess of 9.80% of the number of our common
shares outstanding on the date of issuance would not be subject to the foregoing
limitation on exercisability unless such holder (together with its affiliates)
thereafter beneficially owns 9.80% (or a lesser percentage) of the number of our
common shares outstanding.
Cashless Exercise. The holder
of a warrant may, at such holder’s discretion, in lieu of making the cash
payment otherwise contemplated to be made to us upon such exercise in payment of
the aggregate exercise price, elect instead to receive upon such exercise the
“Net Number” of our common shares determined in accordance with the form of
warrant
Exercise Price. The exercise
price upon exercise of the warrants is $1.02 per common share being purchased.
The exercise price is subject to appropriate adjustment in the event of stock
dividends and distributions, stock splits, stock combinations, certain issuances
of securities below the exercise price, reclassifications or similar events
affecting our common shares.
Transferability. Subjects to
applicable laws and the restriction on transfer set forth in the Securities
Purchase Agreement, the warrants may be transferred at the option of the holders
upon surrender of the warrants to us together with the appropriate instruments
of transfer.
Exchange Listing. We do not
plan on making an application to list the warrants on The NASDAQ Global Market,
any national securities exchange or other nationally recognized trading
system. The common shares issuable upon exercise of the warrants will
be listed on The NASDAQ Global Market.
Fundamental Transactions.
Pursuant to the form of warrant, we may not enter into any fundamental
transactions unless (i) the successor entity assumes in writing all of our
obligations under the warrants and (ii) the successor entity (including its
parent) is a publicly traded corporation whose common stock is quoted on or
listed for trading on an eligible market. Upon the occurrence of any
fundamental transaction, the successor entity must assume all of our obligations
under the warrants.
Rights as a Shareholder.
Except as otherwise provided in the warrants or by virtue of such holder’s
ownership of our common shares, the holders of the warrants do not have the
rights or privileges of holders of our common shares, including any voting
rights, until they exercise their warrants.
Waivers and Amendments. Any
term of the warrants may be amended or waived with our written consent and the
written consent of the holders of warrants representing at least 60% of the
number of our common shares then subject to the outstanding warrants, provided
that such amendment or waiver applies to all warrants in the same fashion.
However, no such amendments may increase the exercise price of any warrant or
decrease the number of shares or class of shares obtainable upon exercise of any
warrant without the written consent of the holder of such warrant.
PLAN
OF DISTRIBUTION
We are
offering the units on a best efforts basis through placement agents. Subject to
the terms and conditions contained in an engagement letter dated as of May 15,
2009 among us and Canaccord Adams Inc. and Wedbush Morgan Securities, Inc.
(collectively, the “placement agents”), the placement agents have agreed to act
as the placement agents for the sale of the common shares and warrants to be
issued in this offering. The placement agents are not purchasing or selling any
securities under this prospectus supplement or the accompanying prospectus, nor
are they required to arrange for the purchase or sale of any specific number or
dollar amount of securities.
We will
pay the placement agents an aggregate placement agents’ fee equal to $600,000.
In no event will the total amount of compensation paid to the placement agents
and other securities brokers and dealers upon completion of this offering exceed
8% of the gross proceeds of the offering. The estimated offering expenses
payable by us, in addition to the placement agents’ fee of $600,000, are
approximately $250,000, which includes our legal and accounting costs, the
placement agents' expenses (including legal fees) and various other fees
associated with registering and listing the common shares. After deducting
certain fees due to the placement agents and our estimated offering expenses, we
expect the net proceeds from this offering to be approximately
$9,150,000.
We have
agreed to indemnify the placement agents against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. We have also agreed to
contribute to payments the placement agents may be required to make in respect
of such liabilities.
We have
agreed not to, and not to allow any of our subsidiaries to, enter into any
agreement to issue or announce the issuance or proposed issuance of any common
shares or common share equivalents for the period beginning on the closing date
of the offering and ending thirty days thereafter with such thirty day period
being extended in certain circumatances.
The
engagement letter with the placement agents is included as an exhibit to our
Current Report on Form 8-K that we have filed with the Commission in connection
with this offering.
The
transfer agent for our common shares to be issued in this offering is Mellon
Investor Services LLC.
Our
common shares are traded on The NASDAQ Global Market under the symbol
“XOMA.”
LEGAL
MATTERS
Certain
matters under Bermuda law with respect to the validity of the securities being
offered hereby will be passed upon by Conyers Dill & Pearman, located in
Hamilton, Bermuda. Certain matters under New York and federal law with respect
to the validity of the securities being offered hereby will be passed upon by
Cahill Gordon & Reindel LLP, located in New York, New
York.
EXPERTS
Ernst
& Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2008, and management’s assessment of the
effectiveness of our internal control over financial reporting as of December
31, 2008, as set forth in their reports, which are incorporated by reference in
this prospectus supplement and elsewhere in the registration statement. Our
financial statements and management’s assessment are incorporated by reference
in reliance on Ernst & Young LLP’s reports, given on their authority as
experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements, and other information with the SEC. The public may
read and copy any materials filed by us at the SEC’s Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549 or on the Internet site maintained by
the SEC at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. Our common shares are listed on the
Nasdaq Global Market, and these reports, proxy statements, and other information
are also available for inspection at the offices of the Nasdaq Stock Market,
1735 K Street, N.W., Washington, D.C. 20006-1504.
The
prospectus included in this filing is part of a registration statement filed by
us with the SEC. The full registration statement can be obtained from the SEC,
as indicated above, or from us.
The SEC
allows us to “incorporate by reference” the information we file with the SEC.
This permits us to disclose important information to you by referring to these
filed documents. Any information referred to in this way is considered part of
this prospectus supplement. We incorporate by reference the following documents
that have been filed with the SEC (other than information furnished under Item
2.02 or Item 7.01 of Form 8-K and all exhibits related to such
items):
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·
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our
annual report on Form 10-K for the fiscal year ended December 31,
2008;
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·
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our
quarterly report on Form 10-Q for the quarterly period ended March 31,
2009;
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·
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our
current reports on Form 8-K filed January 5, 2009, January 20, 2009,
January 21, 2009, February 10, 2009 February 19, 2009, April 9, 2009 and
May 19, 2009;
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·
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the
description of the common shares in the registration statement on Form 8-A
dated and filed on April 1, 2003 under Section 12 of the Securities
Exchange Act, including any amendment or report for the purpose of
updating such description (file no. 0-14710);
and
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·
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our
definitive proxy statement filed pursuant to Section 14 of the Exchange
Act in connection with our 2009 Annual Meeting of Shareholders filed with
the SEC on April 3, 2009.
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Any
information in any of the foregoing documents will automatically be deemed to be
modified or superseded to the extent that information in this prospectus or in a
later filed document that is incorporated or deemed to be incorporated herein by
reference modifies or replaces such information.
We also
incorporate by reference any future filings (other than current reports
furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such
form that are related to such items) made with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, until we file a post-effective
amendment which indicates the termination of the offering of the securities made
by this prospectus supplement. Information in such future filings updates and
supplements the information provided in this prospectus supplement. Any
statements in any such future filings will automatically be deemed to modify and
supersede any information in any document we previously filed with the SEC that
is incorporated or deemed to be incorporated herein by reference to the extent
that statements in the later filed document modify or replace such earlier
statements.
You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address:
XOMA
Ltd.
2910
Seventh Street
Berkeley,
California 94710
(510)
204-7200
PROSPECTUS
$150,000,000
Common
Shares
Preference
Shares
Debt
Securities
Warrants
Offered
by
XOMA
Ltd.
From time
to time, we may offer up to $150,000,000 of any combination of the securities
described in this prospectus.
We will
provide specific terms of these offerings and securities in supplements to this
prospectus. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read this prospectus, the information
incorporated by reference in this prospectus and any prospectus supplement
carefully before you invest.
Our
common shares are traded on the Nasdaq Global Market under the symbol “XOMA.” On
October 21, 2008, the last reported sale price of our common shares was $1.64
per share. You are urged to obtain current market quotations for our common
shares. The applicable prospectus supplement will contain information, where
applicable, as to any other listing on the Nasdaq Global Market or any
securities market or other exchange of the securities, if any, covered by the
prospectus supplement.
Investing
in our securities involves a high degree of risk. . See the section
entitled “RISK FACTORS” contained in any supplements to this Prospectus and in
our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
as well as any amendments thereto, as filed with the Securities and Exchange
Commission, and which are incorporated herein by reference in their
entirety.
This
Prospectus may not be used to offer or sell any securities unless accompanied by
a Prospectus Supplement.
The
securities may be sold directly by us to investors, through agents designated
from time to time or to or through underwriters or dealers. For additional
information on the methods of sale, you should refer to the section entitled
“PLAN OF DISTRIBUTION” in this prospectus. If any underwriters are involved in
the sale of any securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable commissions or
discounts and over-allotment options will be set forth in a prospectus
supplement. The price to the public of such securities and the net proceeds we
expect to receive from such sale will also be set forth in a prospectus
supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
Consent
under the Exchange Control Act 1972 (and its related regulations) has been
obtained from the Bermuda Monetary Authority for the issue and transfer of
XOMA’s shares, options, warrants, depositary receipts, rights, loan notes and
other securities to and between non-residents of Bermuda for exchange control
purposes provided our shares remain listed on an appointed stock exchange, which
includes the Nasdaq Global Market. This prospectus may be filed with the
Registrar of Companies in Bermuda in accordance with Bermuda law. In granting
such consent and in accepting this prospectus for filing, neither the Bermuda
Monetary Authority nor the Registrar of Companies in Bermuda accepts any
responsibility for our financial soundness or the correctness of any of the
statements made or opinions expressed in this prospectus.
