As filed with the Securities and Exchange Commission on May 24, 1996
Registration No. 333-2493
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
XOMA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2756657
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2910 Seventh Street
Berkeley, California 94710
(510) 644-1170
(Address, including ZIP code, and telephone number, including
area code, of registrant's principal executive offices)
----------------------------
CHRISTOPHER J. MARGOLIN, ESQ.
XOMA CORPORATION
2910 Seventh Street
Berkeley, California 94710
(510) 644-1170
(Name, address, including ZIP code, and telephone number, including
area code, of agent for service)
----------------------
Copy to:
GEOFFREY E. LIEBMANN, ESQ.
CAHILL GORDON & REINDEL
80 Pine Street
New York, New York 10005
(212) 701-3000
-----------------------
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /__/
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
<PAGE>
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X_/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. /__/
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act regis-
tration statement number of the earlier effective registration statement for the
same offering. /__/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /__/
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the Securi-
ties Act of 1933 or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
SUBJECT TO COMPLETION, DATED MAY 24, 1996
3,012,122 Shares
XOMA CORPORATION
COMMON STOCK
This Prospectus relates to 3,012,122 shares of Common
Stock, par value $.0005 per share (the "Common Stock"), of XOMA
Corporation (the "Company"), which have been registered for sale
from time to time by the selling stockholders named herein (the
"Selling Stockholders"). Any or all of the Common Stock being
registered hereby may be sold from time to time to purchasers
directly by the Selling Stockholders. Alternatively, the Selling
Stockholders may from time to time offer the Common Stock through
underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of Common
Stock for whom they may act as agent. The Company will receive no
proceeds from the sale by the Selling Stockholders of the Common
Stock offered hereby. The shares of Common Stock to which this
Prospectus relates were issued to the Selling Stockholders either
in the Regulation D Offering (as defined herein) or from time to
time thereafter upon conversion of, as dividends on or upon exer-
cise of certain securities issued in the Regulation D Offering.
All reasonable expenses of registration of the Common Stock to
which this Prospectus relates (other than fees and expenses of
investment bankers, brokerage commissions and the Selling Stock-
holders' counsel fees and expenses, if any) will be borne by the
Company. The Company has agreed to indemnify the Selling Stock-
holders against certain liabilities, including certain liabilities
under the Securities Act of 1933, as amended (the "Securities
Act"), or to contribute to payments which the Selling Stockholders
may be required to make in respect thereof. See "Plan of Distri-
bution."
The Common Stock is traded on the Nasdaq National Market
under the symbol "XOMA." The last reported bid price of the Com-
mon Stock as reported by the Nasdaq National Market on May 21,
1996 was $6 3/8 per share.
The Common Stock offered hereby involves a high degree
of risk. See "Risk Factors."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
The date of this Prospectus is , 1996.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
<PAGE>
-2-
AVAILABLE INFORMATION
The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and is required to file periodic reports, proxy statements
and other information with the Securities and Exchange Commission
(the "SEC") relating to its business, financial statements and
other matters. Such reports, proxy statements and other informa-
tion may be inspected and copied at the public reference facili-
ties maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at 500 West Madison Street, Suite 1400, Chicago, Illi-
nois 60661 and at Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained from
the SEC at prescribed rates from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed a Registration Statement on Form
S-3 with the SEC under the Securities Act with respect to the Com-
mon Stock offered hereby. As permitted by the rules and regula-
tions of the SEC, this Prospectus omits certain information con-
tained in the Registration Statement. For further information,
reference is made to the Registration Statement, including the
financial schedules and exhibits incorporated therein by reference
or filed as a part thereof. Statements made in this Prospectus as
to the contents of any contract, agreement or other document
referred to are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the SEC.
Each such statement shall be deemed qualified in its entirety by
such reference.
--------------------
The Company will provide without charge to each person
to whom a copy of this Prospectus is delivered, upon the written
or oral request of such person, a copy of any or all of the docu-
ments incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should
be directed to Director, Corporate Communications, XOMA Corpora-
tion, 2910 Seventh Street, Berkeley, California 94710,
(510) 644-1170.
<PAGE>
-3-
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the SEC
pursuant to the Exchange Act are hereby incorporated by reference
in this Prospectus:
(1) Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 as amended by Amendment No. 1 on Form
10-K/A and Amendment No. 2 on Form 10-K/A (File No. 0-14710);
(2) Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1996 (File No. 0-14710);
(3) Current Report on Form 8-K dated April 22, 1996
(File No. 0-14710); and
(4) The description of XOMA's Common Stock in the Reg-
istration Statement on Form 8-A dated June 9, 1986 filed on
June 11, 1986 under Section 12 of the Exchange Act, including
any amendment or report for the purpose of updating such
description (Registration No. 33-4793).
All documents filed by the Company with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offer-
ing of the Common Stock offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part
hereof from the date any such document is filed.
Any statements contained in a document incorporated by
reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus (or in any other subse-
quently filed document which also is incorporated by reference in
this Prospectus) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to consti-
tute a part of this Prospectus except as so modified or
superseded.
---------------------
No person has been authorized in connection with the
offering made hereby to give any information or make any represen-
tation not contained in this Prospectus and, if given or made,
such information or representation must not be relied upon as hav-
ing been authorized by the Company or any other person. This Pro-
spectus does not constitute an offer to sell or solicitation of
any offer to buy any of the securities offered hereby in any
jurisdiction in which it is unlawful to make such offer or solici-
tation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any date
subsequent to the date hereof.
<PAGE>
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RISK FACTORS
In addition to the other information included or incor-
porated by reference in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the
shares of Common Stock offered by this Prospectus.
No Assurance of Regulatory Approvals or Additional Product
Development
XOMA's products are subject to rigorous preclinical and
clinical testing requirements and to approval processes by the
U.S. Food and Drug Administration (the "FDA") and similar author-
ities in other countries. The Company's products are primarily
regulated on a product-by-product basis under the U.S. Food, Drug
and Cosmetic Act and Section 351(a) of the Public Health Service
Act. Most of the Company's human therapeutic products are or will
be classified as biologic products and would be subject to regula-
tion by the FDA Center for Biologics Evaluation and Research.
Approval of a biologic for commercialization requires licensure of
the product and the manufacturing facilities.
In December 1992, XOMA submitted an investigational new
drug application ("IND") to the FDA to begin Phase I human testing
of Neuprex(TM), a recombinantly-derived fragment of human
bactericidal/permeability-increasing protein ("BPI"). In March
1993, the Company initiated human safety and pharmacokinetic test-
ing under the IND. In mid-1995, the Company initiated three clin-
ical efficacy trials testing the Neuprex(TM) products as a treatment
for bacterial endotoxin-related conditions. A fourth trial
started in the first quarter of 1996. No assurance can be given,
however, that product approval for Neuprex(TM) or any other BPI prod-
uct will be obtained.
In March 1989, XOMA filed a product license application
("PLA") for approval of E5(RM), a monoclonal antibody product, for
the treatment of gram-negative sepsis. XOMA has completed several
clinical trials of E5(RM), including two randomized, double-blind,
placebo-controlled, multicenter Phase III studies involving nearly
1,300 patients. In September 1991, an FDA advisory committee
heard E5(RM) data presentations but made no recommendations regarding
the safety or efficacy of the product. In June 1992, the FDA
informed XOMA that E5(RM) was not approvable without further clinical
testing. In June 1993, a third Phase III clinical trial of the
E5(RM) product commenced with narrower entry criteria than the pre-
vious trials. The trial is being managed and co-funded by Pfizer
Inc. ("Pfizer"). There can be no assurance that the continuing
<PAGE>
-5-
trial will yield data that will result in licensure of the product
in the United States. In October 1993, Pfizer submitted an appli-
cation for approval to market E5(RM) for endotoxin reduction to regu-
latory authorities in Japan. There can be no assurance that such
application will be approved.
During December 1991 and January 1992 the manufacturing
facilities for E5(RM) were inspected for licensure by the FDA. XOMA
believes that there are no major manufacturing issues outstanding.
Such licenses are currently pending and will not be finalized
unless and until E5(RM) has been approved for sale. Additionally,
FDA licensure of XOMA's manufacturing facilities for Neuprex(TM) will
be required prior to any commercial use or sale of Neuprex(TM). No
assurance can be given that approval of the manufacturing facili-
ties for E5(RM) or Neuprex(TM) will be obtained.
The antibodies currently used by XOMA in its E5(RM) product
are derived from ascites produced in mice by Charles River Labora-
tories ("CRL"). If the Company must obtain ascites from other
sources, including its own facilities or a different facility of
CRL, regulatory licensure of such other sources will be required.
There can be no assurance that any such licensure will be obtained
without significant delay, expense or additional clinical testing.
The FDA has substantial discretion in both the product
approval process and manufacturing facility approval process and
it is not possible to predict at what point, or whether, the FDA
will be satisfied with the Company's submissions or whether the
FDA will raise questions which may be material and delay or pre-
clude product approval or manufacturing facility approval. As
additional clinical data are accumulated, they will be submitted
to the FDA and may have a material impact on the FDA product
approval process.
The Company has accumulated inventories of raw material
and intermediates for E5(RM). Because the achievement, timing and
terms of regulatory licensures and subsequent sales of pharmaceu-
tical products are uncertain, there can be no assurance that the
inventories of raw materials and intermediates will be usable. In
connection with its October 1992 restructuring, the Company estab-
lished a $6.0 million reserve for a portion of its E5(RM) inventory
and recorded a $2.5 million charge to earnings for future idle
capacity. The Company increased the reserve to $6.9 million in
1993 and to $11.1 million in 1995 to cover the entire value of the
inventory. See "-- History of Losses and Accumulated Deficit."
