Prospectus Supplement dated January 7, 1999
to Prospectus dated November 13, 1998
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XOMA Ltd.
Common Shares
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The Company: The Common Shares:
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o We are a biopharmaceutical company developing o As a result of our recent reorganization,
products to treat infections, infectious the shares of Common Stock discussed in the
complications of traumatic injury and surgery, and attached Prospectus are now Common Shares of
immunologic and inflammatory disorders. our Bermuda company. The Common Shares are
described in the following pages of this
o We can be reached at: Prospectus Supplement.
XOMA Ltd. o The Common Shares to which this Prospectus
2910 Seventh Street Supplement and the attached Prospectus relate
Berkeley, California 94710 were or will be issued upon conversion or
(510) 644-1170 exercise of:
o We recently completed a corporate reorganization o Series C Preference Shares,
whereby we changed our legal domicile from Delaware
to Bermuda. o 1997 Warrants, or
o 1998 Warrants
The Offering:
(each as defined herein), which are also
o This is an offering of our Common Shares, par described in the following pages of this
value US$.0005 per share. Prospectus Supplement.
o All of the Common Shares offered hereby are o Our Common Shares are listed on the Nasdaq
being offered by certain of our shareholders. National Market under the symbol "XOMA." The
last reported sale price for the Common Shares
o We will not receive any of the proceeds from the on January 6, 1999 was US$4.00 per share.
sale of Common Shares by our shareholders.
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This investment involves a high degree of risk. Consider carefully the Risk
Factors beginning on page 5 of the attached Prospectus before you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus Supplement or the attached Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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DESCRIPTION OF AUTHORIZED SHARES
The following statements with respect to the share capital of XOMA Ltd.
("XOMA") are subject to the detailed provisions of XOMA's Memorandum of
Continuance and Bye-Laws. These statements do not purport to be complete and,
while XOMA believes the descriptions of the material provisions of the
Memorandum of Continuance and the Bye-Laws are accurate statements with respect
to such material provisions, such statements are subject to the detailed
provisions in the Memorandum of Continuance and the Bye-Laws, to which reference
is hereby made for a full description of such provisions.
COMMON SHARES
General
The Memorandum of Continuance and the Bye-Laws provide that XOMA's
authorized common share capital is limited to 70,000,000 Common Shares, par
value U.S. $.0005 per share (the "Common Shares").
Voting
The holders of Common Shares are entitled to one vote per share. All
actions submitted to a vote of shareholders shall be voted on by the holders of
Common Shares, voting together as a single class (together with the Series A
Preference Shares (as defined below), if any), except as provided by law.
Dividends
Holders of Common Shares are entitled to participate, on a share for share
basis, with the holders of any other common shares outstanding, with respect to
any dividends declared by the Board of Directors of XOMA, subject to the rights
of holders of preference shares. Dividends will generally be payable in U.S.
dollars. XOMA has not paid cash dividends on the Common Shares, currently does
not intend to pay dividends and intends to retain any earnings for use in its
business and the financing of its capital requirements for the foreseeable
future. The payment of any future cash dividends on the Common Shares is
necessarily dependent upon its earnings and financial needs of XOMA, along with
applicable legal and contractual restrictions.
Liquidation
On a liquidation of XOMA, holders of Common Shares will be entitled to
receive any assets remaining after the payment of XOMA's debts and the expenses
of the liquidation, subject to such special rights as may be attached to any
other class of shares.
Redemption
The Common Shares are not subject to redemption either by XOMA or the
holder thereof.
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Variation Of Rights
Under XOMA's Bye-Laws, if at any time XOMA's share capital is divided into
different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of the issue of the shares of that class) may be varied
with the consent in writing of the holders of a majority of the issued shares of
that class either in writing or with the sanction of a resolution passed at a
separate general meeting.
PREFERENCE SHARES
General
Under the Memorandum of Continuance and the Bye-Laws, XOMA has the
authority to issue 1,000,000 preference shares, par value U.S. $.05 per share.
Of these, 650,000 preference shares have been designated Series A Cumulative
Preference Shares (the "Series A Preference Shares"), 7,500 preference shares
have been designated Convertible Preference Shares, Series B (the "Series B
Preference Shares") and 1,250 preference shares have been designated Convertible
Preference Shares, Series C (the "Series C Preference Shares"). Under the
Bye-Laws, subject to the special rights attaching to any class of shares of XOMA
not being varied and to any resolution approved by the holders of 75% of the
issued shares entitled to vote in respect thereof, the Board of Directors of
XOMA may establish one or more classes or series of preference shares having the
number of shares, designations, relative voting rights, dividend rates,
liquidation and other rights, preferences and limitations that the Board of
Directors fixes without any shareholder approval.