The
date of this prospectus is October 21, 2008
TABLE
OF CONTENTS
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ABOUT
THIS PROSPECTUS
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1
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|
ABOUT
XOMA
|
1
|
|
RISK
FACTORS
|
1
|
|
THE
SECURITIES WE MAY OFFER
|
2
|
|
FORWARD-LOOKING
INFORMATION
|
4
|
|
FINANCIAL
RATIOS
|
5
|
|
USE
OF PROCEEDS
|
6
|
|
DESCRIPTION
OF SHARE CAPITAL
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7
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DESCRIPTION
OF DEBT SECURITIES
|
11
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DESCRIPTION
OF WARRANTS
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18
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LEGAL
OWNERSHIP OF SECURITIES
|
20
|
|
PLAN
OF DISTRIBUTION
|
23
|
|
LEGAL
MATTERS
|
27
|
|
EXPERTS
|
27
|
|
WHERE
YOU CAN FIND MORE INFORMATION
|
27
|
You
should rely only on the information we have provided or incorporated by
reference in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. No dealer, salesperson or other person is authorized to give
any information or to represent anything not contained in this prospectus. You
must not rely on any unauthorized information or representation. This prospectus
is an offer to sell only the securities offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. You should
assume that the information in this prospectus or any prospectus supplement is
accurate only as of the date on the front of the document and that any
information we have incorporated by reference is accurate only as of the date of
the document incorporated by reference, regardless of the time of delivery of
this prospectus or any sale of a security.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, using a “shelf” registration process. Under
this shelf registration process, we may sell common shares, preference shares,
debt securities and warrants in one or more offerings up to a total dollar
amount of $150,000,000. This prospectus provides you with a general description
of the securities we may offer. Each time we sell any securities under this
prospectus, we will provide a prospectus supplement that will contain more
specific information about the terms of those securities. We may also add,
update or change in a prospectus supplement any of the information contained in
this prospectus or in documents we have incorporated by reference into this
prospectus. This prospectus, together with the applicable prospectus supplements
and the documents incorporated by reference into this prospectus, includes all
material information relating to this offering. You should carefully read both
this prospectus and the applicable prospectus supplement together with the
additional information described under “WHERE YOU CAN FIND MORE INFORMATION”
before buying securities in this offering. You should rely only on the
information we have provided or incorporated by reference in this prospectus or
any prospectus supplement. We have not authorized anyone to provide you with
information different from that contained in this prospectus. No dealer,
salesperson or other person is authorized to give any information or to
represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representation. This prospectus is an offer to sell
only the securities offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. You should assume that the
information in this prospectus or any prospectus supplement is accurate only as
of the date on the front of the document and that any information we have
incorporated by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of delivery of this prospectus
or any sale of a security.
ABOUT
XOMA
XOMA
Ltd., a Bermuda company (“XOMA” or “we”), is a leader in the discovery,
development and manufacture of therapeutic antibodies. Our expanding pipeline
includes XOMA 052, an anti-IL-1 beta antibody, and XOMA 629, a synthetic peptide
compound derived from bactericidal/permeability-increasing protein.
XOMA’s
proprietary development pipeline is primarily funded by multiple revenue streams
resulting from the licensing of its antibody technologies, product royalties,
development collaborations and biodefense contracts. XOMA’s technologies and
experienced team have contributed to the success of marketed antibody products,
including RAPTIVA®
(efalizumab) for chronic moderate to severe plaque psoriasis and LUCENTIS®
(ranibizumab injection) for wet age-related macular degeneration.
XOMA has
a premier antibody discovery and development platform that includes six antibody
phage display libraries and XOMA’s proprietary Human Engineering(tm) and
bacterial cell expression (BCE) technologies. For example, XOMA’s bacterial cell
expression technology is a key breakthrough biotechnology for the discovery and
manufacturing of antibodies and other proteins. As a result, more than 50
pharmaceutical and biotechnology companies have signed BCE
licenses.
In
addition to developing its own products, XOMA develops products for premier
pharmaceutical companies including Novartis AG, Schering-Plough Research
Institute and Takeda Pharmaceutical Company Limited. XOMA has a fully integrated
product development infrastructure, extending from pre-clinical science to
product launch, and a team of 300 employees at its Berkeley, California
location.
Except
for the historical information contained in this prospectus or incorporated by
reference, this prospectus (and the information incorporated by reference in
this prospectus) contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
discussed here or incorporated by reference. Factors that could cause
or contribute to such differences include those discussed in the section
entitled “RISK FACTORS” contained in any supplements to this prospectus and in
our most recent annual report on Form 10-K and quarterly reports on Form 10-Q
filed with the SEC, as well as any amendments thereto reflected in subsequent
filings with the SEC, which are incorporated herein by reference in their
entirety.
Investment
in our securities involves risks. Prior to making a decision about
investing in our securities, you should consider carefully the risk factors,
together with all of the other information contained or incorporated by
reference in this prospectus and any prospectus supplement, including any
additional specific risks described in any prospectus
supplement. Each of these risk factors could adversely affect our
business, operating results and financial condition, which may result in the
loss of all or part of your investment.
Keep
these risk factors in mind when you read forward-looking statements contained
elsewhere or incorporated by reference in this prospectus and the prospectus
supplement. These statements relate to our expectations about future
events. Discussions containing forward-looking statements may be
found, among other places, in “Business” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” incorporated by
reference from our annual reports on Form 10-K and our quarterly reports on Form
10-Q, as well as any amendments thereto reflected in subsequent filings with the
SEC. These forward-looking statements are based largely on our
expectations and projections about future events and future trends affecting our
business, and so are subject to risks and uncertainties, including the risks and
uncertainties described below under “FORWARD-LOOKING INFORMATION,” that could
cause actual results to differ materially from those anticipated in the
forward-looking statements.
THE
SECURITIES WE MAY OFFER
We may
offer our common shares and preference shares, various series of debt securities
and/or warrants to purchase any of such securities, with a total value of up to
$150,000,000, from time to time under this prospectus at prices and on terms to
be determined by market conditions at the time of offering. This prospectus
provides you with a general description of the securities we may offer. Each
time we offer a type or series of securities, we will provide a prospectus
supplement that will describe the specific amounts, prices and other important
terms of the securities, including, to the extent applicable:
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designation
or classification;
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aggregate
principal amount or aggregate offering
price;
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maturity,
if applicable;
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rates
and times of payment of interest or dividends, if
any;
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redemption,
conversion or sinking fund terms, if
any;
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voting
or other rights, if any;
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conversion
prices, if any; and
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important
federal income tax considerations.
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The
prospectus supplement also may add, update or change information contained in
this prospectus or in documents we have incorporated by reference. However, no
prospectus supplement shall offer a security that is not registered and
described in this prospectus at the time of its effectiveness.
This
Prospectus may not be used to consummate a sale of securities unless it is
accompanied by a Prospectus Supplement.
We may
sell the securities directly to or through agents, underwriters or dealers. We,
and our agents or underwriters, reserve the right to accept or reject all or
part of any proposed purchase of securities. If we do offer securities through
agents or underwriters, we will include in the applicable prospectus
supplement:
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the
names of those agents or
underwriters;
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applicable
fees, discounts and commissions to be paid to
them;
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details
regarding over-allotment options, if any;
and
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the
net proceeds to us.
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Common Shares.
We may issue common shares from time to time. Holders of common shares
are entitled to one vote per share on all matters submitted to a vote of
shareholders. Subject to the rights of any series of preference shares issued
from time to time, all actions submitted to a vote of shareholders shall be
voted on by the holders of common shares, voting together as a single class
(together with the Series A Preference Shares (as described below), if any),
except as provided by law.
Preference
Shares. We may issue preference shares from time to time, in one or more
series. Our board of directors shall determine the rights, preferences,
privileges and restrictions of the preference shares, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of any series. Convertible preference shares will be convertible
into our common shares or convertible into or exchangeable for our other
securities. Conversion may be mandatory or at your option and would be at
prescribed conversion rates.
If we
sell any series of preference shares under this prospectus and applicable
prospectus supplements, we will fix the rights, preferences, privileges,
qualifications and restrictions of the preference shares of such series in the
resolutions creating that series. We will incorporate by reference into the
registration statement of which this prospectus is a part the form of any
resolutions that set out the terms of the series of preference shares we are
offering before the issuance of such series of preference shares. We urge you to
read the prospectus supplements related to the series of preference shares being
offered, as well as the complete resolutions that set out the terms of such
series of preference shares.
Debt Securities.
We may offer debt securities from time to time, in one or more series, as
either senior or subordinated debt or as senior or subordinated convertible
debt. The senior debt securities will rank equally with any other unsecured and
unsubordinated debt. The subordinated debt securities will be subordinate and
junior in right of payment, to the extent and in the manner described in the
instrument governing the debt, to all of our senior indebtedness. Convertible
debt securities will be convertible into or exchangeable for our common shares
or our other securities. Conversion may be mandatory or at your option and would
be at prescribed conversion rates.
The debt
securities will be issued under one or more documents called indentures, which
are contracts between us and a to be named national banking association or other
eligible party, as trustee. In this prospectus, we have summarized certain
general features of the debt securities. We urge you, however, to read the
prospectus supplements related to the series of debt securities being offered,
as well as the complete indentures that contain the terms of the debt
securities. Forms of indentures have been filed as exhibits to the registration
statement of which this prospectus is a part, and supplemental indentures and
forms of debt securities containing the terms of debt securities being offered
will be filed as exhibits to the registration statement of which this prospectus
is a part or will be incorporated by reference from reports we file with the
SEC.
Warrants.
We may issue warrants for the purchase of common shares, preference
shares and/or debt securities in one or more series. We may issue warrants
independently or together with common shares, preference shares and/or debt
securities, and the warrants may be attached to or separate from these
securities.
The
warrants will be evidenced by warrant certificates issued under one or more
warrant agreements, which are contracts between us and an agent for the holders
of the warrants. In this prospectus, we have summarized certain general features
of the warrants. We will incorporate by reference into the registration
statement of which this prospectus is a part the form of warrant agreement,
including a form of warrant certificate, that describes the terms of the series
of warrants we are offering before the issuance of the related series of
warrants. We urge you to read the prospectus supplements related to the series
of warrants being offered, as well as the complete warrant agreements and
warrant certificates that contain the terms of the applicable series of
warrants.