<PAGE>
-6-
Other potential XOMA products will require significant
additional development, including extensive clinical testing.
There can be no assurance that any of the products under develop-
ment by the Company will be developed successfully, obtain the
requisite regulatory approval or be successfully manufactured or
marketed.
Need for Additional Funds
XOMA has expended and expects to continue to expend sub-
stantial funds in connection with research and development relat-
ing to its products and production technologies, the scale-up of
its production capabilities, extensive human clinical trials and
the protection of its intellectual property. The Company's cash
position and resulting investment income are sufficient to finance
the Company's currently anticipated needs for operating expenses,
working capital, equipment and current research projects through
approximately the end of 1997. The Company continues to evaluate
strategic alliances, potential partnerships and financing arrange-
ments which would further strengthen its competitive position and
provide additional funding. However, no assurance can be given
that operations will generate meaningful funds, that additional
agreements for product development funding or strategic alliances
can be negotiated or that adequate additional financing will be
available for the Company to finance its own development on
acceptable terms, if at all. If adequate funds are not available,
the business of the Company will be materially adversely affected.
History of Losses and Accumulated Deficit
XOMA has experienced significant losses and, as of
March 31, 1996, had an accumulated deficit of approximately
$313.5 million.
For the year ended December 31, 1995 and the quarter
ended March 31, 1996, XOMA had net losses of approximately $22.5
million, or $0.95 per share, and $7.0 million, or $0.25 per share,
respectively. The Company expects to incur additional losses in
the future. Its ability to achieve a profitable level of opera-
tions is dependent in large part on obtaining regulatory approval
for its products, entering into agreements for product development
and commercialization, and making a transition to a manufacturing
and marketing company. XOMA's ability to fund its ongoing opera-
tions is dependent on the foregoing factors and on its ability to
secure additional funds. There can be no assurance that the Com-
pany will ever achieve a profitable level of operations or that
<PAGE>
-7-
cash flow from future operations will be sufficient to meet such
obligations.
No Assurance of Effective Marketing
As of the date of this Prospectus, the Company has not
entered into any marketing agreements regarding its Neuprex(TM) prod-
uct. The Company has engaged an investment banking firm to assist
it in completing one or more strategic alliances with respect to
the Neuprex(TM) product. The Company cannot predict whether or when
any such alliance(s) will be consummated.
The Company has entered into marketing agreements with
Pfizer regarding the E5(RM) product, which provide Pfizer with exclu-
sive rights to E5(RM) in exchange for funding of certain clinical and
development activities. In January 1994, the territory covered by
the agreements was redefined to include only the countries of
Japan and the United States. Pfizer also has a limited first
right to negotiate for future XOMA products, other than
BPI-derived products, if they will be used for the treatment, cure
or prevention of gram-negative sepsis. The agreements can be can-
celed with appropriate notice upon reimbursement by Pfizer of cer-
tain of XOMA's research and development expenses. In the third
quarter of 1995, XOMA and Pfizer agreed to modify the funding
arrangement of the current E5(RM) clinical trial and the payment
terms relating to certain patent litigation costs (see Notes 1, 3
and 6 to the Company's Financial Statements, which are incorpo-
rated herein by reference). No assurance can be given that Pfizer
will be able to market the Company's products successfully. The
Company does not currently have a marketing and sales organization
for any of its products, and no assurance can be given that XOMA
will be able to develop the marketing and sales organization nec-
essary for the successful commercialization of its products.
Assuming timely regulatory approval, which cannot be
assured, the successful commercialization of XOMA's products will
be dependent to a large extent upon the marketing capabilities of
its pharmaceutical partners. The Company believes that termina-
tion of its relationship with Pfizer could have a material adverse
effect on its future revenues and prospects.
No Assurance of Scale-up of Manufacturing Processes
The Company has never commercially introduced any phar-
maceutical products. In addition, there can be no assurance that
the Company's, CRL's or Pfizer's existing manufacturing facilities
will receive regulatory approval in a timely manner. If one or
<PAGE>
-8-
more of the Company's products and the relevant manufacturing
facilities were to receive regulatory approval, no assurance can
be given that these existing manufacturing capabilities would be
able to produce sufficient quantities of such products to meet
market demand. Additionally, no assurance can be given that if
additional manufacturing facilities are needed to meet market
demand, such manufacturing facilities will be successfully
obtained or that the requisite regulatory approval for such facil-
ities will be obtained.
No Assurance of Patent Protection/Avoidance of Patent Infringement
Because of the length of time and the expense associated
with bringing new products through development and government
approval to the marketplace, the pharmaceutical industry has tra-
ditionally placed considerable importance on obtaining and main-
taining patent and trade secret protection for significant new
technologies, products and processes. The Company and other
biotechnology firms hold and are in the process of applying for a
number of patents in the United States and abroad to protect their
products and important processes and also have obtained or have
the right to obtain exclusive licenses to certain patents and
applications filed by others. However, the patent position of
biotechnology companies generally is highly uncertain and no con-
sistent policy regarding the breadth of allowed claims has emerged
from the actions of the U.S. Patent and Trademark Office (the
"Patent Office") with respect to biotechnology patents. Legal
considerations surrounding the validity of biotechnology patents
continue to be in transition, and no assurance can be given that
historical legal standards surrounding questions of validity will
continue to be applied or that current defenses as to issued
biotechnology patents will in fact be considered substantial in
the future. Accordingly, no assurance can be given as to the
degree and range of protection any patents will afford against
competitors with similar technologies, that patents will issue,
that others will not obtain patents claiming aspects similar to
those covered by the Company's patent applications or as to the
extent to which the Company will be successful in avoiding any
patents granted to others.
During the period from September 1994 to February 1996,
the Patent Office issued nine patents to the Company related to
its BPI-based products, including novel compositions, their manu-
facturer, formulation, assay and use. In addition, the Company is
the exclusive licensee of three BPI-related patents owned by NYU.
The Company has also received five more U.S. Notices of Allowance
<PAGE>
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and has more than twenty pending patent applications for its
BPI-based products.
The Company is aware of an agreement between Genentech,
Inc. ("Genentech") and Incyte Pharmaceuticals Inc. ("Incyte") pur-
suant to which Incyte claims to hold worldwide rights to all
Incyte and Genentech technology related to BPI and through which
Genentech will receive a royalty on Incyte's BPI product sales.
Between 1992 and 1994, the Patent Office issued five patents
related to BPI to Incyte (the "Incyte BPI Patents"). While the
Company believes, based on the opinion of its patent counsel, that
it does not infringe any valid claims of any of the Incyte BPI
Patents, no assurance can be given that XOMA has not infringed or
will not infringe any valid claims of any of the Incyte BPI
Patents.
If certain patents issued to others are upheld or if
certain patent applications filed by others issue and are upheld,
the Company may require certain licenses from others in order to
develop and commercialize certain potential products incorporating
the Company's technology. There can be no assurance that such
licenses, if required, will be available on acceptable terms.
While the Company pursues patent protection, due to
uncertainty as to the future utility of patent protection for
biotechnology products or processes, the Company also relies upon
trade secrets, know-how and continuing technological advancement
to develop and maintain its competitive position. All Company
employees have signed confidentiality agreements under which they
have agreed not to use or disclose any of the Company's propri-
etary information. Research and development contracts and rela-
tionships between the Company and its scientific consultants and
potential customers provide access to aspects of the Company's
know-how that are protected generally under confidentiality agree-
ments with the parties involved. There can be no assurance that
all confidentiality agreements will be honored or are enforceable.
No Assurance of Product Efficacy or the Ability To Compete
Successfully
The biotechnology and pharmaceutical industries are sub-
ject to continuous and substantial technological change. Competi-
tion in the areas of recombinant DNA-based and monoclonal
antibody-based technologies is intense and expected to increase in
the future as a number of established biotechnology firms and
large chemical and pharmaceutical companies diversify into the
field. A number of these large pharmaceutical and chemical
<PAGE>
-10-
companies have enhanced their capabilities by entering into
arrangements with, or acquiring, biotechnology companies. Sub-
stantially all of these companies have significantly greater
financial resources, larger research and development and marketing
staffs and larger production facilities than those of the Company.
Moreover, certain of these companies have extensive experience in
undertaking preclinical testing and human clinical trials. These
factors may enable such companies to develop products and pro-
cesses competitive with or superior to those of the Company. In
addition, a significant amount of research in biotechnology is
being carried out in universities and other non-profit research
organizations. These entities are becoming increasingly aware of
the commercial value of their work and may become more aggressive
in seeking patent protection and licensing arrangements. There
can be no assurance that developments by others will not render
the Company's products or technologies obsolete or uncompetitive.
Earlier in the 1990's, a number of corporations includ-
ing Centocor, Inc., Synergen, Inc. and Chiron, Inc. discontinued
development of products (like E5(RM)) designed to treat gram-negative
sepsis. These actions may have a material adverse effect on the
regulatory review of E5(RM), and there can be no assurance that E5(RM)
will receive regulatory approval in the United States or that
Pfizer will be able to market E5(RM) effectively. The Company
believes that research and human testing is being conducted with
other products, some of which are designed to treat a broader pop-
ulation of sepsis patients, including patients with gram-positive
as well as gram-negative sepsis. E5(RM) is intended to treat only
patients with severe gram-negative sepsis. There can be no assur-
ance that products currently unknown to the Company will not prove
to be more effective than or receive regulatory approval prior to
E5(RM).
