UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 11, 2000
XOMA LTD.
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(Exact name of registrant as specified in its charter)
BERMUDA
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(State or other jurisdiction of incorporation)
0-14710 94-2756657
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(Commission File Number) (IRS Employer Identification No.)
2910 Seventh Street, Berkeley, California 94710
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (510) 644-1170
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On February 14, 2000, XOMA Ltd. issued the announcement attached hereto as
Exhibit 1, which is incorporated herein by reference, following completion of a
private placement of 6,145,000 common shares for net proceeds of $29,188,750.
The Company entered into a subscription agreement with the investors, a copy of
which is attached hereto as Exhibit 2 and incorporated herein by reference.
Under the terms of a registration rights agreement, a copy of which is attached
hereto as Exhibit 3 and incorporated herein by reference, the Company granted
the investors registration rights for the common shares issued to them. The
Company also issued warrants to purchase an aggregate of 250,000 common shares
to Arnhold and S. Bleichroeder, Inc. and Sutro & Co. Incorporated, financial
advisors to the Company in the February 2000 private placement, and granted the
advisors registration rights for the common shares underlying the warrants
issued to them. Copies of the form of warrant and related registration rights
agreement are attached hereto as Exhibit 4 and Exhibit 5, respectively, and
incorporated herein by reference.
Item 7. Exhibits
1. Press Release dated February 14, 2000.
2. Form of Subscription Agreement dated as of February 8, 2000 by and between
XOMA Ltd. and the purchasers of Common Shares in the February 2000 private
placement
3. Form of Registration Rights Agreement dated as of February 11, 2000 by and
between XOMA Ltd. and the purchasers of Common Shares in the February 2000
private placement
4. Form of Common Share Purchase Warrant (2000 Warrants)
5. Form of Registration Rights Agreement dated as of February 11, 2000 by and
between XOMA Ltd. and the placement agents in the February 2000 private
placement
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 14, 2000 XOMA LTD.
By: /s/ Christopher J. Margolin
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Christopher J. Margolin
Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Number Description
1. Press Release dated February 14, 2000
2. Form of Subscription Agreement dated as of February 8, 2000 by and between
XOMA Ltd. and the purchasers of Common Shares in the February 2000 private
placement
3. Form of Registration Rights Agreement dated as of February 11, 2000 by and
between XOMA Ltd. and the purchasers of Common Shares in the February 2000
private placement
4. Form of Common Share Purchase Warrant (2000 Warrants)
5. Form of Registration Rights Agreement dated as of February 11, 2000 by and
between XOMA Ltd. and the placement agents in the February 2000 private
placement
XOMA CONTACTS: Ellen M. Martin
510-644-1170 or 800-BIO XOMA
Thomson IR: Juliane Snowden 212-510-9286
XOMA COMPLETES $30.7 MILLION COMMON SHARE FINANCING
Berkeley, CA - February 14, 2000 - XOMA Ltd. (Nasdaq: XOMA) today announced it
has sold 6.1 million common shares in a private placement to a number of
institutional investors for gross proceeds of $30.7 million. Arnhold and S.
Bleichroeder, Inc. and Sutro & Co. Incorporated served as placement agents for
the transaction.
"We are very pleased with the reception we received for this financing," said
Peter B. Davis, Vice President of Finance and CFO of XOMA. "We attracted
high-quality institutional investors and demand was such that we increased the
funding above our original target level. The collaboration, licensing and supply
agreements concluded in the past year with Genentech, Allergan and, most
recently, Baxter have reduced our burn rate. These relationships plus this
financing improve our financial position considerably over that of recent
years."
"This week's financing represents a significant increase in our level of
institutional investment," said Jack Castello, Chairman, President and CEO of
XOMA. "We now have approximately two years of cash on hand to support continuing
research on promising opportunities that could further enhance the value of the
company."
Financing proceeds will be used primarily to fund development of products from
XOMA's monoclonal antibody and BPI (bactericidal/permeability-increasing
protein) development platforms. Monoclonal antibody products in XOMA's research
pipeline include ING-1, an antibody that may be useful in treating a variety of
solid tumor cancers, and Genimune(TM), a targeted gelonin fusion product
candidate for treatment of immune cell cancers and autoimmune diseases. Internal
BPI development programs include Mycoprex(TM), a BPI-derived fungicidal
compound, and anti-angiogenic BPI peptide-derived compounds.
XOMA develops and manufactures biopharmaceuticals at facilities located in
Berkeley and Santa Monica, California. Medical targets include infectious
diseases, immunologic and inflammatory disorders, and cancer. The Company has
extensive experience developing monoclonal antibodies. XOMA is collaborating
with Genentech in developing the anti-CD11a humanized monoclonal antibody
product. A Phase III trial was started in patients with moderate to severe
plaque psoriasis in December 1999 and plans have been announced to perform a
Phase I/II study in kidney transplant patients. In addition to the ING-1 and
Genimune(TM) products, XOMA owns a patented method for antibody humanization,
and has developed a cell expression system for manufacturing recombinant
proteins (including antibodies) that has been licensed to more than 15
biotechnology and pharmaceutical companies worldwide.
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XOMA's primary infectious disease drug development platform is BPI
(bactericidal/permeability-increasing protein), a human protein with multiple
anti-infective properties that is part of the body's defense system against
microbial infection. BPI was discovered in white blood cells by Peter Elsbach,
MD, and Jerrold Weiss, PhD, at New York University School of Medicine (NYU).
XOMA has collaborated with NYU since 1991 to extend and apply BPI-related
research to pharmaceutical development. XOMA recently entered into a licensing
arrangement with Baxter Healthcare's Hyland Immuno Division to continue
development of the NEUPREX(R) (rBPI21) product in meningococcemia and other
anti-bacterial and anti-endotoxin indications. In 1999, XOMA completed a Phase
III trial of NEUPREX(R) in meningococcemia, a deadly systemic bacterial
infection that primarily attacks children. The Company also has an agreement
with Allergan to develop BPI/antibiotic ophthalmic anti-infective products.
For more information, visit XOMA's web site at www.xoma.com
Statements made in this press release related to the sufficiency of the
Company's cash position, timing of clinical trials, the FDA regulatory process,
collaborative relationships, other aspects of product development, or that
otherwise relate to future periods, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on assumptions that
may not prove accurate. Actual results could differ materially from those
anticipated due to certain risks inherent in the biotechnology industry and for
companies engaged in the development of new products in a regulated market.
These risks, including those related to the timing or results of pending or
future clinical trials, changes in the status of the Company's collaborative
relationships, uncertainties regarding the legal standards applicable to
biotechnology patents, and actions by the U.S. Food and Drug Administration or
the U.S. Patent and Trademark Office, are discussed in the Company's most recent
annual report on Form 10-K and in other SEC filings. Consider such risks
carefully in evaluating XOMA's prospects.
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SUBSCRIPTION AGREEMENT
dated as of February 8, 2000
by and among
XOMA LTD.