FORWARD-LOOKING
INFORMATION
Certain
statements contained in this prospectus and the related documents incorporated
by reference related to the sufficiency of our cash resources, levels of future
revenues, losses, expenses and cash, future sales of approved products, as well
as other statements related to current plans for product development and
existing and potential collaborative and licensing relationships, or that
otherwise relate to future periods, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”). These statements are based on assumptions that
may not prove accurate. Actual results could differ materially from those
anticipated due to certain risks inherent in the biotechnology industry and for
companies engaged in the development of new products in a regulated market.
Among other things, the period for which our cash resources are sufficient could
be shortened if expenditures are made earlier or in larger amounts than
anticipated or are unanticipated, if anticipated revenues or cost sharing
arrangements do not materialize, if funds are not otherwise available on
acceptable terms; revenue levels may be other than as expected if sales of
approved products are lower than expected; losses may be other than as expected
for any of the reasons affecting revenues and expenses; expense levels and cash
utilization may be other than as expected due to unanticipated changes in our
research and development programs; and the sales efforts for approved products
may not be successful if the parties responsible for marketing and sales fail to
meet their commercialization goals, due to the strength of the competition, if
physicians do not adopt the product as treatment for their patients or if
remaining regulatory approvals are not obtained. These and other risks,
including those related to the results of pre-clinical testing; the timing or
results of pending and future clinical trials (including the design and progress
of clinical trials; safety and efficacy of the products being tested; action,
inaction or delay by the FDA, European or other regulators or their advisory
bodies; and analysis or interpretation by, or submission to, these entities or
others of scientific data); changes in the status of existing collaborative
relationships; the ability of collaborators and other partners to meet their
obligations; our ability to meet the demand of the United States government
agency with which we have entered our first government contract; competition;
market demands for products; scale-up and marketing capabilities; availability
of additional licensing or collaboration opportunities; international
operations; share price volatility; our financing needs and opportunities;
uncertainties regarding the status of biotechnology patents; uncertainties as to
the costs of protecting intellectual property; and risks associated with our
status as a Bermuda company, are described in more detail in “RISK FACTORS” in
any supplement to this prospectus. We undertake no obligation to publicly update
any forward-looking statements, regardless of any new information, future events
or other occurrences. We advise you, however, to consult any additional
disclosures we make in our reports to the SEC on Forms 10-K, 10-Q and
8-K.
FINANCIAL
RATIOS
The
following table sets forth our ratio of earnings to fixed charges and the amount
of deficiency for periods in which the ratio indicates less than one-to-one
coverage:
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Six
Months
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Ended
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June
30,
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Year
Ended December 31,
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2008
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2007
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2006
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2005
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2004
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2003
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Ratio
of earnings to fixed charges (1)
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N/A
(2)
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N/A
(2)
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N/A
(2)
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1.65
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N/A
(2)
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N/A
(2)
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(1)
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For
these purposes, earnings are defined as income before income taxes and
fixed charges and fixed charges are defined as interest expense and the
portion of rental expense which is deemed to represent
interest.
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(2)
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Earnings
were insufficient to cover fixed charges by $31.3 million for the six
months ended June 30, 2008 and $0.7 million, $38.9 million, $77.7 million
and $56.8 million for the years ended December 31, 2007, 2006, 2004 and
2003, respectively.
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USE
OF PROCEEDS
Unless
otherwise provided in the applicable prospectus supplement, we intend to use the
net proceeds from the sale of the securities under this prospectus for general
corporate purposes, including research and development projects, the development
or acquisition of new products or technologies, equipment acquisitions, general
working capital and operating expenses.
We have
not determined the amounts we plan to spend on any of the areas listed above or
the timing of these expenditures. As a result, our management will have broad
discretion to allocate the net proceeds from our sale of securities. We will set
forth in the prospectus supplement our intended use for the net proceeds
received from the sale of any securities. Pending application of the net
proceeds, we intend to invest the net proceeds in investment-grade,
interest-bearing securities.
DESCRIPTION
OF SHARE CAPITAL
The
following statements with respect to our share capital are subject to the
detailed provisions of our memorandum of continuance and bye-laws. These
statements do not purport to be complete and, while we believe the descriptions
of the material provisions of the memorandum of continuance and bye-laws
incorporated by reference are accurate statements with respect to such material
provisions, such statements are subject to the detailed provisions in the
memorandum of continuance and bye-laws, to which reference is hereby made for a
full description of such provisions.
Common
Shares
General
Our
memorandum of continuance and bye-laws provide that our authorized common share
capital is limited to 210,000,000 common shares, par value U.S.$.0005 per share.
As of June 30, 2008, there were 132,330,012 common shares issued and
outstanding.
Voting
The
holders of common shares are entitled to one vote per share. Subject to the
rights of any series of preference shares issued from time to time, all actions
submitted to a vote of shareholders shall be voted on by the holders of common
shares, voting together as a single class (together with the Series A Preference
Shares (as described below) and any other shares having general voting rights,
if any), except as provided by law.
Dividends
Holders
of common shares are entitled to participate, on a share for share basis, with
the holders of any other common shares issued and outstanding, with respect to
any dividends declared by our board of directors, subject to the rights of
holders of preference shares. Dividends will generally be payable in U.S.
dollars. We have not paid cash dividends on the common shares. We currently do
not intend to pay dividends and intend to retain any of our earnings for use in
our business and the financing of our capital requirements for the foreseeable
future. The payment of any future cash dividends on the common shares is
necessarily dependent upon our earnings and financial needs, along with
applicable legal and contractual restrictions.
Liquidation
Upon our
liquidation, holders of our common shares will be entitled to receive any assets
remaining after the payment of our debts and the expenses of the liquidation,
subject to such special rights as may be attached to any other class of
shares.
Redemption
The
common shares are not subject to redemption either by us or the holders
thereof.
Variation
of Rights
Under our
bye-laws, if at any time our share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of the issue of the shares of that class) may be varied with the consent in
writing of the holders of a majority of the issued shares of that class or with
the sanction of a resolution passed by the holders of a majority of such shares
at a separate general meeting.
Transfer
Agent and Registrar
The
transfer agent and branch registrar for our common shares is Mellon Investor
Services LLC.
Listing
on the Nasdaq Global Market
Our
common shares are listed on the Nasdaq Global Market under the symbol
“XOMA.”
Preference
Shares
General
Under our
memorandum of continuance and bye-laws, we have the authority to issue 1,000,000
preference shares, par value U.S.$.05 per share. Of these, 210,000 preference
shares have been designated Series A Preference Shares (the “Series A Preference
Shares”) and 8,000 preference shares have been designated Series B Preference
Shares (the “Series B Preference Shares”). Under our bye-laws, subject to the
special rights attaching to any class of our shares not being varied and to any
resolution approved by the holders of 75% of the issued shares entitled to vote
in respect thereof, our board of directors may establish one or more classes or
series of preference shares having the number of shares, designations, relative
voting rights, dividend rates, liquidation and other rights, preferences and
limitations that the board of directors fixes without any shareholder
approval.
The
following summary of terms of our preference shares is not complete. You should
refer to the provisions of our memorandum of continuance and bye-laws and the
resolutions containing the terms of each class or series of the preference
shares which have been or will be filed with the SEC at or prior to the time of
issuance of such class or series of preference shares and described in the
applicable prospectus supplement. The applicable prospectus supplement may also
state that any of the terms set forth herein are inapplicable to such series of
preference shares, provided that the information set forth in such prospectus
supplement does not constitute material changes to the information herein such
that it alters the nature of the offering or the securities
offered.
Issuances
of preference shares are subject to the applicable rules of the Nasdaq Stock
Market or other organizations on whose systems our preference shares may then be
quoted or listed.
Depending
upon the terms of preference shares established by our board of directors, any
or all series of preference shares could have preferences over the common shares
with respect to dividends and other distributions and upon our liquidation.
Issuance of any such shares with voting powers, or issuance of additional common
shares, would dilute the voting power of the issued and outstanding common
shares.
Terms
The terms
of each series of preference shares will be described in any prospectus
supplement related to such series of preference shares. The board of directors
in approving the creation of a series of preference shares has authority to
determine, and the applicable prospectus supplement may set forth with respect
to such series, the following terms, among others:
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the
number of shares constituting that series and the distinctive designation
of that series;
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the
dividend rate on the shares of that series, if any, whether dividends will
be cumulative and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;
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the
voting rights for shares of the series, if any, in addition to the voting
rights provided by law;
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the
conversion or exchange privileges for shares of the series, if any
(including, without limitation, conversion into common shares), and the
terms and conditions of such conversion or exchange, including provisions
for adjustment of the conversion or exchange rate in such events as the
board will determine;
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whether
or not the shares of that series will be redeemable and, if so, the terms
and conditions of such redemption, including the manner of selecting
shares for redemption if less than all
shares
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are to be
redeemed, the date or dates upon or after which they will be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
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any
sinking fund for the redemption or purchase of shares of that series and
the terms and amount of such sinking
fund;
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the
conditions and restrictions upon the creation of indebtedness of XOMA or
any of our subsidiaries, upon the issue of any additional shares
(including additional shares of such series or any other series) and upon
the payment of dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by us or any of our subsidiaries
of, any of our issued and outstanding
shares;
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the
rights of the shares of that series in the event of our voluntary or
involuntary liquidation, dissolution or winding up, and the relative
rights of priority, if any, of payment of shares of that series;
and
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any
other relative participating, optional or other special rights,
qualifications, limitations or restrictions of that
series.
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The
Series A Preference Shares
There are
no Series A Preference Shares issued and outstanding. Pursuant to the rights of
the Series A Preference Shares, subject to the rights of holders of any shares
of any series of preference shares ranking prior and superior, the holders of
Series A Preference Shares are entitled to receive, when, as and if declared by
our board of directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year, commencing on the first dividend payment date after the
first issuance of a share or fraction of a share of Series A Preference Shares,
in an amount per share equal to the greater of (a) U.S.$1.00 or (b) 1,000 times
the aggregate per share amount of all cash dividends, plus 1,000 times the
aggregate per share amount of all non-cash dividends or other distributions,
other than a dividend or bonus issue payable in common shares, declared on the
common shares since the immediately preceding dividend payment date, or, with
respect to the first dividend payment date, since the first issuance of Series A
Preference Shares.