In addition, it is possible that Incyte or some other
company is developing one or more products based on BPI, and there
can be no assurance that such product(s) will not prove to be more
effective than Neuprex(TM).
No Assurance of Supply of Monoclonal Antibodies
XOMA obtains the unpurified ascites containing the
monoclonal antibodies used in its E5(RM) product from a single sup-
plier, CRL, which has multiple manufacturing sites. XOMA and CRL
entered into a supply agreement in 1989 and renewed the agreement
in 1991, committing CRL to supply and the Company to purchase
XOMA's anticipated ascites needs for five years after FDA
licensure of E5(RM). Among the requirements for FDA licensure of E5(RM)
<PAGE>
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is that the CRL manufacturing facilities be licensed by the FDA.
If the Company must obtain ascites from other sources, including
its own facilities or a different facility of the same supplier,
regulatory approval of such other sources will be required.
Although the Company believes that it currently has sufficient
quantities of ascites for product launch and the first few years
of sales, any significant future interruption in supply could
materially and adversely affect the Company's business relating to
E5(RM).
Potential Impact of Healthcare Reform
The successful commercialization of the Company's prod-
ucts will depend upon, among other things, the Company's marketing
arrangements for its products. The Company's ability to enter
into marketing arrangements on acceptable terms and/or the terms
of its existing arrangements could be materially adversely
affected if legislation were to be enacted or regulations adopted
which mandates or otherwise results in the reduction or contain-
ment of the cost of pharmaceutical products to consumers. In
addition, if legislation were to be enacted or regulations adopted
which mandates or otherwise results in the reduction of pharmaceu-
tical product manufacturer's prices, the Company's business could
be materially adversely affected.
Uncertainties in Attracting and Retaining Qualified Personnel
The Company's success in developing marketable products
and achieving a competitive position will depend, in part, on its
ability to attract and retain qualified scientific and management
personnel. Competition for such personnel is intense, and no
assurances can be given that the Company will be able to attract
or retain such personnel. The loss of a significant group of key
personnel would adversely affect the Company's product development
efforts.
Risk of Product Liability Claims
The testing and marketing of medical products entails an
inherent risk of allegations of product liability. The Company
believes it currently has adequate levels of insurance for its
clinical trials. The Company will seek to obtain additional
insurance, if needed, if and when the Company's products are com-
mercialized; however, there can be no assurance that adequate
insurance coverage will be available or be available at acceptable
costs or that a product liability claim would not materially
<PAGE>
-12-
adversely affect the business or financial condition of the
Company.
Certain Provisions Relating to Changes in Control
The Stockholder Rights Agreement, dated as of
October 27, 1993 (the "Rights Agreement"), between the Company and
First Interstate Bank of California, as Rights Agent, and the Com-
pany's Amended and Restated By-Laws contain provisions that may
have the effect of making more difficult an acquisition of control
of the Company that has not been approved by the Company's Board
of Directors. See "Description of Equity Securities -- Certain
Provisions Relating to Changes in Control of the Company."
Volatility of Stock Price
The market prices for securities of biotechnology com-
panies, including XOMA, have been highly volatile. See "Price
Range of Common Stock and Dividend Information." Announcements
regarding the results of regulatory approval filings, clinical
trials or other testing, technological innovations or new commer-
cial products by XOMA or its competitors, government regulations,
developments concerning proprietary rights or public concern as to
safety of biotechnology have historically had, and are expected to
continue to have, a significant impact on the market price of
XOMA's Common Stock.
THE COMPANY
The Company is a biopharmaceutical company developing
products for the treatment of infectious diseases and major com-
plications due to infections, traumatic injury and surgery. The
Company's current product development programs include:
- Neuprex(TM), a recombinantly-derived fragment of BPI and
XOMA's lead BPI product, which is currently in efficacy
clinical trials for four different indications.
- I-PREX(TM), a proprietary topical formulation of BPI for
the treatment of ophthalmic disorders, which is undergo-
ing preclinical testing as a treatment for corneal
ulcerations and transplants.
- Mycoprex(TM), a potent fungicidal peptide compound derived
from BPI that is currently in preclinical product
development.
<PAGE>
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- E5(RM), XOMA's monoclonal antibody product, which is in a
Phase III trial in the United States as a treatment for
gram-negative sepsis and has been submitted for approval
in Japan as a treatment for endotoxemia.
The Company's cash position and resulting investment
income are sufficient to finance the Company's currently antici-
pated needs for operating expenses, working capital, equipment and
current research projects through approximately the end of 1997.
The Company continues to evaluate strategic alliances, potential
partnerships, and financing arrangements which would further
strengthen its competitive position and provide additional fund-
ing. The Company has engaged an investment banking firm to assist
in completing one or more strategic alliances with respect to the
Neuprex(TM) product. The Company cannot predict whether or when any
such alliance(s) will be consummated or whether additional funding
will be available when required.
On May 15, 1996, the Company announced the granting of
an exclusive license to Genentech, including a sublicense to IDEC
Pharmaceuticals Corporation, to intellectual property covering the
therapeutic use of chimeric IgG1 antibodies specific for the CD20
antigen on the surface of human B-cells. The Company received an
initial cash payment of $3 million and will receive royalties on
the sale of products employing the anti-CD20 technology that are
sold in the United States and in other countries where the Company
holds relevant patents.
Certain statements contained herein that are not related
to historical facts may contain "forward looking" information, as
that term is defined in the Private Securities Litigation Reform
Act of 1995. Such statements are based on the Company's current
beliefs as to the outcome and timing of future events, and actual
results may differ materially from those projected or implied in
the forward looking statements. Further, certain forward looking
statements are based upon assumptions of future events which may
not prove to be accurate. The forward looking statements involve
risks and uncertainties including, but not limited to, the risks
and uncertainties referred to under "Risk Factors" and elsewhere
herein and in other of the Company's Securities and Exchange Com-
mission filings.
<PAGE>
-14-
PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
The Company's Common Stock trades on the Nasdaq National
Market under the symbol "XOMA." The following table sets forth
the quarterly range of high and low reported sale prices of the
Company's Common Stock on the Nasdaq National Market for the peri-
ods indicated.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1994:
First Quarter ............... $6 1/4 $3 3/4
Second Quarter .............. 4 1/4 2 1/2
Third Quarter ............... 3 5/8 2 1/4
Fourth Quarter .............. 4 1/8 2 3/16
1995:
First Quarter ............... $3 1/16 $1 1/8
Second Quarter .............. 2 7/8 1 9/32
Third Quarter ............... 4 1/4 1 11/16
Fourth Quarter .............. 4 1/8 1 7/8
1996:
First Quarter ............... 5 3/4 3 3/8
Second Quarter
(through May 21, 1996) ...... 7 9/16 3 7/8
</TABLE>
On May 21, 1996 the last reported bid price of the Com-
mon Stock as reported on the Nasdaq National Market was $6 3/8 per
share. On May 22, 1996, there were approximately 2,684 record
holders of XOMA's Common Stock.
The Company has not paid cash dividends on its Common
Stock. The Company currently intends to retain earnings for use
in the development and expansion of its business and, therefore,
does not anticipate paying cash dividends on its Common Stock in
the foreseeable future.
<PAGE>
-15-
SELLING STOCKHOLDERS
The following table sets forth certain information
regarding the beneficial ownership of Common Stock by the Sell-
ing Stockholders as of March 31, 1996, and the number of shares
of Common Stock covered by this Prospectus.
<TABLE>
<CAPTION>
Beneficial Ownership Number of Shares
Name and Address of of Common Stock prior of Common Stock
Selling Shareholder to the Offering Registered Hereby
- - ------------------- --------------------- -----------------
Number of Percent
Shares of Class
--------- --------
<S> <C> <C> <C>
Genesee Fund Limited -
Portfolio B ("GFL-B")
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands
Antilles 1,515,152(1) 4.8% 2,272,728(2)
GFL Performance Fund
Limited
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands
Antilles 606,061 2.0% 606,061
Michael Arnouse
Business Consulting
3 Edward Lane Less
Syosset, NY 11791 70,073(3) than 1% 70,073
John Morrissey
240 Park Avenue Less
Manhasset, NY 11030 30,000(3) than 1% 30,000
Shipley Raidy Capital
Partners, LP
One Tower Bridge
Suite 1370 Less
West Conshohocken, PA 19426 33,260(3) than 1% 33,260
<FN>
(1) Represents shares of Common Stock issuable upon conversion
of 5,000 shares of the Company's Series D Preferred Stock
(as defined below) held by GFL-B, assuming conversion at
the formula price in effect on March 31, 1996. The last
reported bid prices of the Common Stock as reported on the
Nasdaq National Market on March 29, 1996 and May 21, 1996
<PAGE>
-16-
were $4 1/4 and $6 3/8, respectively, per share. A higher
price per share of Common Stock means that fewer shares
thereof would be issuable upon conversion of the Series D
Preferred Stock. The terms of the Series D Preferred
Stock provide that in no event shall GFL-B or GFL Perfor-
mance be entitled to convert any shares thereof if the
issuance of shares of Common Stock upon a proposed conver-
sion, when the shares to be so issued are counted together
with other shares of Common Stock beneficially owned by
GFL-B, GFL Performance or any associate or affiliate of or
adviser to GFL-B or GFL Performance (collectively, the
"GFL Persons") (other than shares so owned through owner-
ship of Series D Preferred Stock), would result in a GFL
Person beneficially owning more than 4.9% of the outstand-
ing shares of Common Stock. See "Description of Equity
Securities -- The Series D Preferred Stock".