and
THE BUYERS NAMED HEREIN
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TABLE OF CONTENTS
Page
1. DEFINITIONS..........................................................1
2. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE...............................3
(a) Subscription.........................................................3
(b) Form of Payment......................................................3
(c) Method of Payment....................................................3
3. BUYERS' REPRESENTATIONS, WARRANTIES, ETC.............................3
(a) Purchase for Investment..............................................4
(b) Accredited Investor..................................................4
(c) Reoffers and Resales.................................................4
(d) Company Reliance.....................................................4
(e) Information Provided.................................................4
(f) Absence of Approvals.................................................4
(g) Subscription Agreement...............................................4
(h) Approvals............................................................5
(i) Absence of Brokers, Finders, Etc.....................................5
4. COMPANY REPRESENTATIONS, WARRANTIES, ETC.............................5
(a) Organization and Authority...........................................5
(b) Capitalization.......................................................6
(c) Concerning the Shares and the Common Shares..........................6
(d) Subscription Agreement; Registration Rights Agreement................6
(e) Non-contravention....................................................7
(f) Approvals............................................................7
(g) Information Provided.................................................7
(h) Absence of Certain Changes...........................................8
(i) Absence of Certain Proceedings.......................................8
(j) SEC Filings..........................................................8
(k) Absence of Brokers, Finders, Etc.....................................8
(l) No Solicitation......................................................9
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Page
5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS................................9
(a) Transfer Restrictions................................................9
(b) Restrictive Legend..................................................10
(c) Form D 10
(d) Authorization for Trading...........................................10
(e) Use of Proceeds.....................................................10
(f) Blue Sky Laws.......................................................11
(g) Expenses 11
6. CLOSING DATE........................................................11
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE............11
8. CONDITIONS TO THE BUYERS' OBLIGATIONS TO PURCHASE...................12
9. MISCELLANEOUS.......................................................13
(a) Governing Law.......................................................13
(b) Counterparts........................................................13
(c) Headings, etc.......................................................13
(d) Severability........................................................13
(e) Amendments..........................................................13
(f) Waivers 13
(g) Notices 13
(h) Assignment..........................................................14
(i) Survival of Representations and Warranties..........................14
(j) Entire Agreement....................................................14
(k) Further Assurances..................................................14
(l) Public Statements, Press Releases, Etc..............................14
(m) Rights of Certain Canadian Purchasers...............................14
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Schedule A Buyers
ANNEXES
Annex I Form of Registration Rights Agreement
Annex II Form of Opinion of Cahill Gordon & Reindel to be Delivered on Closing
Date
Annex III Form of Opinion of General Counsel of the Company to be Delivered on
Closing Date
Annex IV Form of Opinion of Conyers Dill & Pearman to be Delivered on Closing
Date
Annex V Form of Opinion of Bryan Cave LLP to be Delivered on Closing Date
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of February 8, 2000 (this
"Agreement"), by and among XOMA LTD., a Bermuda company (the "Company"), with an
office located at 2910 Seventh Street, Berkeley, California 94710, and the
buyers listed on Schedule A hereto (each a "Buyer" and collectively the
"Buyers").
W I T N E S S E T H:
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WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Buyers wish to purchase Common Shares (such capitalized term and all other
capitalized terms used in this Agreement having the respective meanings provided
in Section 1) and the Company wishes to sell Common Shares to the Buyers as
provided in this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the terms "Agreement," "Buyers" and
"Company" shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement; provided, however, that, when
referring to a time or period before January 1, 1999, or when the context so
requires, the term "Company" shall refer to Xoma Corporation, a Delaware
corporation and the predecessor of XOMA Ltd.
(b) All the agreements or instruments herein defined shall mean such
agreements or instruments as the same may from time to time be supplemented or
amended or the terms thereof waived or modified to the extent permitted by, and
in accordance with, the terms thereof and of this Agreement.
(c) The following terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"Action" means an action, suit, proceeding, inquiry or investigation before
or by any court, public board or body, arbitrator or governmental agency.
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the subject Person; for purposes
of this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct
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or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Closing Date" means the date and time of the issuance and sale of the
Shares.
"Common Shares" means the Common Shares, U.S. $.0005 par value, together
with the related Preference Share Purchase Rights.
"Permitted Transferee" means any Person (1) who is an "accredited investor"
as defined in Regulation D under the Securities Act ("Regulation D") and who is
designated a non-resident of Bermuda for Bermuda Exchange Control purposes, (2)
who is to be assigned rights under this Agreement and the Registration Rights
Agreement and (3) who is either (A) an Affiliate of the beneficial owner of the
Shares to be transferred or (B) a Person as to whom the Company shall have
consented to such transfer and assignment, such consent not to be unreasonably
withheld (it being understood that a proposed assignment by a Buyer to a
competitor or potential competitor of the Company or a Person which the Company
determines in good faith is accumulating or is likely to accumulate ownership of
Common Shares for hostile or unfriendly purposes may constitute a basis for
withholding such consent); provided, that no such consent shall be required in
the event of any transfer of Shares in compliance with Rule 144 under the
Securities Act.
"Person" means an individual, partnership, corporation, limited liability
company, trust, incorporated organization, unincorporated association or joint
stock company.
"Preference Share Purchase Rights" means the Preference Share Purchase
Rights issued or issuable pursuant to the Amended and Restated Shareholder
Rights Agreement, dated as of October 27, 1993 and amended and restated as of
December 31, 1998, by and between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
"Purchase Price" means $5.00 per share.
"Registration Rights Agreement" means the Registration Rights Agreement to
be entered into between the Company and the Buyers in the form attached hereto
as Annex I.
"SEC Reports" means (1) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "1998 10-K"), (2) the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, June 30
and September 30, 1999, (3) the Company's definitive proxy statement for its
special meeting of stockholders dated November 30, 1998, (4) the Company's
Current Reports on Form 8-K dated January 6, 1999, January 29, 1999 (as amended
by Amendment No. 1 thereto on Form 8-K/A), July 1, 1999 (as amended by Amendment
No. 1 thereto on Form 8-K/A), July 26, 1999, September 27, 1999 and January 25,
2000 (as amended by Amendment No. 1 thereto on Form 8-K/A) and (5) the Company's
definitive proxy statement for its 1999 Annual Meeting of Shareholders, in each
case as filed with the Securities and Exchange Commission ("SEC").
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"Shares" means 6,145,000 Common Shares.
"Trading Day" means a day on whichever of (w) the national securities
exchange, (x) the Nasdaq National Market, (y) the Nasdaq SmallCap Market or (z)
such other securities market, which at the time constitutes the principal
securities market for the Common Shares, is open for general trading of
securities; provided, however, that if there shall be no principal securities
market for the Common Shares, "Trading Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law or executive order to remain closed.
2. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) Subscription. In consideration of the representations, warranties,
covenants and agreements contained in this Agreement, each of the Buyers hereby
agrees to purchase from the Company the number of Shares set forth opposite such
Buyer's name on Schedule A hereto, and the Company hereby agrees to issue and
sell to each of the Buyers the number of Shares set forth opposite such Buyer's
name on Schedule A hereto at the Purchase Price per share, upon the terms and
conditions of this Agreement.
(b) Form of Payment. On the Closing Date, each of the Buyers shall pay an
amount equal to the Purchase Price multiplied by the number of Shares set forth
opposite such Buyer's name on Schedule A hereto by delivering immediately
available funds in United States Dollars to the Company in exchange for delivery
by the Company of a certificate for the number of Shares set forth opposite such
Buyer's name on Schedule A hereto, issued in the name of such Buyer.
(c) Method of Payment. Payment for the Shares shall be made by wire
transfer of funds to:
Wells Fargo Bank, NA
ABA #: 121000248
WFB Acct#: 4296 914674
Payable To: XOMA Ltd.
3. BUYERS' REPRESENTATIONS, WARRANTIES, ETC.
Each of the Buyers represents, warrants and covenants to the Company,
severally and not jointly, as follows:
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(a) Purchase for Investment. Such Buyer is purchasing the Shares for its
own account for investment only and not with a view towards the public sale or
distribution thereof;
(b) Accredited Investor. Such Buyer is an "accredited investor" as that
term is defined in Rule 501 of the General Rules and Regulations under the
Securities Act of 1933 (the "1933 Act") by reason of Rule 501(a);
(c) Reoffers and Resales. All subsequent offers and sales of the Shares by
such Buyer shall be made pursuant to registration of the Shares under the 1933
Act or pursuant to an exemption from registration;
(d) Company Reliance. Such Buyer understands that the Shares are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and each Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of each Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire the
Shares;
(e) Information Provided. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by such Buyer; such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
satisfactory answers to any such inquiries; without limiting the generality of
the foregoing, such Buyer has had the opportunity to obtain and to review the
SEC Reports; and such Buyer understands that its investment in the Shares
involves a high degree of risk;
(f) Absence of Approvals. Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Shares;
(g) Subscription Agreement. Such Buyer has all requisite power and
authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements executed or to be
executed by such Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby; this Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable in accordance with its terms,
subject as to enforce-
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ability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally;
(h) Approvals. If such Buyer's principal executive offices are located
outside the United States, the purchase of the Shares by such Buyer pursuant to
this Agreement does not require any governmental or regulatory approval, consent
or filing on the part of such Buyer or, to the knowledge of such Buyer, on the
part of the Company, under the securities or similar laws of the jurisdiction in
which such Buyer's principal executive offices are located; and
(i) Absence of Brokers, Finders, Etc. No broker, finder or similar Person
is entitled to any commission, fee or other compensation by reason of the
transactions contemplated by this Agreement other than Arnhold and S.