In
addition to any other voting rights required by law, holders of Series A
Preference Shares have the right to vote on all matters submitted to a vote of
our shareholders with each share of Series A Preference Shares entitled to 1,000
votes. Except as otherwise provided by law, holders of Series A Preference
Shares, holders of common shares and holders of any other shares having general
voting rights vote together as one class on all matters submitted to a vote of
our shareholders.
Unless
otherwise provided in the rights attaching to a subsequently designated series
of our preference shares, the Series A Preference Shares rank junior to any
other series of preference shares subsequently issued as to the payment of
dividends and distribution of assets on liquidation, dissolution or winding-up
and rank senior to the common shares. Upon any liquidation, dissolution or
winding-up of us, no distributions shall be made to holders of shares ranking
junior to the Series A Preference Shares unless, prior thereto, the holders of
Series A Preference Shares shall have received an amount equal to accrued and
unpaid dividends and distributions, whether or not declared, to the date of such
payment, plus an amount equal to the greater of (1) U.S.$100.00 per share or (2)
an aggregate amount per share equal to 1,000 times the aggregate amount to be
distributed per share to holders of common shares or to the holders of shares
ranking on parity with the Series A Preference Shares, except distributions made
ratably on the Series A Preference Shares and all other such parity shares in
proportion to the total amount to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding-up.
If we
enter into any consolidation, amalgamation, merger, combination or other
transaction in which common shares are exchanged for or changed into cash, other
securities and/or any other property, then any Series A Preference Shares issued
and outstanding shall at the same time be similarly exchanged or changed in an
amount per share
equal to
1,000 times the aggregate amount of cash, securities and/or other property, as
the case may be, into which or for which each common share is changed or
exchanged.
The
Series A Preference Shares are not redeemable.
Preference
Share Purchase Rights
Our board
of directors has adopted a shareholder rights agreement, or rights agreement.
Pursuant to the rights agreement, we issued one preference share purchase right,
or right, for each issued and outstanding common share. Each right entitles the
holder to purchase from us a unit consisting of one one-thousandth of a Series A
Preference Share at a cash exercise price of $30.00 per unit, subject to
adjustment.
The
rights are attached to all issued and outstanding common shares. The rights will
separate from the common shares and will be distributed to holders of common
shares upon the earliest of (i) ten business days after the first public
announcement that a person or group of affiliated or associated persons (a
person or group of affiliated or associated persons being referred to as an
Acquiring Person) has acquired beneficial ownership of 20% or more of the common
shares then issued and outstanding (the date of said announcement being referred
to as the Share Acquisition Date), (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person
or group of persons becoming an Acquiring Person or (iii) the declaration by our
board of directors that any person is an “Adverse Person” (the earliest of such
dates being referred to as the Distribution Date). For purposes of the rights
agreement, beneficial ownership of our common shares is generally determined
pursuant the applicable rules and regulations under the Exchange Act and
beneficial owners of new notes or existing notes will be considered beneficial
owners of the common shares into which their notes are convertible.
Our board
of directors may generally declare a person to be an Adverse Person after a
declaration that such person has become the beneficial owner of 10% or more of
the issued and outstanding common shares and a determination that (i) such
beneficial ownership by such person is intended to cause or is reasonably likely
to cause us to repurchase the common shares owned by such person or to cause us
to enter into other transactions not in our best long-term interests or (ii)
such beneficial ownership is reasonably likely to cause a material adverse
impact on our business or prospects. The rights are not exercisable until the
Distribution Date and will expire on December 31, 2012, unless previously
redeemed or exchanged by us.
In the
event that a person becomes an Acquiring Person or our board of directors
determines that a person is an Adverse Person, each holder of a right will
thereafter have the right (each right being referred to as a Subscription Right)
to receive upon exercise that number of units of Series A Preference Shares
having a market value of two times the exercise price of the rights. In the
event that, at any time following the Share Acquisition Date, (i) we consolidate
with, or merge or amalgamate with and into, any person, and we are not the
surviving corporation; (ii) any person consolidates or amalgamates with us, or
merges or amalgamates with and into us and we are the continuing or surviving
corporation of such transaction and, in connection with such transaction, all or
part of the common shares are changed into or exchanged for other securities of
any other person or cash or any other property, or (iii) 50% or more of our
assets are sold or otherwise transferred, provision shall be made so that each
holder of a right shall thereafter have the right (each right being referred to
as a Merger Right) to receive, upon exercise, common shares of the acquiring
company having a market value equal to two times the exercise price of the
rights. Rights that are beneficially owned by an Acquiring or Adverse Person
may, under certain circumstances, become null and void.
At any
time after a person becomes an Acquiring Person or our board of directors
determines that a person is an Adverse Person, our board of directors may
exchange all or any part of the then outstanding and exercisable rights for
common shares or units of Series A Preference Shares at an exchange ratio of one
common share or one unit of Series A Preference Shares per right.
Notwithstanding the foregoing, our board of directors generally will not be
empowered to effect such exchange at any time after any person becomes the
beneficial owner of 50% or more of the common shares then issued and
outstanding.
The
rights may be redeemed in whole, but not in part, at a price of U.S. $.001 per
right by our board of directors at any time prior to the date on which a person
is declared to be an Adverse Person, the tenth business day after
the
Share
Acquisition Date, the occurrence of an event giving rise to the Merger Right or
the expiration date of the rights agreement.
Prior to
the earlier of the Distribution Date and the Share Acquisition Date, our board
may amend the rights agreement as we deem necessary or desirable without the
approval of any holders of rights or common shares. From and after the earlier
of the Distribution Date and the Share Acquisition Date, the rights agreement
may be amended without the approval of any holders of rights only to (i) cure an
ambiguity, (ii) correct defective or inconsistent provisions, (iii) shorten or
lengthen any time period in the rights agreement if directors in office prior to
the acquisition of shares continue to represent a majority of the board, or (iv)
change provisions as we deem necessary, but that will not adversely affect the
interests of holders of the rights. Under no circumstances, however, can the
rights agreement be amended to lengthen a time period relating to when the
rights may be redeemed if the rights are not then redeemable.
The
Series B Preference Shares
8,000
Series B Preference Shares have been designated for issuance, of which 2,959
Series B Preference Shares were issued upon conversion of the convertible
subordinated loans to us made by Genentech in connection with the funding of our
development costs for RAPTIVA®following
the regulatory approval of RAPTIVA®.
Pursuant to the rights of the Series B Preference Shares, the holders of Series
B Preference Shares are not entitled to receive any dividends on the Series B
Preference Shares.
The
Series B Preference Shares rank senior with respect to rights on our
liquidation, winding-up and dissolution to all classes of common shares. Upon
any of our voluntary or involuntary liquidation, dissolution or winding-up,
holders of Series B Preference Shares will be entitled to receive U.S. $10,000
per share of Series B Preference Shares before any distribution is made on the
common shares. The holders of Series B Preference Shares have no voting rights,
except as required under Bermuda law.
The
holders of Series B Preference Shares have the right to convert Series B
Preference Shares into common shares at a conversion price equal to
approximately $7.75 per common share, subject to customary anti-dilution
adjustments.
The
Series B Preference Shares will be automatically converted into common shares at
their then effective conversion rate immediately upon the transfer by the
initial holder to any third party which is not an affiliate of such
holder.
We will
have the right, at any time and from time to time, to redeem any or all Series B
Preference Shares for cash in an amount equal to the conversion price multiplied
by the number of common shares into which each such share of Series B Preference
Shares would then be convertible.
DESCRIPTION
OF DEBT SECURITIES
The following description, together
with the additional information we include in any applicable prospectus
supplements, summarizes the material terms and provisions of the debt securities
that we may offer under this prospectus. While the terms we have summarized
below will apply generally to any future debt securities we may offer under this
prospectus, we will describe the particular terms of any debt securities that we
may offer in more detail in the applicable prospectus supplement. The terms of
any debt securities we offer under a prospectus supplement may differ from the
terms we describe below. However, no prospectus supplement shall fundamentally
change the terms that are set forth in this prospectus or offer a security that
is not registered and described in this prospectus at the time of its
effectiveness. As of September 30, 2007, we had $49.2 million aggregate
principal amount of debt outstanding, approximately $30.3 million of which was
secured by the payment rights due to XOMA (US) LLC relating to
RAPTIVA®,
LUCENTIS® and
CIMZIA®.
We will
issue the senior debt securities under the senior indenture that we will enter
into with the trustee to be named in the senior indenture. We will issue the
subordinated debt securities under the subordinated indenture that we will enter
into with the trustee to be named in the subordinated indenture. We have filed
forms of these docu-
ments as
exhibits to the registration statement which includes this prospectus. We use
the term “indentures” in this prospectus to refer to both the senior indenture
and the subordinated indenture.
The
indentures will be qualified under the Trust Indenture Act of 1939. We use the
term “debenture trustee” to refer to either the trustee under the senior
indenture or the trustee under the subordinated indenture, as
applicable.
The
following summaries of material provisions of the senior debt securities, the
subordinated debt securities and the indentures are subject to, and qualified in
their entirety by reference to, all the provisions of the indenture applicable
to a particular series of debt securities. We urge you to read the applicable
prospectus supplements related to the debt securities that we sell under this
prospectus, as well as the indenture that contains the terms of the debt
securities. Except as we may otherwise indicate, the terms of the senior
indenture and the subordinated indenture are identical.