(2) Includes the shares of Common Stock beneficially owned (as
reflected in this table under "Number of Shares") plus up
to 757,576 additional shares which may be issued from time
to time upon conversion of or as dividends on the Series D
Preferred Stock held by GFL-B.
(3) Represents shares of Common Stock issuable upon exercise
of options held by Mr. Arnouse, Mr. Morrissey and Shipley
Raidy Capital Partners, LP, after giving effect to the
transfer in April 1996 to Mr. Morrissey and Shipley Raidy
Capital Partners, LP of portions of the option originally
granted to Mr. Arnouse. See "Plan of Distribution."
</TABLE>
<PAGE>
-17-
DESCRIPTION OF EQUITY SECURITIES
The authorized capital stock of the Company consists
of 40,000,000 shares of Common Stock, $.0005 par value, of
which 31,601,045 shares were outstanding on May 21, 1996, and
1,000,000 shares of preferred stock, $.05 par value, of which
650,000 have been designated Series A Cumulative Preferred
Stock (the "Series A Preferred Stock"), of which none were out-
standing on such date, 30,000 have been designated Senior Con-
vertible Preferred Stock, Series B (the "Series B Preferred
Stock"), of which 7,807 shares were outstanding on such date,
5,000 have been designated Non-Voting Cumulative Convertible
Preferred Stock, Series D (the "Series D Preferred Stock"), all
of which were outstanding on such date, and 7,500 have been
designated Convertible Preferred Stock, Series E (the "Series E
Preferred Stock"), of which none were outstanding on such date.
Common Stock
Holders of shares of Common Stock are entitled to one
vote per share on all matters to be voted on by stockholders.
The holders of Common Stock are entitled to receive such divi-
dends, if any, as may be declared from time to time by the Com-
pany's Board of Directors out of funds legally available there-
for. Upon liquidation or dissolution of the Company, the hold-
ers of the Common Stock are entitled to share ratably in the
distribution of assets, subject to the rights of the holders of
the Series B Preferred Stock and Series D Preferred Stock or
any other series of preferred stock that may then be outstand-
ing. There are no redemption or sinking fund provisions with
respect to the Common Stock. All of the outstanding shares of
Common Stock are validly issued, fully paid and nonassessable.
Preferred Stock Purchase Rights
On October 27, 1993, the Board of Directors of the
Company declared a dividend distribution of one Preferred Stock
Purchase Right (a "Right") for each outstanding share of Common
Stock. Each Right entitles the holder to purchase from the
Company a unit consisting of one one-hundredth of a share (a
"Unit") of Series A Preferred Stock at a cash exercise price of
$30.00 per Unit, subject to adjustment.
The Rights are attached to all outstanding shares of
Common Stock, including the shares of Common Stock offered
hereby. The Rights will separate from the Common Stock and
will be distributed to holders of Common Stock upon the
<PAGE>
-18-
earliest of (i) ten business days after the first public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial owner-
ship of 20% or more of the Common Stock then outstanding (the
date of said announcement being referred to as the "Stock
Acquisition Date"), (ii) ten business days following the com-
mencement 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 the Board of Directors of the Company
that any person is an "Adverse Person" (the earliest of such
dates, the "Distribution Date").
The Board of Directors of the Company 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 outstanding shares of Common Stock and a determination
that (a) such beneficial ownership by such person is intended
to cause or is reasonably likely to cause the Company to repur-
chase the Common Stock owned by such Person or to cause the
Company to enter into other transactions not in the best
long-term interests of the Company or (b) such beneficial own-
ership is reasonably likely to cause a material adverse impact
on the business or prospects of the Company. The Rights are
not exercisable until the Distribution Date and will expire on
December 31, 2002, unless previously redeemed or exchanged by
the Company.
In the event that a person becomes an Acquiring Per-
son or the Board of Directors determines that a person is an
Adverse Person, each holder of a Right will thereafter have the
right (a "Subscription Right") to receive upon exercise that
number of Units of Series A Preferred Stock having a market
value of two times the exercise price of the Rights. In the
event that, at any time following the Stock Acquisition Date,
(i) the Company consolidates with, or merges with and into, any
person, and the Company is not the surviving corporation;
(ii) any person consolidates with the Company, or merges with
and into the Company and the Company is the continuing or sur-
viving corporation of such merger and, in connection with such
merger, all or part of the shares of Common Stock are changed
into or exchanged for other securities of any other person or
cash or any other property, or (iii) 50% or more of the Compa-
ny's assets are sold or otherwise transferred, each holder of a
Right shall thereafter have the right (a "Merger Right") to
receive, upon exercise, common stock 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
<PAGE>
-19-
or Adverse Person may, under certain circumstances, become null
and void.
At any time after a person becomes an Acquiring Per-
son or the Board of Directors of the Company determines that a
person is an Adverse Person, the Board of Directors of the Com-
pany may exchange all or any part of the then outstanding and
exercisable Rights for shares of Common Stock or Units of
Series A Preferred Stock at an exchange ratio of one share of
Common Stock or one Unit of Series A Preferred Stock per Right.
Notwithstanding the foregoing, the Board of Directors of the
Company 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 Stock then outstanding.
The Rights may be redeemed in whole, but not in part,
at a price of $.001 per Right by the Board of Directors of the
Company at any time prior to the date on which a person is
declared to be an Adverse Person, the tenth business day after
the Stock Acquisition Date, the occurrence of an event giving
rise to the Merger Right or the expiration date of the Rights
Agreement.
The Series A Preferred Stock
There are currently no shares of Series A Preferred
Stock outstanding. Pursuant to the Certificate of Designation
relating to the Series A Preferred Stock, subject to the rights
of holders of any shares of any series of preferred stock rank-
ing prior and superior (such as the Series B Preferred Stock),
the holders of Series A Preferred Stock are entitled to
receive, when, as and if declared by the Board of Directors of
the Company 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 (a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share equal to the greater of
(a) $1.00 or (b) 100 times the aggregate per share amount of
all cash dividends, plus 100 times the aggregate per share
amount of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock, declared on
the Common Stock since the immediately preceding Dividend Pay-
ment Date, or, with respect to the first Dividend Payment Date,
since the first issuance of Series A Preferred Stock.
<PAGE>
-20-
In addition to any other voting rights required by
law, holders of Series A Preferred Stock shall have the right
to vote on all matters submitted to a vote of stockholders of
the Company with each share of Series A Preferred Stock enti-
tled to 100 votes. Except as otherwise provided by law, hold-
ers of Series A Preferred Stock and holders of Common Stock
shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
Unless otherwise provided in a Certificate of Desig-
nation relating to a subsequently designated series of pre-
ferred stock of the Company, the Series A Preferred Stock shall
rank junior to any other series of preferred stock as to the
payment of dividends and distribution of assets on liquidation,
dissolution or winding-up and shall rank senior to the Common
Stock. Upon any liquidation, dissolution or winding-up of the
Company, no distributions shall be made to holders of shares of
stock ranking junior to the Series A Preferred Stock unless,
prior thereto, the holders of Series A Preferred Stock 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) $100.00 per
share or (2) an aggregate amount per share equal to 100 times
the aggregate amount to be distributed per share to holders of
Common Stock or to the holders of stock ranking on parity with
the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity stock
in proportion to the total amount to which the holders of all
such shares are entitled upon such liquidation, dissolution or
winding-up.
If the Company shall enter into any consolidation,
merger, combination or other transaction in which shares of
Common Stock are exchanged for or changed into cash, other
securities and/or any other property, then any shares of
Series A Preferred Stock outstanding shall at the same time be
similarly exchanged or changed in an amount per share equal to
100 times the aggregate amount of cash, securities and/or other
property, as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
The shares of Series A Preferred Stock shall not be
redeemable.
<PAGE>
-21-
The Series B Preferred Stock
The 7,807 outstanding shares of Series B Preferred
Stock were issued by the Company in a private placement consum-
mated on December 21, 1993 in reliance upon the exemption con-
tained in Section 4(2) of the Securities Act (the "1993 Private
Placement"). Pursuant to the Certificate of Designation relat-
ing to the Series B Preferred Stock, the holders of Series B
Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds
legally available therefor, dividends at an annual rate equal
to $50.00 per share, payable semi-annually in arrears, commenc-
ing on June 30, 1994. Dividends are payable, at the option of
the Company, in cash, in Common Stock or any combination of
cash and Common Stock.
The Series B Preferred Stock ranks senior in right of
payment to all classes of Common Stock and to any other class
or series of preferred stock of the Company including the
Series D Preferred Stock, whether now outstanding or issued
hereafter. Except as required by the General Corporation Law
of the State of Delaware, holders of Series B Preferred Stock
shall not be entitled to vote on any matter submitted to a vote
of stockholders of the Company. Upon any voluntary or involun-
tary liquidation, dissolution or winding-up of the Company,
holders of Series B Preferred Stock will be entitled to receive
$1,000 per share in cash before any distribution is made on any
Common Stock or other preferred stock of the Company.