Bleichroeder, Inc. and Sutro & Co. Incorporated (together the "Placement
Agents"), and any such Buyer who enters into such arrangement with such Person
shall pay, and indemnify and hold harmless the Company from, any claim made
against the Company by any other Persons not referred to in such disclosure for
any such commission, fee or other compensation which is ultimately determined by
a final nonappealable decision of a court of competent jurisdiction to be the
obligation of such Buyer and not of the Company.
4. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents, warrants and covenants to each Buyer that:
(a) Organization and Authority. The Company is a company duly organized and
validly existing under the laws of Bermuda, and has all requisite power and
authority to (i) own, lease and operate its properties and to carry on its
business as described in the SEC Reports, and (ii) to execute, deliver and
perform its obligations under this Agreement, the Registration Rights Agreement
and the other agreements to be executed and delivered by the Company in
connection herewith, and to consummate the transactions contemplated hereby and
thereby. The Company is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions wherein such qualification is
necessary and where failure so to qualify could reasonably be expected to have a
material adverse effect on the business, properties, operations, condition
(financial or other) or results of operations of the Company. The Company has no
subsidiaries or equity investment in any Person other than XOMA Limited, a
United Kingdom company, XOMA (US) LLC, a Delaware limited liability company,
XOMA (Bermuda) Ltd., a Bermuda company, XOMA Technology Ltd., a Bermuda company
and XOMA Ireland Limited, an Irish company, all of which are wholly-owned by the
Company.
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<PAGE>
(b) Capitalization. The authorized capital stock of the Company consists of
(a) 135,000,000 Common Shares of which 58,336,056 Common Shares were outstanding
on February 4, 2000, all of which are fully paid and nonassessable; and (b)
1,000,000 preference shares, U.S. $.05 par value, of which as of February 4,
2000 (i) 650,000 shares are designated Series A Preference Shares, none of which
are outstanding, and (ii) 7,500 shares are designated Series B Preference
Shares, none of which are outstanding. On the Closing Date (x) there will be no
material increase from February 4, 2000 in the number of Common Shares
outstanding and (y) no issuances of preference shares will have occurred since
February 4, 2000. As of February 4, 2000, the Company had outstanding options,
warrants and similar rights entitling the holders to purchase 6,169,927 Common
Shares. On the Closing Date, the Company will issue warrants to issue 250,000
Common Shares to the Placement Agents. Other than as set forth in the preceding
two sentences, the Company does not have outstanding any securities (or
obligations to issue any such securities) convertible into, exchangeable for or
otherwise entitling the holders thereof to acquire Common Shares, except as
disclosed in the SEC Reports. The Company has duly reserved from its authorized
and unissued Common Shares the full number of shares required for (a) all
options, warrants, convertible securities and other rights to acquire Common
Shares which are outstanding and (b) all Common Shares and options and other
rights to acquire Common Shares which may be issued or granted under the stock
option and similar plans which have been adopted by the Company. No holder of
any of the Company's securities has any rights, "demand," "piggy-back" or
otherwise, to have such securities registered by reason of the intention to
file, filing or effectiveness of the Registration Statement required to be filed
by the Company pursuant to Section 2 of the Registration Rights Agreement (the
"Registration Statement").
(c) Concerning the Shares and the Common Shares. The Shares have been duly
authorized and, when issued and paid for in accordance with this Agreement, will
be duly and validly issued, fully paid and non-assessable. There are no
preemptive or similar rights of any shareholder of the Company or any other
Person to acquire any of the Shares. The Company has duly reserved a sufficient
number of Common Shares for issuance of the Shares, and such shares shall remain
so reserved. The Common Shares are listed for trading on the Nasdaq National
Market.
(d) Subscription Agreement; Registration Rights Agreement. This Agreement,
the Registration Rights Agreement and the other agreements and instruments
contemplated hereby and thereby have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery hereof and thereof by the
Buyers, this Agreement is, and the Registration Rights Agreement and such other
agreements, when executed and delivered by the Company, will be, valid and
binding obligations of the Company en-
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<PAGE>
forceable against it in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and except that rights to indemnity and contribution may be limited by
public policy.
(e) Non-contravention. The execution and delivery by the Company of this
Agreement and the other documents contemplated by this Agreement and the
consummation by the Company of the issuance of the Shares as contemplated by
this Agreement, and the other transactions contemplated by this Agreement and
the Registration Rights Agreement do not and will not, with or without the
giving of notice or the lapse of time, or both (i) result in any violation of
any terms of the Memorandum of Continuance or Bye-Laws of the Company, (ii)
conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company pursuant to, any indenture, mortgage, deed
of trust or other material agreement or instrument to which the Company is a
party or by which the Company or any of its properties or assets is bound or
affected, or (iii) (assuming the representations and warranties of the Buyers in
Section 3 hereof and the Placement Agents in their representation letters dated
the date hereof are true and accurate) violate or contravene any applicable law,
rule or regulation or any applicable decree, judgment or order of any court,
federal, state or other regulatory body, administrative agency or other
governmental body of the United States or Bermuda having jurisdiction over the
Company or any of its properties or assets, which conflict, breach, violation or
default could reasonably be expected to have a material adverse effect on the
validity or enforceability of this Agreement, the Registration Rights Agreement
or the issuance of the Shares or the transactions contemplated by this
Agreement.
(f) Approvals. Assuming the representations and warranties of the Buyers in
Section 3 hereof and of the Placement Agents in their representation letters
dated the date hereof are true and accurate, no authorization, approval or
consent of, or filing with, any court, governmental body or regulatory agency is
required to be obtained or made by the Company for (1) the execution, delivery
and performance by the Company of this Agreement, the Registration Rights
Agreement and the other agreements and instruments contemplated hereby and
thereby and (2) the issuance and sale of the Shares as contemplated by this
Agreement, other than (w) the listing of the Shares on the Nasdaq National
Market, (x) registration of the resale of the Shares under the 1933 Act as
contemplated by the Registration Rights Agreement, (y) as may be required under
applicable state securities or "blue sky" laws and (z) filing of one or more
Forms D with respect to the Shares as required under Regulation D.
(g) Information Provided. The written information provided by or on behalf
of the Company to the Buyers in connection with the transactions contemplated by
this Agreement, including, without limitation, the written information referred
to in Section 3(e) of this Agreement, does not con-
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tain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, it being understood
that, for purposes of this Section 4(g), any statement contained in such
information shall be deemed to be modified or superseded for purposes of this
Section 4(g) to the extent that a statement in any document included in such
information which was prepared or filed with the SEC on a later date modifies or
replaces such statement, whether or not such later prepared or filed statement
so states. The Company has not filed any reports with the SEC under the
Securities Exchange Act of 1934 (the "1934 Act") since December 31, 1998 other
than the SEC Reports.
(h) Absence of Certain Changes. Except as disclosed in the SEC Reports,
since September 30, 1999, there has been no material adverse change in the
business, properties, operations, condition (financial or other) or results of
operations of the Company. Except as and to the extent disclosed, reflected or
reserved against in the financial statements of the Company and the notes
thereto included in the SEC Reports, to the knowledge of the Company, the
Company has no material liabilities, debts or obligations, whether accrued,
absolute, contingent or otherwise. Subsequent to September 30, 1999, to the
knowledge of the Company, the Company has not incurred any liabilities, debts or
obligations of any nature whatsoever which are individually or in the aggregate
material to the Company, other than those incurred in the ordinary course of its
business or disclosed in the SEC Reports.
(i) Absence of Certain Proceedings. Except as described in the SEC Reports
and except for applications and proceedings relating to regulatory approval of
new drugs or the granting of patents, there is no Action pending or, to the
knowledge of the Company, threatened against the Company, in any such case
wherein an unfavorable decision, ruling or finding would have a material adverse
effect on the business, properties, condition (financial or other) or results of
operations of the Company or the transactions contemplated by this Agreement or
any of the documents contemplated hereby or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of such other documents.