General
We will
describe in each prospectus supplement the following terms relating to a series
of debt securities:
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the
principal amount being offered, and if a series, the total amount
authorized and the total amount
outstanding;
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any
limit on the amount that may be
issued;
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whether
or not we will issue the series of debt securities in global form, the
terms and who the depositary will
be;
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whether
and under what circumstances, if any, we will pay additional amounts on
any debt securities held by a person who is not a United States person for
tax purposes, and whether we can redeem the debt securities if we have to
pay such additional amounts;
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the
annual interest rate, which may be fixed or variable, or the method for
determining the rate and the date interest will begin to accrue, the dates
interest will be payable and the regular record dates for interest payment
dates or the method for determining such
dates;
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whether
or not the debt securities will be secured or unsecured, and the terms of
any secured debt;
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whether
or not the debt securities will be convertible into or exchangeable for
other of our securities, and identifying the securities into which the
debt will be convertible or exchangeable and the terms of
conversion;
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the
terms of the subordination of any series of subordinated
debt;
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the
place where payments will be
payable;
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restrictions
on transfer, sale or other assignment, if
any;
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our
right, if any, to defer payment of interest and the maximum length of any
such deferral period;
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the
date, if any, after which, and the price at which, we may, at our option,
redeem the series of debt securities pursuant to any optional or
provisional redemption provisions and the terms of those redemptions
provisions;
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the
date, if any, on which, and the price at which we are obligated, pursuant
to any mandatory sinking fund or analogous fund provisions or otherwise,
to redeem, or at the holder’s option to purchase, the series of debt
securities and the currency or currency unit in which the debt securities
are payable;
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whether
the indenture will restrict our ability and/or the ability of our
subsidiaries to:
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incur additional
indebtedness;
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issue additional
securities;
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pay dividends and make
distributions in respect of our shares and the shares of our
subsidiaries;
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place restrictions on our
subsidiaries’ ability to pay dividends, make distributions or transfer
assets;
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make investments or other
restricted payments;
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sell or otherwise dispose of
assets;
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enter into sale-leaseback
transactions;
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engage in transactions with
shareholders and affiliates;
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issue or sell shares of our
subsidiaries; or
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effect an amalgamation,
consolidation or merger;
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whether
the indenture will require us to maintain any interest coverage, fixed
charge, cash flow-based, asset-based or other financial
ratios;
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a
discussion of any material or special United States federal income tax
considerations applicable to the debt
securities;
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information
describing any book-entry features;
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provisions
for a sinking fund purchase or other analogous fund, if
any;
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whether
the debt securities are to be offered at a price such that they will be
deemed to be offered at an “original issue discount” as defined in
paragraph (a) of Section 1273 of the Internal Revenue
Code;
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the
denominations in which we will issue the series of debt securities, if
other than denominations of $1,000 and any integral multiple thereof;
and
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any
other specific terms, preferences, rights or limitations of, or
restrictions on, the debt securities, including any additional events of
default or covenants provided with respect to the debt securities, and any
terms that may be required by us or advisable under applicable laws or
regulations.
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Conversion
or Exchange Rights
We will
set forth in the prospectus supplement the terms on which a series of debt
securities may be convertible into or exchangeable for our common shares or our
other securities. We will include provisions as to whether conversion or
exchange is mandatory, at the option of the holder or at our option. We may
include provisions pursuant to which the number of our common shares or other
securities that the holders of the series of debt securities receive would be
subject to adjustment.
Amalgamation,
Consolidation, Merger or Sale
The
indentures will not contain any covenant that restricts our ability to
amalgamate, consolidate or merge, or sell, convey, transfer or otherwise dispose
of all or substantially all of our assets. However, any successor to or acquiror
of such assets must assume all of our obligations under the indentures or the
debt securities, as appropriate. If the debt securities are convertible into or
exchangeable for our other securities or securities of other entities, the
person with whom we amalgamate, consolidate or merge or to whom we sell all of
our property must make provisions for the conversion or exchange of the debt
securities into securities that the holders of the debt securities would have
received if they had converted the debt securities before the amalgamation,
consolidation, merger or sale.
Events
of Default Under the Indenture
The
following are events of default under the indentures with respect to any series
of debt securities that we may issue:
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if
we fail to pay interest when due and payable and our failure continues for
90 days and the time for payment has not been extended or
deferred;
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if
we fail to pay the principal, premium or sinking fund payment, if any,
when due and payable and the time for payment has not been extended or
delayed;
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if
we fail to observe or perform any other covenant contained in the debt
securities or the indentures, other than a covenant specifically relating
to another series of debt securities, and our failure continues for 90
days after we receive notice from the debenture trustee or holders of at
least 25% in aggregate principal amount of the outstanding debt securities
of the applicable series; and
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if
specified events of bankruptcy, insolvency or reorganization
occur.
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If an
event of default with respect to debt securities of any series occurs and is
continuing, other than an event of default specified in the last bullet point
above, the debenture trustee or the holders of at least 25% in aggregate
principal amount of the outstanding debt securities of that series, by notice to
us in writing, and to the debenture trustee if notice is given by such holders,
may declare the unpaid principal of, premium, if any, and accrued interest, if
any, due and payable immediately. If an event of default specified in the last
bullet point above occurs with respect to us, the principal amount of and
accrued interest, if any, of each issue of debt securities then outstanding
shall be due and payable without any notice or other action on the part of the
debenture trustee or any holder.
The
holders of a majority in principal amount of the outstanding debt securities of
an affected series may waive any default or event of default with respect to the
series and its consequences, except defaults or events of default regarding
payment of principal, premium, if any, or interest, unless we have cured the
default or event of default in accordance with the indenture. Any waiver shall
cure the default or event of default.
Subject
to the terms of the indentures, if an event of default under an indenture shall
occur and be continuing, the debenture trustee will be under no obligation to
exercise any of its rights or powers under such indenture at the request or
direction of any of the holders of the applicable series of debt securities,
unless such holders have offered the debenture trustee reasonable indemnity. The
holders of a majority in principal amount of the outstanding debt securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the debenture trustee, or
exercising any trust or power conferred on the debenture trustee, with respect
to the debt securities of that series, provided that:
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the
direction so given by the holder is not in conflict with any law or the
applicable indenture; and
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subject
to its duties under the Trust Indenture Act of 1939, the debenture trustee
need not take any action that might involve it in personal liability or
might be unduly prejudicial to the holders not involved in the
proceeding.
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A holder
of the debt securities of any series will only have the right to institute a
proceeding under the indentures or to appoint a receiver or trustee, or to seek
other remedies if:
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the
holder has given written notice to the debenture trustee of a continuing
event of default with respect to that
series;
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the
holders of at least 25% in aggregate principal amount of the outstanding
debt securities of that series have made written request, and such holders
have offered reasonable indemnity to the debenture trustee to institute
the proceeding as trustee; and
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the
debenture trustee does not institute the proceeding, and does not receive
from the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series other conflicting directions
within 90 days after the notice, request and
offer.
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These
limitations do not apply to a suit instituted by a holder of debt securities if
we default in the payment of the principal, premium, if any, or interest on, the
debt securities.
We will
periodically file statements with the debenture trustee regarding our compliance
with specified covenants in the indentures.
Modification
of Indenture; Waiver
We and
the debenture trustee may change an indenture without the consent of any holders
with respect to specific matters:
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to
fix any ambiguity, defect or inconsistency in the
indenture;
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to
comply with the provisions described above under “Amalgamation,
Consolidation, Merger or Sale”;
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to
comply with any requirements of the SEC in connection with the
qualification of any indenture under the Trust Indenture Act of
1939;
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to
add to, delete from or revise the conditions, limitations, and
restrictions on the authorized amount, terms, or purposes of issue,
authentication and delivery of debt securities, as set forth in the
indenture;
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to
provide for the issuance of and establish the form and terms and
conditions of the debt securities of any series as provided under
“General” to establish the form of any certifications
required
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to be
furnished pursuant to the terms of the indenture or any series of debt
securities, or to add to the rights of the holders of any series of debt
securities;
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to
evidence and provide for the acceptance of appointment hereunder by a
successor trustee;
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to
provide for uncertificated debt securities and to make all appropriate
changes for such purpose;
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to
add to our covenants such new covenants, restrictions, conditions or
provisions for the protection of the holders, and to make the occurrence,
or the occurrence and the continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an event of default;
or
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to
change anything that does not materially adversely affect the interests of
any holder of debt securities of any
series.
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In
addition, under the indentures, the rights of holders of a series of debt
securities may be changed by us and the debenture trustee with the written
consent of the holders of at least a majority in aggregate principal amount of
the outstanding debt securities of each series that is affected. However, we and
the debenture trustee may only make the following changes with the consent of
each holder of any outstanding debt securities affected:
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extending
the fixed maturity of the series of debt
securities;
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reducing
the principal amount, reducing the rate of or extending the time of
payment of interest, or reducing any premium payable upon the redemption
of any debt securities; or
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reducing
the percentage of debt securities, the holders of which are required to
consent to any amendment, supplement, modification or
waiver.
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Discharge
Each
indenture provides that we can elect to be discharged from our obligations with
respect to one or more series of debt securities, except for specified
obligations, including obligations to:
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register
the transfer or exchange of debt securities of the
series;
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replace
stolen, lost or mutilated debt securities of the
series;
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maintain
paying agencies;
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hold
monies for payment in trust;
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recover
excess money held by the debenture
trustee;
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compensate
and indemnify the debenture trustee;
and
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appoint
any successor trustee.
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In order
to exercise our rights to be discharged, we must deposit with the debenture
trustee money or government obligations sufficient to pay all the principal of,
any premium, if any, and interest on, the debt securities of the series on the
dates payments are due.
Form,
Exchange and Transfer
We will
issue the debt securities of each series only in fully registered form without
coupons and, unless we otherwise specify in the applicable prospectus
supplement, in denominations of $1,000 and any integral multiple thereof. The
indentures provide that we may issue debt securities of a series in temporary or
permanent global form and as book-entry securities that will be deposited with,
or on behalf of, The Depository Trust Company or another depositary named by us
and identified in a prospectus supplement with respect to that series. See
“LEGAL OWNERSHIP OF SECURITIES” for a further description of the terms relating
to any book-entry securities.
At the
option of the holder, subject to the terms of the indentures and the limitations
applicable to global securities described in the applicable prospectus
supplement, the holder of the debt securities of any series can exchange the
debt securities for other debt securities of the same series, in any authorized
denomination and of like tenor and aggregate principal amount.