Each holder of Series B Preferred Stock has the right
at any time, or from time to time, to convert each share of
Series B Preferred Stock into 211.1073 shares of Common Stock,
subject to adjustment.
The Series B Preferred Stock may be redeemed at the
option of the Company, in whole or, from time to time, in part
(provided that no less than 25% of the shares of Series B Pre-
ferred Stock then outstanding may be redeemed at any one time)
(i) at any time after December 31, 1996 or (ii) on or prior to
December 31, 1996 if the price per share of the Common Stock is
at least $9.08 for at least ten trading days selected by the
Company within a period of any twenty consecutive trading days.
If on the date prior to the determination of the Board of
Directors to redeem any shares of Series B Preferred Stock the
price per share of Common Stock is equal to or greater than
$5.45, then the Series B Preferred Stock to be redeemed may be
redeemed by the Company for any combination of (i) shares of
<PAGE>
-22-
Common Stock, each share of Series B Preferred Stock to be
redeemed for 211.1073 shares of Common Stock and (ii) $1,000 in
cash per share of Series B Preferred Stock. If on the date
prior to the determination of the Board of Directors of the
Company to redeem Series B Preferred Stock the price per share
of Common Stock is less than $5.45, then the Series B Preferred
Stock to be redeemed shall be redeemed by the Company for
$1,000 in cash per share.
The Series B Preferred Stock has not been registered
under the Securities Act and may not be transferred except pur-
suant to an effective registration statement under the Securi-
ties Act or pursuant to an exemption from registration thereun-
der. Additionally, the Certificate of Designation relating to
the Series B Preferred Stock contains certain restrictions on
the transfer of the Series B Preferred Stock. The Company is
not obligated and does not intend to register the Series B Pre-
ferred Stock under the Securities Act. The Common Stock into
which the outstanding shares of Series B Preferred Stock is
convertible, for which such shares are redeemable and payable
as dividends on such shares has been registered under the Secu-
rities Act for sale from time to time by the holders of the
outstanding shares of Series B Preferred Stock.
The Series C Preferred Stock
The 4,799 shares of Convertible Preferred Stock,
Series C, issued by the Company in an offering made to foreign
investors in reliance on Regulation S under the Securities Act
in August 1995, have been converted into an aggregate of
2,728,190 shares of Common Stock.
The Series D Preferred Stock
The 5,000 outstanding shares of Series D Preferred
Stock were issued by the Company to GFL-B in an offering of
Series D Preferred Stock and Common Stock exempt from the reg-
istration requirements of the Securities Act pursuant to Regu-
lation D thereunder in March 1996 (the "Regulation D Offer-
ing"). Pursuant to the Certificate of Designations relating to
the Series D Preferred Stock, the holders thereof are entitled
to receive, when, as and if declared by the Board of Directors
of the Company, out of funds legally available therefor, divi-
dends at an annual rate of $40.00 per share, payable
semi-annually in arrears, commencing June 30, 1996. Dividends
are payable, at the option of the Company, in cash, in Common
Stock or any combination of cash and Common Stock. In
<PAGE>
-23-
addition, the Company may elect not to declare or make payment
of any dividend, in which event the accrued and unpaid divi-
dends shall be taken into account at the time of conversion, as
described below.
The Series D Preferred Stock ranks senior with
respect to rights on liquidation, winding-up and dissolution of
the Company to all classes of Common Stock. Upon any voluntary
or involuntary liquidation, dissolution or winding-up of the
Company, holders of Series D Preferred Stock will be entitled
to receive $1,000 per share, plus accrued and unpaid dividends,
before any distribution is made on the Common Stock or any pre-
ferred stock of the Company ranking junior as to liquidation
rights to the Series D Preferred Stock, but only after any pay-
ments with respect to liquidation preference of preferred stock
ranking senior as to liquidation rights to the Series D Pre-
ferred Stock are fully met. Except as may be required by law
and except with respect to certain actions which may adversely
affect the holders of Series D Preferred Stock, the holders of
Series D Preferred Stock are not entitled to vote on any matter
submitted to a vote of stockholders of the Company.
The holders of Series D Preferred Stock have the
right to convert shares of Series D Preferred Stock into Common
Stock at a conversion price equal to 80% of the then current
market price of the Common Stock on or after the 75th day fol-
lowing the first date of original issuance of any shares of
Series D Preferred Stock; provided that in no event shall GFL-B
or GFL Performance be entitled to convert any shares of Series
D Preferred Stock if the issuance of shares of Common Stock
upon a proposed conversion, when the shares to be so issued are
counted together with other shares of Common Stock beneficially
owned by GFL-B, GFL Performance or any associate or affiliate
of or adviser to GFL-B or GFL Performance (collectively, the
"GFL Persons") (other than shares so owned through ownership of
Series D Preferred Stock), would result in a GFL Person benefi-
cially owning more than 4.9% of the outstanding shares of Com-
mon Stock; and provided, further, that in the event that for
any 15 trading days during a 20 consecutive trading day period
the conversion of all the outstanding shares of Series D Pre-
ferred Stock upon surrender thereof would require the issuance
of more than approximately 4.5 million shares of Common Stock
in the aggregate with respect to all conversions of Series D
Preferred Stock, the Company will have the option to either
redeem the Series D Preferred Stock at a redemption price of
$1,250 per share or, with stockholder approval, convert such
Series D Preferred Stock into shares of Common Stock. In
<PAGE>
-24-
addition, subject to the proviso of the immediately preceding
sentence, the Corporation has the right, so long as it is in
material compliance with its obligations to the holders of the
Series D Preferred Stock, exercisable at any time on or after
January 15, 1998, to require the holders thereof to convert
their shares of Series D Preferred Stock into Common Stock at a
conversion price equal to 80% of the then current market price
of the Common Stock.
Each share of Series D Preferred Stock may be
redeemed at the option of the Company at any time on or after
October 1, 1996 at a redemption price of $1,250 per share.
The Series E Preferred Stock
There are currently no shares of Series E Preferred
Stock outstanding. The 7,500 shares of Series E Preferred
Stock have been designated by the Company for issuance upon
conversion of the convertible subordinated loans to the Company
made and to be made by Genentech in connection with the funding
of the Company's development costs for anti-CD11a through 1988.
See "The Company." Such loans are and will be convertible into
Series E Preferred Stock upon the occurrence of certain events
relating to certain regulatory approvals, payment defaults,
prepayments and other circumstances. Pursuant to the Certifi-
cate of Designation relating to the Series E Preferred Stock,
the holders of shares of Series E Preferred Stock will not be
entitled to receive any dividends on shares of the Series E
Preferred Stock.
The Series E Preferred Stock will rank senior with
respect to rights on liquidation, winding-up and dissolution of
the Company to all classes of Common Stock. Upon any voluntary
or involuntary liquidation, dissolution or winding-up of the
Company, holders of Series E Preferred Stock will be entitled
to receive $10,000 per share of Series E Preferred Stock before
any distribution is made on the Common Stock. The holders of
shares of Series E Preferred Stock will have no voting rights,
except as required under the General Corporation Law of the
State of Delaware.
The holders of Series E Preferred Stock will have the
right to convert shares of Series E Preferred Stock into shares
of Common Stock at a conversion price equal to the current mar-
ket price of the Common Stock (determined as provided below).
The current market price will be determined (a) for shares of
Series E Preferred Stock issued in connection with a conversion
<PAGE>
-25-
of one or more of the convertible subordinated loans upon cer-
tain regulatory approvals, payment defaults or in certain other
circumstances, as of the first date on which such a conversion
occurs, and (b) for shares of Series E Preferred Stock issued
in connection with certain prepayments of one or more of the
convertible subordinated loans or a conversion thereof in cer-
tain other circumstances, as of the date of the issuance of
such shares of Series E Preferred Stock.
The Series E Preferred Stock will be automatically
converted into Common Stock at its then effective conversion
rate immediately upon the transfer by the initial holder to any
third party which is not an affiliate of such holder.
The Company will have the right, at any time and from
time to time, to redeem any or all shares of Series E Preferred
Stock for cash in an amount equal to the conversion price mul-
tiplied by the number of shares of Common Stock into which each
such share of Series E Preferred Stock would then be
convertible.
Certain Provisions Relating to Changes in Control of the
Company
Certain provisions of the Amended and Restated
By-Laws of the Company (the "By-Laws") and the Rights (summa-
rized above) may delay, defer or prevent a change in control of
the Company that a stockholder might consider to be in his or
her best interest, including those applicable to a change in
control of the Company that might result in a premium over the
market price for the shares of Common Stock held by
stockholders.
Special Meeting of Stockholders. The By-Laws provide
that meetings of stockholders of the Company may be called only
by the Chief Executive Officer or the Board of Directors of the
Company. This provision may make it more difficult for stock-
holders to take action opposed by management or the Board of
Directors of the Company.
Advance Notice Requirements for Stockholder Proposals
and Director Nominations. The By-Laws provide that stockhold-
ers seeking to bring business before an annual meeting of
stockholders or to nominate candidates for election as direc-
tors at an annual meeting of stockholders, must provide timely
notice thereof in writing. To be timely, a stockholder's
notice must be received by the Secretary of the Company not
<PAGE>
-26-
less than sixty nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting, or in the
case of an annual meeting that is called for a date that is
more than thirty days or delayed by more than sixty days from
such anniversary, notice by the stockholder to be timely must
be so received not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the
later of (1) the sixtieth day prior to such annual meeting or
(2) the tenth day following the day on which such notice of the
date of the annual meeting was mailed or publicly disclosed.