(j) SEC Filings. The Company has timely filed all required forms, reports
and other documents required to be filed with the SEC under the 1934 Act since
January 1, 1999. All of such forms, reports and other documents complied as to
form, when filed, in all material respects, with all applicable requirements of
the 1934 Act.
(k) Absence of Brokers, Finders, Etc. No broker, finder or similar Person
is entitled to any commission, fee or other compensation by reason of the
transactions contemplated by this Agreement other than the Placement Agents, and
the Company shall pay, and indemnify and hold harmless the Buyers from, any
claim made against the Buyers by the entity or entities re-
-8-
<PAGE>
ferred to in such disclosure and any other Person for any such commission, fee
or other compensation.
(l) No Solicitation. No form of general solicitation or general advertising
was used by the Company or, to its knowledge, any other Person acting on behalf
of the Company, in respect of or in connection with the offer and sale of the
Shares. Neither the Company nor, to its knowledge, any Person acting on behalf
of the Company has, either directly or indirectly, sold or offered for sale to
any Person any of the Shares, and neither the Company nor any person authorized
to act on its behalf will sell or offer for sale any Common Shares or solicit
any offers to buy any Common Shares, so as thereby to cause the issuance or sale
of any of the Shares to be in violation of Section 5 of the 1933 Act.
5. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) Transfer Restrictions. The Company and the Buyers acknowledge and agree
that (1) except as provided in the Registration Rights Agreement with respect to
the resale of the Shares, the Shares have not been and are not being registered
for resale under the 1933 Act, and the Shares may not be transferred unless (A)
subsequently registered for resale thereunder or (B) (i) transferred to a
Permitted Transferee and (ii) the Buyer desiring such transfer shall have
delivered to the Company (x) in the event of any resale of the Shares to be made
in reliance on Rule 144 promulgated under the 1933 Act, documentation (including
a transferor's representation letter and a broker's representation letter)
reasonably satisfactory in form, scope and substance to the Company
substantiating the reliance on Rule 144 (which documentation may relate to all
Shares covered by a filed Form 144); provided, however, that in the event that
the same Buyer desires to make more than two filings on Form 144 (or revise the
number of shares on a previously filed Form 144 more than one time) in any one
fiscal quarter, such Buyer shall be required to deliver an opinion complying
with the following clause (y); or (y) in the event of any other resale of
Shares, an opinion, reasonably satisfactory in form, scope and substance to the
Company, of counsel reasonably satisfactory to the Company (which shall include,
but not be limited to, counsel who represented the Buyers or the Placement
Agents in connection with the negotiation and execution of this Agreement) to
the effect that the Shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; (2) any resale of the Shares
made in reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any such resale of Shares under circumstances in which the seller,
or the person through whom the sale is made, may be deemed to be an underwriter,
as that term is used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (3) neither the Company nor any other Person is under any obligation to
register the Shares (other than registration of the resale
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<PAGE>
of the Shares pursuant to the Registration Rights Agreement) under the 1933 Act
or to comply with the terms and conditions of any exemption thereunder (other
than pursuant to Section 5(d) hereof and pursuant to the Registration Rights
Agreement).
(b) Restrictive Legend.
(1) The Buyers acknowledge and agree that until such time as the Shares
have been registered for resale under the 1933 Act as contemplated by the
Registration Rights Agreement, the certificates for the Shares may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for the Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned
in the absence of an effective registration statement for the
securities under the Securities Act of 1933, as amended, or, in the
event of any resale in reliance on Rule 144 under the Securities Act of
1933, as amended, certain documentation showing compliance with such
rule or, in certain events, an opinion of counsel that registration is
not required under said Act.
(2) Once the Registration Statement has been declared effective, thereafter
(i) upon request of a Buyer the Company will promptly (but in no event later
than three Trading Days after receipt of such Buyer's legended certificates by
the Company) substitute certificates without restrictive legend for certificates
for any Shares issued prior to the date such Registration Statement is declared
effective by the SEC which bear such restrictive legend and remove any
stop-transfer restriction relating thereto and (ii) the Company shall not place
any restrictive legend on certificates for any Shares issued or impose any
stop-transfer restriction thereon.
(c) Form D. The Company agrees to file a Form D with respect to the Shares
as required under Regulation D and to provide a copy thereof to each Buyer
promptly after such filing. Each Buyer agrees to cooperate with the Company in
connection with such filing and, upon request of the Company, to provide all
information relating to such Buyer reasonably required for such filing.
(d) Authorization for Trading. Within five days after the Closing Date, the
Company shall file a notification for listing of additional shares with the
Nasdaq National Market relating to the Shares and shall provide evidence of such
filing to the Buyer.
(e) Use of Proceeds. The proceeds of sale of the Shares will be used for
general working capital purposes and in the operation of the Company's business.
-10-
<PAGE>
(f) Blue Sky Laws. On or before the Closing Date, the Company shall take
such action as and to the extent it shall be necessary or required to qualify,
or to obtain an exemption for, the Shares for sale to each Buyer pursuant to
this Agreement under such of the securities or "blue sky" laws of jurisdictions
as shall be applicable to the sale of the Shares pursuant to this Agreement. The
Company shall furnish copies of all filings, applications, orders and grants or
confirmations of exemptions relating to such securities or "blue sky" laws on or
prior to the Closing Date.
(g) Expenses. Each of the parties hereto shall pay all of their own costs
and expenses, including any and all legal and accounting fees, incident to the
negotiation, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby whether or not such transactions shall be
consummated.
6. CLOSING DATE.
Subject to the satisfaction or waiver of the conditions set forth in
Sections 7 and 8, the Closing Date shall be 12:00 noon, New York City time, on
February 11, 2000, or such other mutually agreed day and time. The closing of
the sale of the Shares shall occur on the Closing Date at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York 10005.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
Each Buyer understands that the Company's obligation to sell the Shares to
the each Buyer pursuant to this Agreement on the Closing Date is conditioned
upon the satisfaction of the following conditions precedent on or before the
Closing Date (any or all of which may be waived by the Company in its sole
discretion):
(a) The receipt and acceptance by the Company of this Agreement and the
Registration Rights Agreement in the form attached hereto as Annex I as
evidenced by execution of this Agreement and the Registration Rights Agreement
by the Company and delivery of executed counterparts of this Agreement and the
Registration Rights Agreement to each Buyer or its legal counsel;
(b) The accuracy on the Closing Date of the representations and warranties
of each Buyer contained in this Agreement as if made on the Closing Date and the
performance by each Buyer on or before the Closing Date of all covenants and
agreements of each Buyer required to be performed on or before the Closing Date;
and
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<PAGE>
(c) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
8. CONDITIONS TO THE BUYERS' OBLIGATIONS TO PURCHASE.
The Company understands that each Buyer's obligation to purchase the Shares
from the Company pursuant to this Agreement on the Closing Date is conditioned
upon the satisfaction of the following conditions precedent on or before the
Closing Date (any or all of which may be waived by such Buyer in its sole
discretion):
(a) The receipt and acceptance by each of the Buyers of this Agreement and
the Registration Rights Agreement in the form attached hereto as Annex I as
evidenced by execution of this Agreement and the Registration Rights Agreement
by the Buyers and delivery of executed counterparts of this Agreement and the
Registration Rights Agreement to the Company or its legal counsel;
(b) The accuracy on the Closing Date of the representations and warranties
of the Company contained in this Agreement as if made on the Closing Date and
the performance by the Company on or before the Closing Date of all covenants
and agreements of the Company required to be performed on or before the Closing
Date and receipt by such Buyer of a certificate, dated the Closing Date, of the
Chief Executive Officer or the Chief Financial Officer of the Company confirming
such matters;
(c) The receipt by such Buyer of a certificate, dated the Closing Date, of
the Secretary of the Company certifying (1) the Memorandum of Continuance and
Bye-Laws of the Company as in effect on the Closing Date, and (2) all
resolutions of the Board of Directors (and committees thereof) of the Company
relating to this Agreement and the transactions contemplated hereby;
(d) Receipt by such Buyer on the Closing Date of (i) an opinion of Cahill
Gordon & Reindel, counsel for the Company, dated the Closing Date, to the effect
set forth in Annex II attached hereto, (ii) an opinion of Christopher J.