Preference Shares Purchase Rights
Pursuant to XOMA's Amended and Restated Shareholder Rights Agreement, XOMA
issued one Preference Share Purchase Right (a "Right") for each outstanding
Common Share. Each Right entitles the holder to purchase from XOMA a unit
consisting of one one-hundredth of a share (a "Unit") of Series A Preference
Shares at a cash exercise price of $30.00 per Unit, subject to adjustment.
The Rights are attached to all outstanding Common Shares, including the
Common Shares offered hereby. The Rights will separate from the Common Shares
and will be distributed to holders of Common Shares upon the earliest of (i) ten
business days after the first public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the Common Shares then outstanding (the date of said
announcement being referred to as the "Share Acquisition Date"), (ii) ten
business days following the commencement of a tender offer or exchange offer
that would result in a person or group of persons becoming an Acquiring Person
or (iii) the declaration by the Board of Directors of XOMA that any person is an
"Adverse Person" (the earliest of such dates, the "Distribution Date").
The Board of Directors of XOMA 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 Common Shares and a determination that
(a) such beneficial ownership by such person is intended to cause or is
reasonably likely to cause XOMA to repurchase the Common Shares
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owned by such Person or to cause XOMA to enter into other transactions not in
the best long-term interests of XOMA or (b) such beneficial ownership is
reasonably likely to cause a material adverse impact on the business or
prospects of XOMA. The Rights are not exercisable until the Distribution Date
and will expire on December 31, 2002, unless previously redeemed or exchanged by
XOMA.
In the event that a person becomes an Acquiring Person or the Board of
Directors of XOMA 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 Preference Shares having a market
value of two times the exercise price of the Rights. If at any time following
the Share Acquisition Date, (i) XOMA consolidates with, or merges or amalgamates
with and into, any person, and XOMA is not the surviving corporation; (ii) any
person consolidates or amalgamates with XOMA, or merges or amalgamates with and
into XOMA and XOMA is the continuing or surviving corporation of such
transaction and, in connection with such transaction, all or part of the Common
Shares are changed into or exchanged for other securities of any other person or
cash or any other property, or (iii) 50% or more of XOMA's assets are sold or
otherwise transferred, provision shall be made so that each holder of a Right
shall thereafter have the right (a "Merger Right") to receive, upon exercise,
common shares of the acquiring company having a market value equal to two times
the exercise price of the Rights. Rights that are beneficially owned by an
Acquiring or Adverse Person may, under certain circumstances, become null and
void.
At any time after a person becomes an Acquiring Person or the Board of
Directors of XOMA determines that a person is an Adverse Person, the Board of
Directors of XOMA may exchange all or any part of the then outstanding and
exercisable Rights for Common Shares or Units of Series A Preference Shares at
an exchange ratio of one Common Share or one Unit of Series A Preference Shares
per Right. Notwithstanding the foregoing, the Board of Directors of XOMA
generally will not be empowered to effect such exchange at any time after any
person becomes the beneficial owner of 50% or more of the Common Shares then
outstanding.
The Rights may be redeemed in whole, but not in part, at a price of U.S.
$.001 per Right by the Board of Directors of XOMA at any time prior to the date
on which a person is declared to be an Adverse Person, the tenth business day
after the Share Acquisition Date, the occurrence of an event giving rise to the
Merger Right or the expiration date of the Rights Agreement.
The Series A Preference Shares
There are no Series A Preference Shares outstanding. Pursuant to the rights
of the Series A Preference Shares, subject to the rights of holders of any
shares of any series of preference shares ranking prior and superior (such as
the Series C Preference Shares), the holders of Series A Preference Shares are
entitled to receive, when, as and if declared by the Board of Directors of XOMA
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 Preference
Shares, 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 Common Shares, declared on the Common Shares
since the immediately preceding Dividend Pay-
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ment Date, or, with respect to the first Dividend Payment Date, since the first
issuance of Series A Preference Shares.