Subject
to the terms of the indentures and the limitations applicable to global
securities set forth in the applicable prospectus supplement, holders of the
debt securities may present the debt securities for exchange or for registration
of transfer, duly endorsed or with the form of transfer endorsed thereon duly
executed if so required by us or the security registrar, at the office of the
security registrar or at the office of any transfer agent designated by us for
this purpose. Unless otherwise provided in the debt securities that the holder
presents for transfer or exchange, we will make no service charge for any
registration of transfer or exchange, but we may require payment of any taxes or
other governmental charges.
We will
name in the applicable prospectus supplement the security registrar, and any
transfer agent in addition to the security registrar, that we initially
designate for any debt securities. We may at any time designate additional
transfer agents or rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts, except that we will
be required to maintain a transfer agent in each place of payment for the debt
securities of each series.
If we
elect to redeem the debt securities of any series, we will not be required
to:
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issue,
register the transfer of, convert or exchange any debt securities of that
series during a period beginning at the opening of business 15 days before
the day of mailing of a notice of redemption of any debt securities that
may be selected for redemption and ending at the close of business on the
day of the mailing; or
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register
the transfer of, convert or exchange any debt securities so selected for
redemption, in whole or in part, except the unredeemed portion of any debt
securities we are redeeming in
part.
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Information
Concerning the Debenture Trustee
The
debenture trustee, other than during the occurrence and continuance of an event
of default under an indenture, undertakes to perform only those duties as are
specifically set forth in the applicable indenture. Upon an event of default
under an indenture, the debenture trustee must use the same degree of care as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to this provision, the debenture trustee is under no obligation to
exercise any of the powers given it by the indentures at the request of any
holder of debt securities unless it is offered reasonable security and indemnity
against the costs, expenses and liabilities that it might incur.
Payment
and Paying Agents
Unless we
otherwise indicate in the applicable prospectus supplement, we will make payment
of the interest on any debt securities on any interest payment date to the
person in whose name the debt securities, or one or more predecessor securities,
are registered at the close of business on the regular record date for the
interest.
We will
pay principal of and any premium and interest on the debt securities of a
particular series at the office of the paying agents designated by us, except
that unless we otherwise indicate in the applicable prospectus
supplement,
we will
make interest payments by check that we will mail to the holder or by wire
transfer to certain holders. Unless we otherwise indicate in a prospectus
supplement, we will designate the corporate trust office of the debenture
trustee in the City of New York as our sole paying agent for payments with
respect to debt securities of each series. We will name in the applicable
prospectus supplement any other paying agents that we initially designate for
the debt securities of a particular series. We will maintain a paying agent in
each place of payment for the debt securities of a particular
series.
All money
we pay to a paying agent or the debenture trustee for the payment of the
principal of or any premium or interest on any debt securities that remains
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to us, and the holder of the debt security
thereafter may look only to us for payment thereof.
Governing
Law
The
indentures and the debt securities will be governed by and construed in
accordance with the laws of the State of New York, except to the extent that the
Trust Indenture Act of 1939 is applicable.
Subordination
of Subordinated Debt Securities
The
subordinated debt securities will be unsecured and will be subordinate and
junior in priority of payment to certain of our other indebtedness to the extent
described in a prospectus supplement. The subordinated indenture does not limit
the amount of subordinated debt securities that we may issue. It also does not
limit us from issuing any other secured or unsecured debt.
DESCRIPTION
OF WARRANTS
The
following description, together with the additional information we may include
in any applicable prospectus supplements, summarizes the material terms and
provisions of the warrants that we may offer under this prospectus and the
related warrant agreements and warrant certificates. While the terms summarized
below will apply generally to any warrants that we may offer, we will describe
the particular terms of any series of warrants in more detail in the applicable
prospectus supplement. If we indicate in the prospectus supplement, the terms of
any warrants offered under that prospectus supplement may differ from the terms
described below. However, no prospectus supplement shall fundamentally change
the terms that are set forth in this prospectus or offer a security that is not
registered and described in this prospectus at the time of its effectiveness. We
will incorporate by reference into the registration statement of which this
prospectus is a part the form of warrant agreement, including a form of warrant
certificate, that describes the terms of the series of warrants we are offering
before the issuance of the related series of warrants. The following summaries
of material provisions of the warrants and the warrant agreements are subject
to, and qualified in their entirety by reference to, all the provisions of the
warrant agreement applicable to a particular series of warrants. We urge you to
read the applicable prospectus supplements related to the warrants that we sell
under this prospectus, as well as the complete warrant agreements that contain
the terms of the warrants.
Terms
We will
describe in the applicable prospectus supplement the terms of the series of
warrants, including:
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the
offering price and aggregate number of warrants
offered;
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the
currency for which the warrants may be
purchased;
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if
applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each such
security or with a specified principal amount of such
security;
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if
applicable, the date on and after which the warrants and the related
securities will be separately
transferable;
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in
the case of warrants to purchase debt securities, the principal amount of
debt securities purchasable upon exercise of one warrant and the price at
which, and currency in which, this principal amount of debt securities may
be purchased upon such exercise;
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in
the case of warrants to purchase common shares or preference shares, the
number of common shares or preference shares, as the case may be,
purchasable upon the exercise of one warrant and the price at which these
shares may be purchased upon such
exercise;
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the
effect of any amalgamation, consolidation, merger, sale or other
disposition of our business on the warrant agreements and the
warrants;
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the
terms of any rights to redeem or call the
warrants;
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any
provisions for changes to or adjustments in the exercise price or number
of securities issuable upon exercise of the
warrants;
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the
dates on which the right to exercise the warrants will commence and
expire;
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the
manner in which the warrant agreements and warrants may be
modified;
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U.S.
federal income tax consequences of holding or exercising the
warrants;
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the
terms of the securities issuable upon exercise of the warrants;
and
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any
other specific terms, preferences, rights or limitations of or
restrictions on the warrants.
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Before
exercising their warrants, holders of warrants will not have any of the rights
of holders of the securities purchasable upon such exercise,
including:
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in
the case of warrants to purchase debt securities, the right to receive
payments of principal of, or premium, if any, or interest on, the debt
securities purchasable upon exercise or to enforce covenants in the
applicable indenture; or
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in
the case of warrants to purchase common shares or preference shares, the
right to receive dividends, if any, or, payments upon our liquidation,
dissolution or winding up or to exercise voting rights, if
any.
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Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in
the applicable prospectus supplement at the exercise price that we describe in
the applicable prospectus supplement. Unless we otherwise specify in the
applicable prospectus supplement, holders of the warrants may exercise the
warrants at any time up to 5:00 P.M. New York time on the expiration date that
we set forth in the applicable prospectus supplement. After the close of
business on the expiration date, unexercised warrants will become
void.
Holders
of the warrants may exercise the warrants by delivering the warrant certificate
representing the warrants to be exercised together with specified information,
and paying the required amount to the warrant agent in immediately available
funds, as provided in the applicable prospectus supplement. We will set forth on
the reverse side of the warrant certificate and in the applicable prospectus
supplement the information that the holder of the warrant will be required to
deliver to the warrant agent.
Upon
receipt of the required payment and the warrant certificate properly completed
and duly executed at the corporate trust office of the warrant agent or any
other office indicated in the applicable prospectus supplement, we will issue
and deliver the securities purchasable upon such exercise. If fewer than all of
the warrants represented by the
warrant
certificate are exercised, then we will issue a new warrant certificate for the
remaining amount of warrants. If we so indicate in the applicable prospectus
supplement, holders of the warrants may surrender securities or rights to
purchase securities as all or part of the exercise price for
warrants.
Enforceability
of Rights by Holders of Warrants
Each
warrant agent will act solely as our agent under the applicable warrant
agreement and will not assume any obligation or relationship of agency or trust
with any holder of any warrant. A single bank or trust company may act as
warrant agent for more than one issue of warrants. A warrant agent will have no
duty or responsibility in case of any default by us under the applicable warrant
agreement or warrant, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon us. Any holder of a
warrant may, without the consent of the related warrant agent or the holder of
any other warrant, enforce by appropriate legal action its right to exercise,
and receive the securities purchasable upon exercise of, its
warrants.
LEGAL
OWNERSHIP OF SECURITIES
We can
issue securities in registered form or in the form of one or more global
securities. We describe global securities in greater detail below. We refer to
those persons who have securities registered in their own names on the books
that we or any applicable trustee, depositary or warrant agent maintain for this
purpose as the “holders” of those securities. These persons are the legal
holders of the securities. We refer to those persons who, indirectly through
others, own beneficial interests in securities that are not registered in their
own names, as “indirect holders” of those securities. As we discuss below,
indirect holders are not legal holders, and investors in securities issued in
book-entry form or in street name will be indirect holders.
Book-Entry
Holders
We may
issue securities in book-entry form only, as we will specify in the applicable
prospectus supplement. This means securities may be represented by one or more
global securities registered in the name of a financial institution that holds
them as depositary on behalf of other financial institutions that participate in
the depositary’s book-entry system. These participating institutions, which are
referred to as participants, in turn, hold beneficial interests in the
securities on behalf of themselves or their customers.
Only the
person in whose name a security is registered is recognized as the holder of
that security. Securities issued in global form will be registered in the name
of the depositary or its participants. Consequently, for securities issued in
global form, we will recognize only the depositary as the holder of the
securities, and we will make all payments on the securities to the depositary.
The depositary passes along the payments it receives to its participants, which
in turn pass the payments along to their customers who are the beneficial
owners. The depositary and its participants do so under agreements they have
made with one another or with their customers; they are not obligated to do so
under the terms of the securities.
As a
result, investors in a book-entry security will not own securities directly.
Instead, they will own beneficial interests in a global security, through a
bank, broker or other financial institution that participates in the
depositary’s book-entry system or holds an interest through a participant. As
long as the securities are issued in global form, investors will be indirect
holders, and not holders, of the securities.
Street
Name Holders
We may
terminate a global security or issue securities in non-global form. In these
cases, investors may choose to hold their securities in their own names or in
“street name.” Securities held by an investor in street name would be registered
in the name of a bank, broker or other financial institution that the investor
chooses, and the investor would hold only a beneficial interest in those
securities through an account he or she maintains at that
institution.