Margolin, Esq., the General Counsel of the Company, dated the Closing Date, to
the effect set forth in Annex III attached hereto, (iii) an opinion of Conyers
Dill & Pearman, Bermuda counsel to the Company, dated the Closing Date, to the
effect set forth in Annex IV attached hereto and (iv) an opinion of Bryan Cave
LLP, Arizona counsel to the Company, dated the Closing Date, to the effect set
forth in Annex V attached hereto; and
(e) On the Closing Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement.
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<PAGE>
9. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.
(b) Counterparts. This Agreement may be executed in counterparts and by the
parties hereto on separate counterparts, all of which together shall constitute
one and the same instrument. A facsimile transmission of this Agreement bearing
a signature on behalf of a party hereto shall be legal and binding on such
party.
(c) Headings, etc. The headings, captions and footers of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) Amendments. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Buyers or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given.
(f) Waivers. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, or any course of dealings between the parties, shall not operate as a
waiver thereof or an amendment hereof.
(g) Notices. Any notices required or permitted to be given under the terms
of this Agreement shall be delivered personally (which shall include telephone
line facsimile transmission with answer back confirmation) or by courier and
shall be effective upon receipt, if delivered personally or by courier, in the
case of the Company addressed to the Company at its address shown in the
introductory paragraph of this Agreement, Attention: Legal Department (telephone
line facsimile transmission number (510) 649-7571), with a copy to Cahill Gordon
& Reindel, 80 Pine Street, New York, New York 10005, Attn: Geoffrey E. Liebmann,
Esq. (telephone line facsimile transmission number: (212) 269-5420) or, in the
case of each of the Buyers, at its address or telephone line facsimile
transmission number shown on the signature pages to this Agreement or such other
address or telephone line facsimile transmission number
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<PAGE>
as a party shall have provided by notice to the other party in accordance with
this provision.
(h) Assignment. Prior to the Closing Date, none of the parties may assign
its rights and obligations under this Agreement. Any transfer of the Shares by
the Buyers after the Closing Date shall be made in accordance with Section 5(a).
After the Closing Date, each Buyer shall have the right to assign its rights and
obligations under this Agreement to Permitted Transferees in connection with any
transfer of such Buyer's rights under the Registration Rights Agreement in
compliance with the provisions of Section 7(e) of the Registration Rights
Agreement by notice of such assignment to the Company.
(i) Survival of Representations and Warranties. The respective
representations, warranties, covenants and agreements of the Buyers and the
Company contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall survive the delivery of payment
for the Shares and shall remain in full force and effect regardless of any
investigation made by or on behalf of them or any Person controlling or advising
any of them.
(j) Entire Agreement. This Agreement and its Schedules and Annexes set
forth the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
whether written or oral, with respect thereto.
(k) Further Assurances. Each party to this Agreement will perform any and
all acts and execute any and all documents as may be necessary and proper under
the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
(l) Public Statements, Press Releases, Etc. The Company and the Buyers
shall have the right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyers, to make any press release or other public disclosure
with respect to such transactions as is required by applicable law and
regulations (although the Buyers shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release and
shall be provided with a copy thereof).
(m) Rights of Certain Canadian Purchasers. In the event that the offering
memorandum delivered to a Buyer resident in Ontario or Quebec before the
issuance of Shares to such subscriber contains an untrue statement of a material
fact or omits to state a material fact that is re-
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<PAGE>
quired to be stated or that is necessary in order to make any statement therein
not misleading in light of the circumstances in which it was made (herein called
a "misrepresentation"), and it was a misrepresentation at the time of purchase
of the Shares, such Buyer shall have, subject as hereinafter in this paragraph
provided, a right, exercisable on written notice given not more than 180 days
subsequent to the date on which payment is made for the Shares, either of action
for damages or, alternatively, of rescission against the Company while still the
owner of the Shares, provided that:
(i) the Company shall not be held liable under this paragraph if such
Buyer purchased the Shares with knowledge of the misrepresentation;
(ii) in an action for damages, the Company is not liable for all or any
portion of such damages that it proves do not represent the
depreciation in value of the Shares as a result of the
misrepresentation relied upon; and
(iii) in no case shall the amount recoverable hereunder exceed the price at
which the Shares were sold to such Buyer.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
Buyers and the Company by their respective officers or other representatives
thereunto duly authorized as of the date first set forth above.
XOMA LTD.
By:
-----------------------------------------
Name: Peter B. Davis
Title: Vice President, Finance and
Chief Financial Officer
Date:
---------------------------------------
---------------------------------------
Name of Investor
By:
-----------------------------------------
Name:
Title:
Date:
---------------------------------------
-16-
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of February 11,
2000, by and among XOMA Ltd., a Bermuda company (the "Company"), and the
investors listed on Schedule A hereto (each an "Investor" and collectively, the
"Investors").
WHEREAS:
A. In connection with the Subscription Agreement between the parties hereto
dated as of February 8, 2000 (the "Subscription Agreement"), the Company has
agreed, upon the terms and subject to the conditions contained therein, to issue
and sell to the Investors an aggregate of 6,145,000 common shares (the
"Purchased Shares") of the Company, par value $.0005 per share (the "Common
Shares");
B. To induce the Investors to execute and deliver the Subscription
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute and rules (collectively, the
"Securities Act"), and applicable state securities laws; and
C. Pursuant to the provisions of Section 2(d) of this Agreement, the
Company may from time to time be required to issue additional shares to the
Investors (the "Additional Shares").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investors
hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in
compliance with the Securities Act and pursuant to Rule 415 under the
Securities Act or any successor rule providing for offering securities
on a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of the Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(ii) "Registrable Securities" means (i) the Purchased Shares, (ii) the
Additional Shares, if any, and (iii) Common Shares issued prior to the
effectiveness of the Registration Statement covering such shares as a
dividend or other distribution with respect to, in exchange for or in
replacement of, the Purchased Shares; provided, however, that any
Purchased Shares sold pursuant to an effective registration statement
or pursuant to Rule 144 under the Securities Act shall cease to be
Registrable Securities.
<PAGE>
(iii) "Registration Statement" means a registration statement of the
Company under the Securities Act, including any amendment thereto.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Subscription Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare, and, on or prior to
the date which is forty-five (45) days after the Closing Date (as defined in the
Subscription Agreement), file with the SEC a Registration Statement on Form S-3
registering the resale of the Registrable Securities; provided, however, that in
the event Form S-3 is not available to the Company, the Company shall file such
other form as may be available if holders who hold Registrable Securities with a
market value of at least One Million Dollars ($1,000,000) deliver a written
request to the Company that the Company do so, where such market value is
determined as of the date of such written request.
(b) Effectiveness. The Company shall use its reasonable best efforts to
obtain effectiveness of the Registration Statement within one-hundred twenty
(120) days after the filing of the Registration Statement (the end of such
period, the "Effectiveness Date") (in the event such Registration Statement is
not effective at the expiration of such 120-day period, the Company shall
continue to use all reasonable commercial efforts to cause it to become
effective until it becomes effective).
(c) No Underwriting. The registration of any Registrable Securities
provided for in this Section 2 shall not be underwritten.
(d) Additional Shares. If the Registration Statement is not declared
effective prior to or on the Effectiveness Date, the Company shall pay to each
Investor, in cash or Additional Shares (at the Company's option), an amount
equal to 1% of the product of (i) the number of Purchased Shares held by such
Investor, multiplied by (ii) the Purchase Price (as defined in the Subscription
Agreement), for each 15 day period subsequent to the Effectiveness Date during
which the Registration Statement is not effective. Any Additional Shares so
issued will be valued based on the Purchase Price. Such payment shall be made as
soon as practicable after each such 15 day period.
(e) Eligibility for Registration Statement Forms. The Company meets the
requirements for the use of Form S-3 for registration of the Registrable
Securities for resale by the Investors. The Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
maintain such eligibility for the use of Form S-3.