In addition to any other voting rights required by law, holders of Series A
Preference Shares shall have the right to vote on all matters submitted to a
vote of shareholders of XOMA with each share of Series A Preference Shares
entitled to 100 votes. Except as otherwise provided by law, holders of Series A
Preference Shares and holders of Common Shares shall vote together as one class
on all matters submitted to a vote of shareholders of XOMA.
Unless otherwise provided in the rights attaching to a subsequently
designated series of preference shares of XOMA, the Series A Preference Shares
shall rank junior to any other series of preference shares as to the payment of
dividends and distribution of assets on liquidation, dissolution or winding-up
and shall rank senior to the Common Shares. Upon any liquidation, dissolution or
winding-up of XOMA, no distributions shall be made to holders of shares ranking
junior to the Series A Preference Shares unless, prior thereto, the holders of
Series A Preference Shares shall have received an amount equal to accrued and
unpaid dividends and distributions, whether or not declared, to the date of such
payment, plus an amount equal to the greater of (1) $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 Shares or to the holders of shares
ranking on parity with the Series A Preference Shares, except distributions made
ratably on the Series A Preference Shares and all other such parity shares in
proportion to the total amount to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding-up.
If XOMA shall enter into any consolidation, amalgamation, merger,
combination or other transaction in which Common Shares are exchanged for or
changed into cash, other securities and/or any other property, then any Series A
Preference Shares 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 Common Share is changed or exchanged.
The Series A Preference Shares shall not be redeemable.
The Series B Preference Shares
There are no Series B Preference Shares outstanding. The 7,500 Series B
Preference Shares have been designated for issuance upon conversion of the
convertible subordinated loans to XOMA made and to be made by Genentech in
connection with the funding of XOMA's development costs for hull24. Such loans
are and will be convertible into Series B Preference Shares upon the occurrence
of certain events relating to certain regulatory approvals, payment defaults,
prepayments and other circumstances. Pursuant to the rights of the Series B
Preference Shares, the holders of Series B Preference Shares will not be
entitled to receive any dividends on the Series B Preference Shares.
The Series B Preference Shares will rank senior with respect to rights on
liquidation, winding-up and dissolution of XOMA to all classes of Common Shares.
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
XOMA, holders of Series B Preference
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Shares will be entitled to receive $10,000 per share of Series B Preference
Shares before any distribution is made on the Common Shares. The holders of
Series B Preference Shares will have no voting rights, except as required under
Bermuda law.
The holders of Series B Preference Shares will have the right to convert
Series B Preference Shares into Common Shares at a conversion price equal to the
current market price of the Common Shares (determined as provided below). The
current market price will be determined (a) for Series B Preference Shares
issued in connection with a conversion of one or more of the convertible
subordinated loans upon certain regulatory approvals, payment defaults or in
certain other circumstances, as of the first date on which such a conversion
occurs, and (b) for Series B Preference Shares issued in connection with certain
prepayments of one or more of the convertible subordinated loans or a conversion
thereof in certain other circumstances, as of the date of the issuance of such
Series B Preference Shares.
The Series B Preference Shares will be automatically converted into Common
Shares 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.
XOMA will have the right, at any time and from time to time, to redeem any
or all Series B Preference Shares for cash in an amount equal to the conversion
price multiplied by the number of Common Shares into which each such share of
Series B Preference Shares would then be convertible.
The Series C Preference Shares
As of January 1, 1999, 644 Series C Preference Shares were outstanding.
Pursuant to the rights of the Series C Preference Shares, the holders thereof
are entitled to receive, when and as declared by the Board of Directors of XOMA
out of funds legally available therefor, cumulative dividends at a rate per
share (as a percentage of the stated value per share) equal to 5% per annum.
Dividends are payable, at the option of XOMA, in cash or Common Shares (subject
to certain restrictions thereon). In addition, XOMA may elect not to declare or
make payment of any dividend, in which event the accrued and unpaid dividends
shall be calculated and paid at the time of conversion, as described below.
The Series C Preference Shares rank senior with respect to rights on
liquidation, dissolution or winding-up of XOMA to the Common Shares. Upon any
voluntary or involuntary liquidation, dissolution or winding-up of XOMA, holders
of Series C Preference Shares will be entitled to receive U.S. $10,000 per
share, plus accrued but unpaid dividends, before any distribution or payment is
made on the Common Shares or any preference shares of XOMA ranking junior as to
liquidation rights to the Series C Preference Shares. Except as may be required
by law and except with respect to certain actions which may adversely affect the
holders of Series C Preference Shares, the holders of Series C Preference Shares
are not entitled to vote on any matter submitted to a vote of shareholders of
XOMA.