These provisions may preclude some stockholders from bringing
matters before an annual meeting of stockholders or making nom-
inations for directors at an annual meeting of stockholders.
Preferred Stock Purchase Rights. The provisions of
the Rights and the Series A Preferred Stock may make it more
difficult or more costly for a person or group of persons to
acquire control of the Company in a transaction opposed by the
Board of Directors of the Company. See "-- Preferred Stock
Purchase Rights" and "-- The Series A Preferred Stock."
Transfer Agent and Registrar
First Interstate Bank of California is the transfer
agent and registrar of the Common Stock.
PLAN OF DISTRIBUTION
Any or all of the Common Stock being registered
hereby may be sold from time to time to purchasers directly by
the Selling Stockholders. Alternatively, the Selling Stock-
holders may from time to time offer the Common Stock through
underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of Common
Stock for whom they may act as agent. The Selling Stockhold-
ers, and any such underwriters, dealers or agents that partici-
pate in the distribution of Common Stock, may be deemed to be
underwriters, and any profit on the sale of the Common Stock by
them and any discounts, commissions or concessions received by
them may be deemed to be underwriting discounts and commissions
under the Securities Act. At the time a particular offer of
Common Stock is made, to the extent required, a supplement to
this Prospectus will be distributed which will set forth the
terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any
underwriter for Common Stock purchased from the Selling
<PAGE>
-27-
Stockholders and any discounts, commissions and other items
constituting compensation from the Selling Stockholders and any
discounts, commissions or concessions allowed or reallowed or
paid to dealers, including the proposed selling price to the
public. The Company will receive no proceeds from the sale by
the Selling Stockholders of the Common Stock offered hereby.
The shares of Common Stock covered by this Prospectus
are (i) shares of Common Stock into which the Series D Common
Stock may be converted, (ii) shares of Common Stock that may be
paid as dividends on the Series D Preferred Stock, (iii) the
shares of Common Stock purchased by GFL Performance in the Reg-
ulation D Offering and (iv) shares underlying the option to
purchase shares of Common Stock originally granted to Mr.
Michael Arnouse in connection with the Regulation D Offering.
Mr. Arnouse subsequently transferred, with the Company's con-
sent, portions of his option to Mr. John Morrissey and Shipley
Raidy Capital Corporation, LP, as reflected on the "Selling
Stockholders" table. These options are exercisable at any
time, in whole or in part, at $5.00 per share and expire in
March 1999.
All reasonable expenses of registration of the Common
Stock to which this Prospectus relates (other than fees and
expenses of investment bankers, brokerage commissions and the
Selling Stockholders' counsel fees and expenses, if any), esti-
mated to be approximately $110,000, will be borne by the Com-
pany. As and when the Company is required to update this Pro-
spectus, it may incur additional expenses in excess of this
estimated amount.
The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including certain
liabilities under the Securities Act, or to contribute to pay-
ments which the Selling Stockholders may be required to make in
respect thereof.
LEGAL OPINIONS
The validity of the shares of Common Stock to which
this Prospectus relates has been passed upon for the Company by
Cahill Gordon & Reindel, a partnership including a professional
corporation, located in New York, New York. Opinions regarding
certain legal matters with respect to patents and patent law
have been provided to the Company by Marshall, O'Toole,
Gerstein, Murray & Borun, located in Chicago, Illinois.
<PAGE>
-28-
EXPERTS
The financial statements of XOMA incorporated by ref-
erence in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said
report.
<PAGE>
======================================== ===================================
No dealer, salesman or other per-
son has been authorized to give
any information or to make representa-
tions other than those contained in
this Prospectus, and, if given or 3,012,122 Shares
made, such information or representa-
tions must not be relied upon as having XOMA Corporation
been authorized by the Company or the
Selling Stockholders. Neither the Common Stock
delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create an implication
that the information herein is correct
as of any time subsequent to its date. __________
This Prospectus does not constitute an
offer or solicitation by anyone in any PROSPECTUS
jurisdiction in which such offer __________
or solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so
or to anyone to whom it is unlawful to
make such offer or solicitation.
__________________
TABLE OF CONTENTS
Page
Available Information...........
Information Incorporated
by Reference..................
Risk Factors....................
The Company.....................
Price Range of Common Stock
and Dividend Information......
Selling Stockholders.............
Description of Equity
Securities....................
Plan of Distribution............
Legal Opinions..................
Experts.........................
, 1996
===================================== ===================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offer-
ing are as follows:
Amount
to be Paid
----------
SEC registration fee ...................... $ 4,155
Nasdaq fee ................................ 17,500
Legal fees and expenses (including
Blue Sky fees and expenses) ............. 75,000
Accounting fees and expenses .............. 3,000
Miscellaneous ............................. 10,345
--------
Total ..................................... $ 110,000
========
Item 15. Indemnification of Directors and Officers
The Delaware General Corporation Law provides for
indemnification of directors, officers, employees and agents,
subject to certain limitations (Del. Code, Title 8 Sec. 145).
Article VII of the Company's Bylaws provides that expenses
incurred by an officer or director of the Company in defending
a civil or criminal action, suit or proceeding shall be paid by
the Company in advance of a final disposition of the action,
suit or proceeding upon receipt by the Company of an undertak-
ing by the officer or director that he or she will repay such
expenses if it is ultimately determined that he or she is not
entitled to indemnification under the Delaware General Corpora-
tion Law.
As permitted by Section 102 of the Delaware General
Corporation Law, the Company's Certificate of Incorporation
contains provisions eliminating a director's personal liability
for monetary damages to the Company and its stockholders aris-
ing from a breach of a director's fiduciary duty except for
liability under Section 174 of the Delaware General Corporation
Law or liability for any breach of the director's duty of loy-
alty to the Company or its stockholders, for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law or for any transaction by which the
director derived an improper personal benefit. The Company has
also entered into indemnification agreements with its directors
II-1
<PAGE>
and officers providing for indemnification and advancements of
expenses to the fullest extent permitted under Delaware law.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit
Number
-------
4.1 Restated Certificate of Incorporation(1)
4.2 Amended and Restated By-Laws(2)
4.3 Stockholder Rights Agreement dated October 27,
1993 by and between the Company and First Inter-
state Bank of California as Rights Agent(3)
4.4 Certificate of Designations of Non-Voting Cumula-
tive Convertible Preferred Stock, Series D(4)
4.5 Certificate of Designation of Convertible Pre-
ferred Stock, Series E
5.1 Opinion of Cahill Gordon & Reindel(4)
10.1 Preferred Stock Subscription Agreement, dated as
of March 27, 1996, by and between the Company and
Genesee Fund Limited - Portfolio B (4)
10.2 Subscription Agreement, dated as of March 27,
1996, by and between the Company and GFL Perfor-
mance Fund Limited (4)
10.3 Registration Rights Agreement, dated as of
March 29, 1996, by and between the Company and
Genesee Fund Limited - Portfolio B (4)
10.4 Registration Rights Agreement, dated as of
March 29, 1996, by and between the Company and
GFL Performance Limited (4)
10.5 Option Agreement, dated as of March 27, 1996,
between the Company and Michael Arnouse (4)
24.1 Consent of Arthur Andersen LLP
24.2 Consent of Marshall, O'Toole, Gerstein, Murray &
Borun
II-2
<PAGE>
24.3 Consent of Cahill Gordon & Reindel (4)
25.1 Power of Attorney (4)
____________________
(1) Incorporated by reference to the Company's Registration
Statement on Form S-3 (File No. 33-59379).
(2) Incorporated by reference to the Company's Registration
Statement on Form S-3 (File No. 33-74982).
(3) Incorporated by reference to the Company's Current Report
on Form 8-K dated October 27, 1993.
(4) Previously filed.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this regis-
tration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, repre-
sent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii)
do not apply if the registration statement is on Form S-3 or
Form S-8, and the information required to be included in the
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any lia-
bility under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pur-
suant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Com-
mission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the regis-
trant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such direc-
tor, officer or controlling person in connection with the secu-
rities being registered, the registrant will, unless in the
opinion of counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest
annual report to security holders that is incorporated by ref-
erence in the prospectus and furnished pursuant to and meeting
the requirements of Rule 14a-3 or Rule 14c-3 under the Securi-
ties Exchange Act of 1934; and, where interim financial infor-
mation required to be presented by Article 3 of Regulation S-X
II-4
<PAGE>
is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incor-
porated by reference in the prospectus to provide such interim
financial information.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Berkeley, State of California, on May 24, 1996.
XOMA CORPORATION
By: /s/ John L. Castello
-------------------------
John L. Castello
Chairman of the Board,
President and
Chief Executive Officer
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons on behalf of the registrant and in the capac-
ities and on the dates indicated.
Signature Title Date
- - --------- ----- ----
/s/ John L. Castello Chairman of the Board,
- - ---------------------- President and Chief
John L. Castello Executive Officer
(Principal Executive
Officer) May 24, 1996
/s/ Patrick J. Scannon Chief Scientific and
- - ---------------------- Medical Officer and
Patrick J. Scannon Director May 24, 1996
/s/ Peter B. Davis Vice President,
- - ---------------------- Finance and Chief
Peter B. David Financial Officer
(Principal Financial
and Accounting Officer) May 24, 1996
* Director May 24, 1996
- - ----------------------
James G. Andress
* Director May 24, 1996
- - -----------------------
William K. Bowes, Jr.