(f) Request by Holders. If (i) the Company fails to comply with its
obligations under either Section 2(a) or 2(b) hereof within the respective time
periods set forth therein and subsequently receives a written request from the
holders of at least fifty percent
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<PAGE>
(50%) of the Purchased Shares issued as of the Closing that the Company file a
Registration Statement under the Securities Act (including, without limitation,
a "shelf" registration statement, if requested by such holders, during any
period of time that Rule 144 is not available as an exemption for the sale in a
single 90-day period of all the Registrable Securities that any such holder
desires to sell) covering the registration of Registrable Securities, and (ii)
the expected gross proceeds of the sale of Registrable Securities under such
Registration Statement would equal or exceed $2,000,000, then the Company shall,
within ten (10) business days of the receipt of such written request, give
written notice of such request ("Request Notice") to all holders of Registrable
Securities (as reflected on its register of such holders), and use commercially
reasonable efforts to effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities that holders thereof request to be
registered and included in such registration by written notice given by such
holders to the Company within twenty (20) days after receipt of the Request
Notice.
3. Obligations of the Company.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) Once declared effective, the Company shall use its reasonable best
efforts to keep the Registration Statement (whether filed pursuant to Section
2(a) or 2(f)) effective pursuant to Rule 415 at all times until such date as is
the earlier of (i) the date on which all of the Registrable Securities have been
sold and (ii) the date on which all of the Registrable Securities may be
immediately sold without restriction (including without limitation as to volume
by each holder thereof) without registration under the Securities Act (the
"Registration Period").
(b) The Company shall (i) prepare and file with the SEC, with notice
thereof to each Investor following such filing, such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement and (ii) as promptly as reasonably practicable after becoming aware of
such fact or event, notify each Investor of the existence of any fact or the
happening of any event of which the Company has knowledge as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Company shall furnish to each Investor such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
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<PAGE>
(d) The Company shall use reasonable best efforts to register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Investor may reasonably request and maintain such registrations and
qualifications in effect at all times during the Registration Period; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company undue expense or burden, or (v) make any
change in its memorandum of continuance or bye-laws.
(e) In the event that, in the reasonable judgment of the Company, it is
advisable to suspend use of the prospectus relating to the Registration
Statement for a discrete period of time (a "Deferral Period") due to pending
material corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to the Company, the Company shall deliver a notice in
writing, to each Investor, to the effect of the foregoing and, upon receipt of
such notice, each Investor agrees not to dispose of any Registrable Securities
covered by the Registration Statement (other than in transactions exempt from
the registration requirements under the Securities Act) until the Investors are
advised in writing by the Company that use of the prospectus may be resumed;
provided, however, that no Deferral Period shall be more than thirty (30)
consecutive days; provided, further, that the aggregate number of days in any
such Deferral Periods shall be no more than sixty (60) in any 12-month period.
4. Obligations of the Investors.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that each of the Investors shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be required to effect the registration of such
Registrable Securities, and shall execute such documents in connection with such
registration, as the Company may reasonably request.
(b) Each Investor, by acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder, unless
such Investor has notified the Company in writing of the Investor's election to
exclude the Registrable Securities from the Registration Statement.
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<PAGE>
(c) For any offer or sale of any of the Registrable Securities under the
Registration Statement by the Investor in a transaction that is not exempt under
the Securities Act, the Investor, in addition to complying with any other
federal securities laws, shall deliver a copy of the final prospectus (together
with any amendment of or supplement to such prospectus) of the Company covering
the Registrable Securities, in the form furnished to the Investor by the
Company, to the purchaser of any of the Registrable Securities on or before the
settlement date for the purchase of such Registrable Securities.
(d) Upon the receipt by an Investor of any notice from the Company of (1)
the existence of any fact or the happening of any event as a result of which the
prospectus included in the Registration Statement contains an untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, (2) the issuance by the SEC of any stop order or
injunction suspending or enjoining the use or the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose, or
the taking of any similar action by the securities regulators of any state or
other jurisdiction, or (3) the request by the SEC or any other federal or state
governmental agency for amendments or supplements to the Registration Statement
or related prospectus or for additional information related thereto, such
Investor shall forthwith discontinue disposition of its Registrable Securities
covered by the Registration Statement or related prospectus (other than in
transactions exempt from the registration requirements under the Securities Act)
until receipt of the supplemented or amended prospectus or until such Investor
is advised in writing by the Company that the use of the applicable prospectus
may be resumed. In such a case, the Company shall as promptly as reasonably
practicable (i) prepare an amendment to correct or update the prospectus, (ii)
use its reasonable best efforts to remove the impediments referred to in
subclause (2) above, (iii) comply with the requests referred to in subclause (3)
above and (iv) send each Investor an updated prospectus and advise each Investor
in writing that the Investors may continue disposition of their Registrable
Securities (subject to Section 3(e)) registered by the Registration Statement.
5. Expenses.
All reasonable expenses incurred by the Company in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualification fees,
printers and accounting fees and the fees and disbursements of counsel for the
Company shall be borne by the Company. Each Investor shall be responsible for
any stock transfer taxes that may be payable by such Investor, and all brokerage
commissions relating to Registrable Securities. The Company shall not be
responsible for the fees and disbursements of counsel for the Investor except as
set forth in the Subscription Agreement.
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<PAGE>
6. Indemnification.
In the event any Registrable Securities are included in the Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor, its directors and officers and each person who controls
such Investor within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), if any (each, an
"Indemnified Person"), against any losses, claims, damages or liabilities to
third parties (collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such Claims arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of the Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the provisions set forth in Section
6(c), the Company shall reimburse the Indemnified Person for any legal fees or
other expenses reasonably incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly stating that such information is for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (ii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld; and
(iii) with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, such corrected prospectus was
timely furnished to such Indemnified Person by the Company pursuant to Section
3(c) hereof, and the Indemnified Person was promptly advised in writing not to
use the uncorrected prospectus prior to the use giving rise to a Violation and
such Indemnified Person, notwithstanding such advice, used such uncorrected
prospectus.
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<PAGE>
(b) In connection with the Registration Statement, each Investor, severally
and not jointly, agrees to indemnify and hold harmless, to the same extent and
in the same manner set forth in Section 6(a), the Company, each of its officers
and directors and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act (each, an "Indemnified
Party"), against any Claim to which any of them may become subject, under the
Securities Act, the Exchange Act or other federal or state securities law,
insofar as such Claim arises out of or is based upon any Violation by such
Investor, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly stating that such
information is for use in connection with the Registration Statement; and
subject to Section 6(c) such Investor will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld; provided, further, however,
that such Investor shall be liable under this Agreement (including this Section
6(b) and Section 7) for only that amount as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to the
Registration Statement containing the Violation. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if such Investor timely notified the Company in
writing of the untrue statement or omission of material fact contained in the
preliminary prospectus and the Company failed to make such correction to the
prospectus.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party of
notice of the commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be (which consent shall not be
unreasonably withheld); provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the Indemnified Person or Indemnified
Party, as applicable, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. With respect to the foregoing proviso, the indemnifying party shall
pay for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable (together with appropriate local counsel),
and such legal counsel shall be selected by a majority of the Investors, if the
Investors are entitled to indemnification hereunder, or the Company, if the
Company is entitled to indemnification hereunder, as appli-
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<PAGE>
cable. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6.
7. General Provisions.
(a) Registered Holder. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Notices. All notices which may be required pursuant to this Agreement
(i) shall be in writing, (ii) shall be addressed as follows:
If to the Company:
XOMA Ltd.
2910 Seventh Street
Berkeley, California 94710
Attn: Legal Department
Facsimile: (510) 649-7571
With a copy to:
Cahill Cordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Geoffrey E. Liebmann, Esq.