The holders of Series C Preference Shares have the right to convert Series
C Preference Shares into Common Shares at a conversion price equal to 88% of the
average per share mar-
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ket price of the Common Shares for the five (5) trading days immediately
preceding the date of conversion, provided that the current holders of the
Series C Preference Shares have agreed that in no event shall any such holder be
entitled to convert any Series C Preference Shares (or exercise any 1998
Warrants (as defined below)) to the extent the issuance of Common Shares upon a
proposed conversion (or exercise) would result in such holder beneficially
owning more than 4.999% of the outstanding Common Shares, absent certain
defaults by XOMA; and provided, further, that in the event that on any
conversion date the conversion of all the outstanding Series C Preference Shares
upon surrender thereof, together with all Common Shares previously issued upon
conversion of Series C Preference Shares and the Convertible Preferred Stock,
Series G and Convertible Preferred Stock, Series H of XOMA's Delaware
predecessor and in respect of payment of dividends thereon, would require the
issuance of a number of Common Shares in excess of 20% of the number of such
shares outstanding on June 26, 1998, XOMA shall, at its option, either redeem
all of such holder's shares of the Series C Preference Shares not convertible by
reason of the limitation described in this proviso at a redemption price per
share based on the five day trailing average market price at the time of
conversion or at the time of redemption, whichever is greater, or, after
obtaining shareholder approval, convert such Series C Preference Shares into
Common Shares; provided, that, if XOMA elects to seek shareholder approval, the
holders of a majority of the outstanding Series C Preference Shares may request,
in lieu of such approval, that XOMA redeem the Series C Preference Shares as set
forth above. In addition, subject to the limitation described in the second
proviso of the preceding sentence, XOMA has the right, so long as it is in
compliance with its obligations to the holders of the Series C Preference Shares
and the related registration statement is then effective, exercisable at any
time on or after June 26, 2001, to require the holders thereof to convert all or
a portion of their Series C Preference Shares into Common Shares at the then
applicable conversion price.
The holders of the Series C Preference Shares will be entitled to redeem
their Series C Preference Shares at the redemption price described in the
preceding paragraph if the Common Shares are no longer listed for trading on
Nasdaq or any other principal market or exchange for such shares (other than as
a result of the suspension of trading in securities generally or temporarily
pending release of material information) for five trading days in the aggregate.
WARRANTS
XOMA's Delaware predecessor issued common stock purchase warrants (the
"1996 Warrants") in September 1996. Each of the 54,870 unexpired 1996 Warrants
outstanding entitles the holder thereof to purchase one Common Share, subject to
anti-dilution adjustments. A holder may exercise the 1996 Warrants at an
exercise price of $7.29 per share on or before September 24, 1999.
XOMA's Delaware predecessor issued 485,879 common stock purchase warrants
(the "1997 Warrants") in August 1997. Each 1997 Warrant outstanding entitles the
holder thereof to purchase one Common Share, subject to anti-dilution
adjustments. A holder may exercise the 1997 Warrants at an exercise price of
$10.00 per share on or before August 14, 2000.
XOMA's Delaware predecessor issued 618,681 common stock purchase warrants
(the "1998 Warrants") on June 26, 1998. Each 1998 Warrant outstanding entitles
the holder thereof
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to purchase one Common Share, subject to anti-dilution adjustments. A holder may
exercise the 1998 Warrants at an exercise price of $7.00 per share on or before
June 26, 2001.
XOMA's Delaware predecessor issued 250,000 common stock purchase warrants
(the "Incyte Warrants") in July 1998. Each Incyte Warrant outstanding entitles
the holder thereof to purchase one Common Share, subject to anti-dilution
adjustments. A holder may exercise the Incyte Warrants at an exercise price of
$6.00 per share on or before July 9, 2008 or earlier upon the related license
becoming fully paid up.
None of the warrants described above have been registered under the
Securities Act of 1933, as amended (the "Securities Act") and none may be
transferred except pursuant to an effective registration statement under the
Securities Act or pursuant to an exception from registration thereunder.
Additionally, all of the warrants contain certain restrictions on their
transfer. XOMA is not obligated and does not intend to register the warrants
under the Securities Act.