* Director May 24, 1996
- - -----------------------
Arthur Kornberg
* Director May 24, 1996
- - -----------------------
Steven C. Mendell
* Director May 24, 1996
- - -----------------------
W. Denman Van Ness
* Director May 24, 1996
- - -----------------------
Gary Wilcox
II-7
<PAGE>
<PAGE>
*By:/s/ Christopher J. Margolin
---------------------------
Christopher J. Margolin
Attorney-in-Fact
II-8
<PAGE>
EXHIBIT INDEX
Exhibit
Number Page
- - ------- ----
4.1 Restated Certificate of Incorporation(1)
4.2 Amended and Restated By-Laws(2)
4.3 Stockholder Rights Agreement dated Octo-
ber 27, 1993 by and between the Company
and First Interstate Bank of California
as Rights Agent(3)
4.4 Certificate of Designations of
Non-Voting Cumulative Convertible Pre-
ferred Stock, Series D (4)
4.5 Certificate of Designation of Convert-
ible Preferred Stock, Series E
5.1 Opinion of Cahill Gordon & Reindel (4)
10.1 Preferred Stock Subscription Agreement,
dated as of March 27, 1996, by and
between the Company and Genesee Fund
Limited - Portfolio B (4)
10.2 Subscription Agreement, dated as of
March 27, 1996, by and between the Com-
pany and GFL Performance Fund Limited
(4)
10.3 Registration Rights Agreement, dated as
of March 29, 1996, by and between the
Company and Genesee Fund Limited - Port-
folio B (4)
10.4 Registration Rights Agreement, dated as
of March 29, 1996, by and between the
Company and GFL Performance Limited (4)
10.5 Option Agreement, dated as of March 27,
1996, between the Company and Michael
Arnouse (4)
24.1 Consent of Arthur Andersen LLP
24.2 Consent of Marshall, O'Toole, Gerstein,
Murray & Borun
24.3 Consent of Cahill Gordon & Reindel (4)
<PAGE>
Exhibit
Number Page
- - ------- ----
25.1 Power of Attorney (4)
- - -------------------------
(1) Incorporated by reference to the Company's Registration
Statement on Form S-3 (File No. 33-59379).
(2) Incorporated by reference to the Company's Registration
Statement on Form S-3 (File No. 33-74982).
(3) Incorporated by reference to the Company's Current Report
on Form 8-K dated October 27, 1993.
(4) Previously filed.
Exhibit 4.5
CERTIFICATE OF DESIGNATION
OF
CONVERTIBLE PREFERRED STOCK, SERIES E
OF
XOMA CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
XOMA CORPORATION, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Corporation by the Restated Certificate of Incorporation of the Corporation, as
amended, and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors duly adopted
the following resolution on April 18, 1996, which resolution remains in full
force and effect as of the date hereof:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation in accordance with the
provisions of its Amended and Restated Certificate of Incorporation,
the Board of Directors hereby creates a series of Preferred Stock, par
value $.05 per share, of the Corporation and hereby states the
designation and number of shares, and fixes the relative powers,
preferences, rights, qualifications, limitations and restrictions
thereof (in addition to the provisions set forth in the Restated
Certificate of Incorporation of the Corporation, as amended, which are
applicable to the Preferred Stock of all classes and series), as
follows:
Convertible Preferred Stock, Series E:
Section A. Designation and Amount. Seven Thousand Five Hundred
(7,500) shares of Preferred Stock, $.05 par value, are designated
"Convertible Preferred Stock, Series E" with the powers, preferences,
rights, qualifications, limitations and restrictions specified herein
(the "Series E Preferred Stock"). Such number of shares may be
increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series
E Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon
<PAGE>
<PAGE>
the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities (including indebtedness)
issued by the Corporation convertible into Series E Preferred Stock.
Section B. Dividends. The Corporation shall not be required to
pay, and the holders of the Series E Preferred Stock shall not be
entitled to receive, any dividends on shares of the Series E Preferred
Stock.
Section C. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, before any payment or distribution shall be
made to the holders of shares of the common stock of the Corporation,
the holders of shares of Series E Preferred Stock shall be entitled to
receive $10,000.00 per share of Series E Preferred Stock then held by
such holders, plus an amount equal to declared and unpaid dividends
and distributions thereon. After payment of the full liquidation
preference of the Series E Preferred Stock set forth in the preceding
sentence, the holders of the Series E Preferred Stock shall not be
entitled to any further payments or distribution from the assets of
the Corporation.
Section D. Voting Rights. The holders of shares of Series E
Preferred Stock shall not have any voting rights, except as required
under the General Corporation Law of the State of Delaware.
Section E. Redemption.
1. General. The Corporation at its option, in accordance with the
terms and provisions of this Section 5, may, at any time and from time
to time, redeem any or all shares of Series E Preferred Stock at a
redemption price per share equal to a cash amount determined by
multiplying the Conversion Price (as defined below) by the number of
shares of Common Stock into which each such share of Series E
Preferred Stock would be convertible pursuant to the provisions of
Section 6 hereof. If fewer than all the outstanding shares of Series E
Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected pro rata as nearly as practicable or by lot, or by such other
method as the Board of Directors of the Corporation may determine to
be fair and appropriate.
2. Notice of Redemption. The Corporation will provide notice of
any redemption of shares of Series E Preferred Stock to the holders of
record of the Series E Preferred Stock to be redeemed not less than
five (5) nor more than sixty (60) days prior to the date fixed for
such redemption. Such notice shall be provided by first-class mail,
postage prepaid, to each holder of record of the Series E Preferred
Stock to be redeemed, at such holder's address as it appears on the
stock transfer books of the Corporation. Each such notice shall state,
as appropriate, the following:
a. the redemption date;
b. the number of shares of Series E Preferred Stock to be
redeemed and, if fewer than all the shares held by any holder are
to be redeemed, the number of such shares to be redeemed from
such holder;
-2-
<PAGE>
<PAGE>
c. the redemption price;
d. the place or places where certificates for such shares
are to be surrendered for redemption;
e. the then effective Conversion Price (as determined under
Section 6); and
f. that the right of holders to convert shares of Series E
Preferred Stock to be redeemed will terminate at the close of
business on the business day next preceding the date fixed for
redemption (unless the Corporation shall default in the payment
of the redemption price).
Any notice that is mailed as set forth above shall be
conclusively presumed to have been duly given, whether or not the
holder of shares of Series E Preferred Stock receives such notice, and
failure to give such notice by mail, or any defect in such notice, to
the holders of any shares designated for redemption shall not affect
the validity of the proceedings for the redemption of any other shares
of Series E Preferred Stock.
3. Mechanics of Redemption. Upon surrender in accordance with the
aforesaid notice of the certificate for any shares so redeemed (duly
endorsed or accompanied by appropriate instruments of transfer), the
holders of record of such shares shall be entitled to receive the
redemption price, without interest. In case fewer than all the shares
represented by such certificate are redeemed, a new certificate
representing the unredeemed shares shall be issued without cost to the
holder thereof. Upon surrender of any shares so redeemed in accordance
with this Section 5(C), the Corporation shall pay the full redemption
amounts with respect to shares as provided herein.
4. Rights After Redemption. Notwithstanding that any certificates
for shares to be redeemed have not been surrendered in accordance with
Section 5(C), from and after the date of redemption designated in the
notice of redemption (i) the shares represented thereby shall be
deemed to be no longer outstanding, and (ii) all rights of the holders
of such shares of Series E Preferred Stock shall cease and terminate,
except only the right to receive the full redemption amounts as
provided herein without interest.
Section F. Conversion.
1. Right to Convert. Each share of Series E Preferred Stock shall
be convertible, at the option of the holder thereof, into that number
of shares of the Common Stock, par value $.0005 per share, of the
Corporation (herein, the "Common Stock") as determined by dividing
$10,000.00 by the Conversion Price (determined as provided below). The
"Conversion Price" for any shares of Series E Preferred Stock issued
in connection with a conversion pursuant to Section 4(a) of the
Convertible Subordinated Note Agreement, dated as of April 22, 1996,
between the Corporation and Genentech, Inc. (the "Note Agreement")
shall be an amount per share equal to the Current Market Price (as
defined below) of the Common Stock determined as of the first
occurring Conversion Date (as such term is defined in Section 4(a) of
the Note Agreement) (herein, the "Initial Issue Date"). The
"Conversion Price" for any shares of Series E Preferred Stock issued
in connection with a prepayment pursuant to Section
-3-
<PAGE>
<PAGE>
3(d) of the Note Agreement shall be an amount per share equal to the
Current Market Price of the Common Stock determined as of the date of
the issuance of such shares (herein, the "Prepayment Issue Date"). The
number of shares of Common Stock into which a share of Series E
Preferred Stock is convertible is hereinafter referred to as the
"Conversion Rate" of such series. The Conversion Price shall be
subject to adjustment from time to time after the Initial Issue Date
or applicable Prepayment Issue Date, as the case may be, as set forth
in this Section 6.