For
securities held in street name, we will recognize only the intermediary banks,
brokers and other financial institutions in whose names the securities are
registered as the holders of those securities, and we will make all payments on
those securities to them. These institutions pass along the payments they
receive to their customers who are the
beneficial
owners, but only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold securities in
street name will be indirect holders, not holders, of those
securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable trustee and of any
third parties employed by us or a trustee, run only to the legal holders of the
securities. We do not have obligations to investors who hold beneficial
interests in global securities, in street name or by any other indirect means.
This will be the case whether an investor chooses to be an indirect holder of a
security or has no choice because we are issuing the securities only in global
form.
For
example, once we make a payment or give a notice to the holder, we have no
further responsibility for the payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect holders but does not do so. Similarly, we may
want to obtain the approval of the holders to amend an indenture, to relieve us
of the consequences of a default or of our obligation to comply with a
particular provision of the indenture or for other purposes. In such an event,
we would seek approval only from the holders, and not the indirect holders, of
the securities. Whether and how the holders contact the indirect holders is up
to the holders.
Special
Considerations for Indirect Holders
If you
hold securities through a bank, broker or other financial institution, either in
book-entry form or in street name, you should check with your own institution to
find out:
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how
it handles securities payments and
notices;
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whether
it imposes fees or charges;
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how
it would handle a request for the holders’ consent, if ever
required;
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whether
and how you can instruct it to send you securities registered in your own
name so you can be a holder, if that is permitted in the
future;
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how
it would exercise rights under the securities if there were a default or
other event triggering the need for holders to act to protect their
interests; and
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if
the securities are in book-entry form, how the depositary’s rules and
procedures will affect these
matters.
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Global
Securities
A global
security is a security that represents one or any other number of individual
securities held by a depositary. Generally, all securities represented by the
same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that
we deposit with and register in the name of a financial institution or its
nominee that we select. The financial institution that we select for this
purpose is called the depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York, New York, known
as DTC, will be the depositary for all securities issued in book-entry
form.
A global
security may not be transferred to or registered in the name of anyone other
than the depositary, its nominee or a successor depositary, unless special
termination situations arise. We describe those situations below under “Special
Situations When a Global Security Will Be Terminated.” As a result of these
arrangements, the depositary, or its nominee, will be the sole registered owner
and holder of all securities represented by a global security, and
investors
will be permitted to own only beneficial interests in a global security.
Beneficial interests must be held by means of an account with a broker, bank or
other financial institution that in turn has an account with the depositary or
with another institution that does. Thus, an investor whose security is
represented by a global security will not be a holder of the security, but only
an indirect holder of a beneficial interest in the global security.
If the
prospectus supplement for a particular security indicates that the security will
be issued in global form only, then the security will be represented by a global
security at all times unless and until the global security is terminated. If
termination occurs, we may issue the securities through another book-entry
clearing system or decide that the securities may no longer be held through any
book-entry clearing system.
Special
Considerations for Global Securities
As an
indirect holder, an investor’s rights relating to a global security will be
governed by the account rules of the investor’s financial institution and of the
depositary, as well as general laws relating to securities transfers. We do not
recognize an indirect holder as a holder of securities and instead deal only
with the depositary that holds the global security.
If
securities are issued only in the form of a global security, an investor should
be aware of the following:
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An
investor cannot cause the securities to be registered in his or her name,
and cannot obtain non-global certificates for his or her interest in the
securities, except in the special situations we describe
below;
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An
investor will be an indirect holder and must look to his or her own bank
or broker for payments on the securities and protection of his or her
legal rights relating to the securities, as we describe
above;
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An
investor may not be able to sell interests in the securities to some
insurance companies and to other institutions that are required by law to
own their securities in non-book-entry
form;
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An
investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the securities
must be delivered to the lender or other beneficiary of the pledge in
order for the pledge to be
effective;
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The
depositary’s policies, which may change from time to time, will govern
payments, transfers, exchanges and other matters relating to an investor’s
interest in a global security. We and any applicable trustee have no
responsibility for any aspect of the depositary’s actions or for its
records of ownership interests in a global security. We and the trustee
also do not supervise the depositary in any
way;
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The
depositary may, and we understand that DTC will, require that those who
purchase and sell interests in a global security within its book-entry
system use immediately available funds, and your broker or bank may
require you to do so as well; and
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Financial
institutions that participate in the depositary’s book-entry system, and
through which an investor holds its interest in a global security, may
also have their own policies affecting payments, notices and other matters
relating to the securities. There may be more than one financial
intermediary in the chain of ownership for an investor. We do not monitor
and are not responsible for the actions of any of those
intermediaries.
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Special
Situations When a Global Security Will Be Terminated
In a few
special situations described below, the global security will terminate and
interests in it will be exchanged for physical certificates representing those
interests. After that exchange, the choice of whether to hold securities
directly or in street name will be up to the investor. Investors must consult
their own banks or brokers to find out
how to
have their interests in securities transferred to their own name, so that they
will be direct holders. We have described the rights of holders and street name
investors above.
The
global security will terminate when the following special situations
occur:
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if
the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary for that global security and we do not
appoint another institution to act as depositary within 90
days;
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if
we notify any applicable trustee that we wish to terminate that global
security; or
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if
an event of default has occurred with regard to securities represented by
that global security and has not been cured or
waived.
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The
prospectus supplement may also list additional situations for terminating a
global security that would apply only to the particular series of securities
covered by the prospectus supplement. When a global security terminates, the
depositary, and not we or any applicable trustee, is responsible for deciding
the names of the institutions that will be the initial direct
holders.
PLAN
OF DISTRIBUTION
General
We may
sell the securities through underwriters or dealers, through agents, or directly
to one or more purchasers. A prospectus supplement or supplements will describe
the terms of the offering of the securities, including:
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the
name or names of any underwriters, if
any;
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the
purchase price of the securities and the proceeds we will receive from the
sale;
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any
over-allotment options under which underwriters may purchase additional
securities from us;
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any
agency fees or underwriting discounts and other items constituting agents’
or underwriters’ compensation;
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any
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers;
and
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any
securities exchange or market on which the securities may be
listed.
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If
underwriters are used in the sale, they will acquire the securities for their
own account and may resell the securities from time to time in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale. The obligations of the underwriters to purchase the securities
will be subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Subject to certain conditions, the underwriters will be obligated to
purchase all of the securities offered by the prospectus supplement. Any public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may change from time to time. We may use underwriters with whom we have
a material relationship. We will describe in the prospectus supplement, naming
the underwriter, the nature of any such relationship.
We may
sell securities directly or through agents we designate from time to time. We
will name any agent involved in the offering and sale of securities and we will
describe any commissions we will pay the agent in the prospectus
supplement.
Unless the prospectus supplement states otherwise, our agent will act on a
best-efforts basis for the period of its appointment. However, no prospectus
supplement shall fundamentally change the terms that are set forth in this
prospectus or offer a security that is not registered and described in this
prospectus at the time of its effectiveness.
We may
authorize agents or underwriters to solicit offers by certain types of
institutional investors to purchase securities from us at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
We will describe the conditions to these contracts and the commissions we must
pay for solicitation of these contracts in the prospectus
supplement.
We may
provide agents and underwriters with indemnification against civil liabilities
related to this offering, including liabilities under the Securities Act, or
contribution with respect to payments that the agents or underwriters may make
with respect to these liabilities. Agents and underwriters may engage in
transactions with, or perform services for, us in the ordinary course of
business.
All
securities we offer, other than common shares, will be new issues of securities
with no established trading market. Any underwriters may make a market in these
securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot guarantee the liquidity of the
trading markets for any securities.
Any
underwriter may engage in overallotment, stabilizing transactions, short
covering transactions and penalty bids in accordance with Regulation M under the
Exchange Act. Overallotment involves sales in excess of the offering size, which
create a short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Short covering transactions involve purchases of the securities in the
open market after the distribution is completed to cover short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a
dealer when the securities originally sold by the dealer are purchased in a
covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced,
the underwriters may discontinue any of the activities at any time.
Any
underwriters who are qualified market makers on the Nasdaq Global Market may
engage in passive market making transactions in the securities on the Nasdaq
Global Market in accordance with Rule 103 of Regulation M, during the business
day prior to the pricing of the offering, before the commencement of offers or
sales of the securities. Passive market makers must comply with applicable
volume and price limitations and must be identified as passive market makers. In
general, a passive market maker must display its bid at a price not in excess of
the highest independent bid for such security; if all independent bids are
lowered below the passive market maker’s bid, however, the passive market
maker’s bid must then be lowered when certain purchase limits are
exceeded.
In
compliance with guidelines of the Financial Industry Regulatory Authority, or
FINRA, the maximum consideration or discount to be received by any FINRA member
or independent broker dealer may not exceed 8% of the aggregate amount of the
securities offered pursuant to this prospectus and any applicable prospectus
supplement.
Equity
Line
On
October 21, 2008, we entered into what is sometimes referred to as an equity
line of credit arrangement with Azimuth Opportunity
Ltd. (“Azimuth”). A copy of the press release issued by us
on October 21, 2008 concerning the transaction is filed herewith as Exhibit 1
and is incorporated herein by reference. In connection with this
transaction, we entered into a Common Stock Purchase Agreement with Azimuth (the
“Purchase Agreement”), pursuant to which, and upon the terms and subject to the
conditions set forth therein, Azimuth has committed to purchase up to
$60,000,000 of our common shares, or the number of shares which is one less than
twenty percent (20%) of the issued and outstanding common shares as of October
21, 2008, whichever occurs first, over the 24-month term of the Purchase
Agreement. From time to time ending on November 1, 2010 and at our
sole discretion, we may present Azimuth with draw down notices to purchase our
common shares over 10 consecutive trading days or such other period mutually
agreed upon by us and Azimuth. Each draw down is subject to
limitations based on the price of our common shares and a limit of 2.5% of our
market capitalization at the time of such draw down, provided, however, Azimuth
will not be required to purchase more than $16,000,000 of our common shares in
any single draw down (excluding shares under any call option, which is described
below). We are able to present Azimuth with up to 24
draw down
notices during the term of the Purchase Agreement, with a minimum of five
trading days required between each draw down period. Only one draw
down is allowed in each draw down pricing period, unless otherwise mutually
agreed upon by us and Azimuth.