Facsimile: (212) 269-5420
If to the Investors, the addresses listed on Schedule A hereto
(or to such other person or address as either party may so designate from time
to time), (iii) shall be mailed, postage prepaid, by registered mail or
certified mail, return receipt requested, sent by nationally-recognized
overnight carrier or transmitted by courier for hand delivery and (iv) shall be
deemed to have been given on the date of receipt. Any such notice may be sent by
facsimile transmission but shall in such case be subsequently confirmed by a
writing mailed, sent or transmitted as set forth above and shall be deemed to
have been given on the date of receipt of such facsimile transmission subject to
receipt of such confirmation.
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<PAGE>
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
(d) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties regarding the subject matter hereof and thereof,
and there are no prior written or oral promises or representations not
incorporated herein or therein. No amendment or modification of the terms of
this Agreement shall be binding on either party unless reduced to writing and
signed by an authorized officer of the party to be bound.
(e) Binding Effect; Assignability. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assignable by either party,
either in whole or in part, except as provided in the next sentence. The rights
to have the Company register Common Shares pursuant to this Agreement and rights
to Additional Shares, if any, pursuant to Section 2(d) of this Agreement shall
be automatically assigned by an Investor to any Permitted Transferee of all or
any portion of such securities only if: (i) the Investor agrees in writing with
the Permitted Transferee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such Permitted
Transferee and (B) the securities with respect to which such registration rights
are being transferred or assigned, and (iii) the Permitted Transferee agrees in
writing with the Company to be bound by all of the provisions contained herein.
(f) Waiver. The waiver by a party hereto of any breach of or default under
any of the provisions of this Agreement or the failure of a party to enforce any
of the provisions of this Agreement or to exercise any right hereunder shall not
be construed as a waiver of any other breach or default or as a waiver of any
such rights or provisions hereunder.
(g) Severability. If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective only to the
extent of such invalidity or unenforceability, without in any way affecting the
remaining parts of this Agreement. In addition, the part that is ineffective
shall be deemed reformed in such a manner as to as nearly approximate the intent
of the parties as possible.
(h) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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<PAGE>
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Investors have caused this
Agreement to be duly executed as of the date first above written.
XOMA Ltd.
By:
-----------------------------------------
Name: Peter B. Davis
Title: Vice President, Finance and
Chief Financial Officer
---------------------------------------
Name of Investor
By:
-----------------------------------------
Name:
Title:
-11-
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT.
Right to Purchase [ ] Common Shares of
XOMA Ltd.
XOMA LTD.
Common Share Purchase Warrant
No. 00-
XOMA LTD., a Bermuda company (the "Company"), hereby certifies that, for
value received, [Name of Placement Agent] or registered assigns (the "Holder"),
is entitled, subject to the terms set forth below, to purchase from the Company
at any time or from time to time after the date hereof, and before 5:00 p.m.,
New York City time, on the Expiration Date (as hereinafter defined), [ ] fully
paid and nonassessable Common Shares (as hereinafter defined) at a purchase
price per share equal to the Purchase Price (as hereinafter defined). The number
of such Common Shares and the Purchase Price are subject to adjustment as
provided in this Warrant.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
"Common Shares" means and includes the Company's Common Shares, $.0005
par value per share, as authorized on the date hereof, and any other
securities into which or for which the Common Shares may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger,
amalgamation, sale of assets or otherwise.
"Company" shall include XOMA Ltd. and any legal entity that shall
succeed to or assume the obligation of XOMA Ltd. hereunder in accordance
with the terms hereof.
"Expiration Date" means February 11, 2005.
"Issuance Date" shall mean the first date of original issuance of this
Warrant.
"Other Securities" refers to any shares (other than Common Shares) and
other securities of the Company or any other person (corporate or
otherwise) which the Holder at any time shall be entitled to receive, or
shall have received, on the exercise of this Warrant, in lieu of or in
addition to Common Shares, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Shares or
Other Securities pursuant to Section 4.
<PAGE>
"Permitted Transferee" means any person (1) who is an "accredited
investor" as defined in Regulation D under the Securities Act and who is
designated a non-resident of Bermuda for Bermuda Exchange Control purposes
(2) and who is either (A) an affiliate of the owner of this Warrant or (B)
a person as to whom the Company shall have consented to such transfer, such
consent not to be unreasonably withheld (it being understood that a
proposed transfer by the Buyer to a competitor or potential competitor of
the Company or a person which the Company determines in good faith is
accumulating or is likely to accumulate ownership of Common Shares for
hostile or unfriendly purposes may constitute a basis for withholding such
consent).
"Purchase Price" shall mean $5.00 per share, subject to adjustment as
provided in this Warrant.
"Trading Day" means a day on which the principal securities market for
the Common Shares is open for general trading of securities.
1. Exercise of Warrant. This Warrant may be exercised by the Holder hereof
in full or in part at any time or from time to time during the exercise period
specified in the first paragraph hereof until the Expiration Date by surrender
of this Warrant and the subscription form annexed hereto (duly executed by the
Holder), to the Company's transfer agent and registrar for the Common Shares,
and by making payment, in cash or by certified or official bank check payable to
the order of the Company, in the amount obtained by multiplying (a) the number
of Common Shares designated by the Holder in the subscription form by (b) the
Purchase Price then in effect. On any partial exercise the Company will
forthwith issue and deliver to or upon the order of the Holder hereof a new
Warrant or Warrants of like tenor, in the name of the Holder hereof or as the
Holder (upon payment by the Holder of any applicable transfer taxes) may
request, providing in the aggregate on the face or faces thereof for the
purchase of the number of Common Shares for which such Warrant or Warrants may
still be exercised.
2. Delivery of Share Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within three
Trading Days thereafter, the Company at its expense (including the payment by it
of any applicable issue or stamp taxes) will cause to be issued in the name of
and delivered to the Holder hereof, or as the Holder (upon payment by the Holder
of any applicable transfer taxes) may direct, the number of fully paid and
nonassessable Common Shares (or Other Securities) to which the Holder shall be
entitled on such exercise, in such denominations as may be requested by the
Holder and a certificate or certificates therefor, plus, in lieu of any
fractional share to which the Holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current fair market value of one full
share, together with any other shares or other securities any property
(including cash, where applicable) to which the Holder is entitled upon such
exercise pursuant to Section 1 or otherwise. Upon exercise of this Warrant as
provided herein, the Company's obligation to issue and deliver the certificates
for Common Shares shall be absolute and unconditional, irrespective of the
absence of any action by the Holder to enforce the same, any waiver or consent
with respect to any provision thereof, the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in the
enforcement of any other obligation of the Company to the Holder, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other person of any obligation to the Company, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with such exercise.
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<PAGE>
If the Company fails to issue and deliver the certificates for the Common Shares
to the Holder pursuant to the first sentence of this paragraph as and when
required to do so, in addition to any other liabilities the Company may have
hereunder and under applicable law, the Company shall pay or reimburse the
Holder on demand for all reasonable out-of-pocket expenses including, without
limitation, fees and expenses of legal counsel incurred by the Holder as a
result of such failure.
As used herein, current fair market value of Common Shares as of a
specified date shall mean with respect to each Common Share the closing bid
price of the Common Shares on the principal securities market on which the
Common Shares may at the time be listed or, if on such day the Common Shares are
not so listed, the representative bid prices quoted in the Nasdaq System as of
4:00 p.m., New York City time, or, if on such day the Common Shares are not
quoted in the Nasdaq System, the average of the highest bid and lowest asked
price on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of five consecutive Trading Days
consisting of the day as of which the current fair market value of a Common
Share is being determined (or if such day is not a Trading Day, the Trading Day
next preceding such day) and the four consecutive Trading Days prior to such
day. If on the date for which current fair market value is to be determined the
Common Shares are not listed on any securities exchange or quoted in the Nasdaq
System or the over-the-counter market, the current fair market value of Common
Shares shall be the highest price per share which the Company could then obtain
from a willing buyer (not a current employee or director) for Common Shares sold
by the Company, from authorized but unissued shares, as determined in good faith
by the Board of Directors of the Company, unless prior to such date the Company
has become subject to a merger, amalgamation, acquisition or other consolidation
pursuant to which the Company is not the surviving or continuing party, in which
case the current fair market value of the Common Shares shall be deemed to be
the value received by the holders of the Company's Common Shares for each share
thereof pursuant to the Company's acquisition.