For purposes of this Section 6(A), "Current Market Price" shall
mean the average daily Closing Prices (as defined below) per share of
Common Stock for the fifteen (15) consecutive trading days immediately
prior to the Initial Issue Date or applicable Prepayment Issue Date,
as the case may be. "Closing Price" with respect to any securities on
any day shall mean the closing sale price regular way on such day or,
in case no such sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in each case on
the New York Stock Exchange, or, if such security is not listed or
admitted to trading on such Exchange, on the principal national
security exchange or quotation system on which such security is quoted
or listed or admitted to trading, or, if not quoted or listed or
admitted to trading on any national securities exchange or quotation
system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available, in such
manner as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors of the
Corporation for that purpose, or a price determined in good faith by
the Board of Directors of the Corporation or, to the extent permitted
by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive.
If any shares of Series E Preferred Stock shall be called for
redemption, the right to convert the shares designated for redemption
shall terminate at the close of business on the business day next
preceding the date fixed for redemption unless the Corporation
defaults in the payment of the redemption price. In the event of a
default in the payment of the redemption price, the right to convert
the shares designated for redemption shall terminate at the close of
business on the business day next preceding the date that such default
is cured.
The shares of Common Stock issuable upon conversion of the shares
of Series E Preferred Stock, when the same shall be issued in
accordance with the terms hereof, are hereby declared to be and shall
be fully paid and non-assessable shares of Common Stock in the hands
of the holders thereof.
2. Automatic Conversion. Each share of Series E Preferred Stock
shall automatically be converted into shares of Common Stock at its
then effective Conversion Rate immediately upon the transfer of
ownership by the initial holder to any third party which is not an
Affiliate (as such term is defined below) of such holder. For purposes
of this Certificate, the term "Affiliate" means, when used with
respect to any specified person, any other person directly or
indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, "control," when used with respect to any person, means the
power to direct the management and policies of such person, directly
or indirectly, whether through the
-4-
<PAGE>
<PAGE>
ownership of voting securities, by contract or otherwise, and the
terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
3. Mechanics of Conversion. Each holder of Series E Preferred
Stock who desires to convert the same into shares of Common Stock
pursuant to this Section 6 shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation
or any transfer agent for the Series E Preferred Stock, and shall give
written notice to the Corporation at such office that such holder
elects to convert the same. Such notice shall state the number of
shares of Series E Preferred Stock being converted. Thereupon, the
Corporation shall promptly issue and deliver at such office to such
holder a certificate or certificates for the number of shares of
Common Stock to which such holder is entitled and shall promptly pay
in cash or, to the extent sufficient funds are not then legally
available therefor, in Common Stock (at the fair market value of the
Common Stock as of the date of such conversion as determined by the
Board of Directors of this Corporation), any declared and unpaid
dividends on the shares of Series E Preferred Stock being converted.
Such conversion shall be deemed to have been made at the close of
business on the date of such surrender of the certificates
representing the shares of Series E Preferred Stock to be converted,
and the person entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.
4. Adjustment for Subdivisions and Combinations. If the
Corporation shall at any time or from time to time after the Initial
Issue Date or applicable Prepayment Issue Date, as the case may be,
effect a subdivision of the outstanding Common Stock, the Conversion
Price in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Corporation shall at any
time or from time to time after the Initial Issue Date or applicable
Prepayment Issue Date, as the case may be, combine the outstanding
shares of Common Stock into a smaller number of shares, the Conversion
Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 6(D)
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
5. Adjustment for Certain Dividends and Distributions. If the
Corporation at any time or from time to time after the Initial Issue
Date or applicable Prepayment Issue Date, as the case may be, makes,
or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, in each such event (without
duplication for related events) the Conversion Price that is then in
effect shall be decreased as of the time of such issuance or, in the
event such record date is fixed, as of the close of business on such
record date, by multiplying the Conversion Price then in effect by a
fraction (1) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and (2)
the denominator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend
is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on such record date and
thereafter the
-5-
<PAGE>
<PAGE>
Conversion Price shall be adjusted pursuant to this Section 6(E) to
reflect the actual payment of such dividend or distribution.
6. Adjustment for Other Dividends and Distributions. If the
Corporation at any time or from time to time after the Initial Issue
Date or applicable Prepayment Issue Date, as the case may be, makes,
or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, in
each such event provision shall be made so that the holders of the
Series E Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon,
the amount of other securities of the Corporation which they would
have received had their Series E Preferred Stock been converted into
Common Stock on the date of such event and had they thereafter, during
the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during
such period, subject to all other adjustments called for during such
period under this Section 6 with respect to the rights of the holders
of the Series E Preferred Stock or with respect to such other
securities by their terms.
7. Adjustment for Recapitalizations, etc. If at any time or from
time to time after the Initial Issue Date or applicable Prepayment
Issue Date, as the case may be, the Common Stock issuable upon the
conversion of the Series E Preferred Stock is changed into the same or
a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 6 or in Section 3), in any such event each
holder of Series E Preferred Stock shall have the right thereafter to
convert such stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of
shares of Common Stock into which such shares of Series E Preferred
Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further
adjustment as provided herein or with respect to such other securities
or property by the terms thereof.
8. Compliance with Laws. Notwithstanding any provision of this
Section 6 to the contrary, no conversion of any share of Series E
Preferred Stock shall be effective unless such conversion is permitted
under then applicable laws.
Section G. Reacquired Shares. Any shares of Series E Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the
Amended and Restated Certificate of Incorporation, or in any other
Certificate of Designation creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section H. Exclusion of Other Rights. Except as may otherwise be
required by the General Corporation Law of the State of Delaware,
shares of the Series E Preferred Stock shall not have any preferences
or relative, participating, optional or other
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special rights, other than those specifically set forth in this
Certificate of Designation (as such Certificate of Designation may be
amended from time to time) and in the Corporation's Amended and
Restated Certificate of Incorporation, as amended. No shares of Series
E Preferred Stock shall have any preemptive or subscription rights
whatsoever as to any securities of the Corporation.
Section I. Notice. All notices and other communications provided
for or permitted to be given to the Corporation hereunder shall be
made by hand delivery, next day air courier or certified first-class
mail to the Corporation at its principal executive office (currently
located on the date of the adoption of these resolutions at 2910
Seventh Street, Berkeley, California 94710, Attention: General
Counsel).
Section J. Transferability; Registration; Rights of Transferees.
1. Transferability. The Series E Preferred Stock may not be sold,
assigned, conveyed, transferred, pledged, hypothecated or otherwise
disposed of other than as set forth in, and in accordance with, that
certain Common Stock and Convertible Note Purchase Agreement, dated as
of April 22, 1996, between the Corporation and Genentech, Inc.
2. Transfer Mechanics; Registration. The Series E Preferred Stock
certificate representing shares of Series E Preferred Stock to be
transferred shall be duly endorsed by the transferring holder or by
his duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or authority to transfer. In
all cases of a transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be
deposited and remain with the Corporation. In case of a transfer by
executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and
may be required to be deposited and to remain with the Corporation in
its discretion. Upon any registration of a transfer, the Corporation
shall deliver new Series E Preferred Stock certificates to the persons
entitled to the shares of Series E Preferred Stock represented
thereby. The Series E Preferred Stock certificates may be exchanged at
the option of the holder thereof, when surrendered at the offices of
the Corporation, for other Series E Preferred Stock certificates of
different denominations, of like tenor and representing in the
aggregate a like number of shares of Series E Preferred Stock. Any
Series E Preferred Stock certificate so surrendered shall be promptly
canceled by the Corporation and retired. Each Series E Preferred Stock
certificate issued in exchange as provided above shall be
substantially in the form of the Series E Preferred Stock certificate
being exchanged and shall be subject to all of the terms and
provisions hereof.
3. Required Legend(s). Each of the Series E Preferred Stock
certificates shall contain the legend(s) required by that certain
Common Stock and Convertible Note Purchase Agreement, dated as of
April 22, 1996, between the Corporation and Genentech, Inc.
Section K. Amendments. The Certificate of Designation filed
pursuant hereto may be amended without notice to or the consent of any
holder of Series E Preferred Stock to cure any ambiguity, defect or
inconsistency, provided that such amendment does not adversely affect
the rights of any holder of Series E Preferred Stock. Any provisions
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of the Certificate of Designation filed pursuant hereto may be amended
by the Corporation with the written consent of holders of Series E
Preferred Stock representing a majority of the outstanding shares of
Series E Preferred Stock.
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IN WITNESS WHEREOF, the undersigned have executed this certificate as of
April 22, 1996.
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Clarence L. Dellio
Senior Vice President, Operations
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Christopher J. Margolin
Vice President, General Counsel
and Secretary
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EXHIBIT 24.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation by reference in this Registration State-
ment of our report dated February 14, 1996 included in XOMA
Corporation's Form 10-K for the year ended December 31, 1995,
and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
San Francisco, California
May 13, 1996
EXHIBIT 24.2
[LETTERHEAD OF MARSHALL, O'TOOLE, GERSTEIN, MURRAY & BORUN]
May 13, 1996
Board of Directors
XOMA Corporation
2910 Seventh Street
Berkeley, CA 94710
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
Marshall, O'Toole, Gerstein, Murray & Borun hereby
consents to the disclosure of our relationship as patent coun-
sel to XOMA Corporation (the "Company") in the Company's Regis-
tration Statement on Form S-3 (the "Registration Statement"),
and in particular the references to us under the headings "Risk
Factors - No Assurance of Patent Protection/Avoidance of Patent
Infringement" and "Legal Opinions," and to the filing of this
consent as an exhibit to the Registration Statement.
Very truly yours,
Marshall, O'Toole, Gerstein
Murray & Borun