Once
presented with a draw down notice, Azimuth is required to purchase a pro-rata
portion of the shares allocated to each trading day during the trading period on
which the daily volume weighted average price for our common shares exceeds a
threshold price for such draw down determined by us. The payment for
shares in respect of each draw down notice shall be settled on the second
trading day following the last trading day of each draw down period, or on such
earlier date as we and Azimuth may mutually agree. The per share
purchase price for these shares equals the daily volume weighted average price
of our common shares on each date during the draw down period on which shares
are purchased, less a discount ranging from 2.65% to 6.65%. If the
daily volume weighted average price of our common shares falls below the
threshold price on any trading day during a draw down period, Azimuth will not
be required to purchase the pro-rata portion of common shares allocated to that
day. However, at its election, Azimuth may buy the pro-rata portion
of shares allocated to that day at the threshold price less the discount
described above.
The
Purchase Agreement also provides that from time to time and at our sole
discretion we may grant Azimuth the right to exercise one or more options to
purchase additional common shares during each draw down pricing period as
specified by us. Upon Azimuth’s exercise of the option, we will sell
to Azimuth our common shares subject to the option at a price equal to the
greater of the daily volume weighted average price of our common shares on the
day Azimuth notifies us of its election to exercise its option or the threshold
price for the option determined by us, less a discount ranging from 2.65% to
6.65%.
In
addition to our issuance of common shares to Azimuth pursuant to the Purchase
Agreement, our Registration Statement on Form S–3 (File
No. 333-149874) also covers the sale of those shares from time to
time by Azimuth to the public. Azimuth is an “underwriter” within the
meaning of Section 2(a)(11) of the Securities Act of 1933, as
amended.
Azimuth
has informed us that it will use an unaffiliated broker-dealer to effectuate all
sales, if any, of common shares that it may purchase from us pursuant to the
Purchase Agreement. Such sales will be made on the NASDAQ Global
Market at prices and at terms then prevailing or at prices related to the then
current market price. Each such unaffiliated broker-dealer will be an
underwriter within the meaning of Section 2(a)(11) of the Securities
Act. Azimuth has informed us that each such broker-dealer will
receive commissions from Azimuth which will not exceed customary brokerage
commissions. Azimuth also will pay other expenses associated with the
sale of the common shares it acquires pursuant to the Purchase
Agreement.
The
common shares may be sold in one or more of the following manners:
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers; or
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a
block trade in which the broker or dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block as
principal to facilitate the
transaction.
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Azimuth
has agreed that during the term of and for a period of 90 days after the
termination of the Purchase Agreement, neither Azimuth nor any of its affiliates
will, directly or indirectly, sell any of our securities except the shares that
it owns or has the right to purchase pursuant to the provisions of a draw down
notice. Azimuth has agreed that during the period listed above it
will not enter into a short position with respect to our common shares except
that Azimuth may sell shares that it is obligated to purchase under a pending
draw down notice but has not yet taken possession of so long as Azimuth covers
any such sales with the shares purchased pursuant to such draw down
notice. Azimuth has further agreed that during the periods listed
above it will not grant any option to purchase or acquire any right to dispose
or otherwise dispose for value of any of our common shares or any securities
convertible into, or exchangeable for, or warrants to purchase, any of our
common shares, or enter into any swap, hedge or other agreement that transfers,
in whole or in part, the economic risk of ownership of our common shares, except
for the sales permitted by the prior two sentences.
In
addition, Azimuth and any unaffiliated broker-dealer will be subject to
liability under the federal securities laws and must comply with the
requirements of the Securities Act and the Securities Exchange Act of 1934,
including without limitation, Rule 10b–5 and Regulation M under the Exchange
Act. These rules and regulations may limit the timing of purchases
and sales of common shares by Azimuth or any unaffiliated
broker-dealer. Under these rules and regulations, Azimuth and any
unaffiliated broker-dealer:
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may
not engage in any stabilization activity in connection with our
securities;
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must
furnish each broker which offers our common shares covered by the
prospectus that is a part of our Registration Statement with the number of
copies of such prospectus and any prospectus supplement which are required
by each broker; and
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may
not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Exchange Act.
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These
restrictions may affect the marketability of the common shares by Azimuth and
any unaffiliated broker-dealer.
Subject
to limited exceptions, we have agreed to indemnify and hold harmless Azimuth,
each of its affiliates, employees, representatives and advisors and any
unaffiliated broker-dealer and each person who controls Azimuth or any
unaffiliated broker-dealer against certain liabilities, including liabilities
under the Securities Act, which may be based upon, among other things, any
untrue statement or alleged untrue statement of a material fact contained in or
incorporated by reference in our Registration Statement, or any omission or
alleged omission to state in the Registration Statement or any Issuer Free
Writing Prospectus or any document incorporated by reference therein, a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless made or omitted in reliance upon written information
provided to us by Azimuth or any unaffiliated broker-dealer. We have
agreed to pay up to thirty-five thousand dollars ($35,000) of Azimuth’s
attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket
expenses) incurred by Azimuth in connection with the preparation, negotiation,
execution and delivery of the Purchase Agreement and related transaction
documentation, and up to $12,500 each quarter during the term of the equity line
to cover ongoing due diligence and review of documentation. Further,
we have agreed that if we issue a draw down notice and fail to deliver the
shares to Azimuth on the applicable settlement date, and such failure continues
for ten trading days, we will pay Azimuth liquidated damages in cash or
restricted common shares, at the option of Azimuth.
Azimuth
has agreed to indemnify and hold harmless us and each of our directors, officers
and persons who control us against certain liabilities, including liabilities
under the Securities Act, which may be based upon, among other things, an untrue
statement, alleged untrue statement, omission or alleged omission, included in
the prospectus that forms a part of our Registration Statement or any prospectus
supplement or permitted free writing prospectus or any amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
by Azimuth to us for inclusion therein, or any omission or alleged omission to
state in such prospectus, prospectus supplement or permitted free writing
prospectus or any amendment or supplement thereto a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, the untrue statement, alleged untrue
statement, omission or alleged omission was made in reliance upon, and in
conformity with, written information provided to us by Azimuth.
Reedland
Capital Partners, an Institutional Division of Financial West Group, member
FINRA/SIPC (“Reedland”), is acting as placement agent in connection with the
sale of our common shares to Azimuth under the Purchase Agreement. We
have agreed to pay Reedland, upon each such sale, a placement fee equal to 1.35%
of the aggregate dollar amount of common shares purchased by
Azimuth.
LEGAL
MATTERS
Certain
matters under Bermuda law with respect to the validity of the securities being
offered hereby will be passed upon by Conyers Dill & Pearman, located in
Hamilton, Bermuda. Certain matters under New York and federal law with respect
to the validity of the securities being offered hereby will be passed upon by
Cahill Gordon & Reindel LLP, located in New York, New
York.
EXPERTS
Ernst
& Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2006, and management’s assessment of the
effectiveness of our internal control over financial reporting as of December
31, 2006, as set forth in their reports, which are incorporated by reference in
this prospectus and elsewhere in the registration statement. Our financial
statements and management’s assessment are incorporated by reference in reliance
on Ernst & Young LLP’s reports, given on their authority as experts in
accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements, and other information with the SEC. The public may
read and copy any materials filed by us at the SEC’s Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549 or on the Internet site maintained by
the SEC at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. Our common shares are listed on the
Nasdaq Global Market, and these reports, proxy statements, and other information
are also available for inspection at the offices of the Nasdaq Stock Market,
1735 K Street, N.W., Washington, D.C. 20006-1504.
This
prospectus is part of a registration statement filed by us with the SEC. The
full registration statement can be obtained from the SEC, as indicated above, or
from us.
The SEC
allows us to “incorporate by reference” the information we file with the SEC.
This permits us to disclose important information to you by referring to these
filed documents. Any information referred to in this way is considered part of
this prospectus. We incorporate by reference the following documents that have
been filed with the SEC (other than information furnished under Item 2.02 or
Item 7.01 of Form 8-K and all exhibits related to such items):
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our
annual report on Form 10-K for the year ended December 31, 2007 and the
amendment to our annual report on Form 10-K for the year ended December
31, 2007 filed on March 14, 2008;
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our
quarterly reports on Form 10-Q for the fiscal quarters ended March 31,
2008 and June 30, 2008 and the amendment to our quarterly report on Form
10-Q for the fiscal quarter ended June 30, 2008, which was filed on
September 11, 2008;
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our
current reports on Form 8-K filed on March 14, 2008, April 2, 2008, April
9, 2008, May 12, 2008, July 28, 2008, October 17, 2008 and October
22, 2008;
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the
description of the common shares in the registration statement on Form 8-A
dated and filed on April 1, 2003 under Section 12 of the Securities
Exchange Act, including any amendment or report for the purpose of
updating such description (file no. 0-14710);
and
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our
definitive proxy statement filed pursuant to Section 14 of the Exchange
Act in connection with our 2008 Annual Meeting of Shareholders filed with
the SEC on April 9, 2008.
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Any
information in any of the foregoing documents will automatically be deemed to be
modified or superseded to the extent that information in this prospectus or in a
later filed document that is incorporated or deemed to be incorporated herein by
reference modifies or replaces such information.
We also
incorporate by reference any future filings (other than current reports
furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such
form that are related to such items) made with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, until we file a post-effective
amendment which indicates the termination of the offering of the securities made
by this prospectus. Information in such future filings updates and supplements
the information provided in this prospectus. Any statements in any such future
filings will automatically be deemed to modify and supersede any information in
any document we previously filed with the SEC that is incorporated or deemed to
be incorporated herein by reference to the extent that statements in the later
filed document modify or replace such earlier statements.
You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address:
XOMA
Ltd.
2910
Seventh Street
Berkeley,
California 94710
(510)
204-7200
-28-