3. Adjustment for Dividends in Other Shares, Property, etc.;
Reclassification, etc. In case at any time or from time to time, all the holders
of Common Shares (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional shares or other securities or property (other
than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
(c) other or additional shares or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional Common Shares (or Other Securities) issued as a share
dividend or in a share-split (adjustments in respect of which are provided for
in Section 5), then and in each such case the Holder, on the exercise hereof as
provided in Section 1, shall be entitled to receive the amount of shares and
other securities and property (including cash in the cases
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<PAGE>
referred to in subdivisions (b) and (c) of this Section 3) which the Holder
would hold on the date of such exercise if on the date thereof the Holder had
been the holder of record of the number of Common Shares called for on the face
of this Warrant and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and all such other
or additional shares and other securities and property (including cash in the
case referred to in subdivisions (b) and (c) of this Section 3) receivable by
the Holder as aforesaid during such period, giving effect to all adjustments
called for during such period by Section 4.
4. Exercise upon Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate or amalgamate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition of such reorganization, consolidation,
amalgamation, merger, sale or conveyance, the Company shall give at least 20
days notice to the Holder of such pending transaction whereby the Holder shall
have the right to exercise this Warrant prior to any such reorganization,
consolidation, amalgamation, merger, sale or conveyance. Any exercise of this
Warrant pursuant to notice under this Section shall be conditioned upon the
closing of such reorganization, consolidation, amalgamation, merger, sale or
conveyance which is the subject of the notice and the exercise of this Warrant
shall not be deemed to have occurred until immediately prior to the closing of
such transaction.
5. Adjustment for Extraordinary Events. In the event that the Company shall
(i) issue additional Common Shares as a dividend or other distribution on
outstanding Common Shares, (ii) subdivide or reclassify its outstanding Common
Shares, or (iii) combine its outstanding Common Shares into a smaller number of
Common Shares, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, the
numerator of which shall be the number of Common Shares outstanding immediately
prior to such event and the denominator of which shall be the number of Common
Shares outstanding immediately after such event, and the product so obtained
shall thereafter be the Purchase Price then in effect. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described in this Section 5. The Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of Common Shares determined by multiplying the number of
Common Shares which would be issuable on such exercise immediately prior to such
issuance by a fraction of which (i) the numerator is the Purchase Price in
effect immediately prior to such issuance and (ii) the denominator is the
Purchase Price in effect on the date of such exercise.
6. Further Assurances. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares, free from all taxes, liens and charges with
respect to the issue thereof, on the exercise of all or any portion of this
Warrant from time to time outstanding.
7. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend on, or any right to subscribe for,
purchase or otherwise acquire any shares of any class or any other
securities or property, or to receive any other right, or
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<PAGE>
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the share capital of the Company or any transfer of all
or substantially all of the assets of the Company to or consolidation,
amalgamation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder, at least ten days prior to such record date, a notice specifying (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, amalgamation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Shares (or
Other Securities) shall be entitled to exchange their Common Shares (or Other
Securities) for securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, amalgamation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any shares or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or a favorable vote of shareholders if either is required. Such notice shall be
mailed at least ten days prior to the date specified in such notice on which any
such action is to be taken or the record date, whichever is earlier.
8. Reservation of Shares, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available out of its authorized but
unissued share capital, solely for issuance and delivery on the exercise of this
Warrant, a sufficient number of Common Shares (or Other Securities) to effect
the full exercise of this Warrant and the exercise, conversion or exchange of
any other warrant or security of the Company exercisable for, convertible into,
exchangeable for or otherwise entitling the holder to acquire Common Shares (or
Other Securities), and if at any time the number of authorized but unissued
Common Shares (or Other Securities) shall not be sufficient to effect such
exercise, conversion or exchange, the Company shall take such action as may be
necessary to increase its authorized but unissued Common Shares (or Other
Securities) to such number as shall be sufficient for such purposes.
9. Transfer of Warrant. This Warrant may be transferred, in whole or in
part, only to Permitted Transferees. This Warrant shall inure to the benefit of
the successors to and permitted assigns of the Holder. This Warrant and all
rights hereunder, in whole or in part, are registrable at the office of the
Company referred to in Section 10 by the Holder hereof in person or by his duly
authorized attorney, upon surrender of this Warrant properly endorsed.
10. Register of Warrants. The Company shall maintain, at the principal
office of the Company (or such other office as it may designate by notice to the
Holder hereof), a register in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each successor and prior owner of such Warrant. The Company
shall be entitled to treat the person in whose name this Warrant is so
registered as the sole and absolute owner of this Warrant for all purposes.
-5-
<PAGE>
11. Exchange of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Holder hereof at the office or agency of the Company referred to
in Section 10, for one or more new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of Common Shares
which may be subscribed for and purchased hereunder, each of such new Warrants
to represent the right to subscribe for and purchase such number of shares as
shall be designated by said Holder hereof at the time of such surrender.
12. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
13. Warrant Agent. On or prior to the issuance of this Warrant, the Company
will instruct ChaseMellon Shareholder Services, L.L.C., as Transfer Agent and
Registrar (the "Transfer Agent"), to act as the exercise agent for purposes of
issuing Common Shares (or Other Securities) on the exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 11 and
replacing this Warrant pursuant to Section 12, or any of the foregoing, and
thereafter any such exchange or replacement, as the case may be, shall be made
at such office by such agent.
14. Remedies. The Company stipulates that the remedies at law of the Holder
in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
15. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the Holder hereof to purchase Common Shares, and no mere enumeration
herein of the rights or privileges of the Holder hereof, shall give rise to any
liability of the Holder for the Purchase Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
16. Notices, etc. All notices and other communications from the Company to
the registered Holder shall be mailed by first class certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
the Holder or at the address shown for the Holder on the register of Warrants
referred to in Section 10 and any such notices to the Company shall be mailed in
such manner to its principal office.
17. Transfer Restrictions. This Warrant may only be transferred as provided
in Section 9. In addition, by acceptance of this Warrant, the Holder represents
to the Company that this Warrant is being acquired for the Holder's own account
and for the purpose of investment and not with a view to, or for sale in
connection with, the distribution thereof, nor with any present intention of
distributing or selling this Warrant or the Common Shares issuable
-6-
<PAGE>
upon exercise of the Warrant. The Holder acknowledges and agrees that this
Warrant and the Common Shares issuable upon exercise of this Warrant (if any)
have not been (and at the time of acquisition by the Holder, will not have been
or will not be), registered under the Securities Act or under the securities
laws of any state, in reliance upon certain exemptive provisions of such
statutes. The Holder further recognizes and acknowledges that because this
Warrant and the Common Shares issuable upon exercise of this Warrant (if any)
are unregistered, they may not be eligible for resale, and may only be resold in
the future pursuant to an effective registration statement under the Securities
Act and any applicable state securities laws, or pursuant to a valid exemption
from such registration requirements. Unless the Common Shares issuable upon
exercise of this Warrant have theretofore been registered for resale under the
Securities Act, the Company may require, as a condition to the issuance of
Common Shares upon the exercise of this Warrant, a confirmation as of the date
of exercise of the Holder's representations pursuant to this Section 17.
18. Legend. Unless theretofore registered for resale under the Securities
Act, each certificate for shares issued upon exercise of this Warrant shall bear
the following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned
in the absence of an effective registration statement for the
securities under the Securities Act of 1933, as amended, or an opinion
of counsel that registration is not required under said Act.
Once the Registration Statement required to be filed by the Company
pursuant to Section 2 of the Registration Rights Agreement, by and among the
Company, Arnhold and S. Bleichroeder, Inc. and Sutro & Co. Incorporated, dated
the date hereof, has been declared effective, thereafter (i) upon the Holder's
request the Company will promptly (but in no event later than three Trading Days
after receipt of the Holder's legended certificates by the Company) substitute
certificates without restrictive legend for certificates for any shares issued
prior to the date such Registration Statement is declared effective by the SEC
which bear such restrictive legend and remove any stop-transfer restriction
relating thereto and (ii) the Company shall not place any restrictive legend on
certificates for any shares issued or impose any stop-transfer restriction
thereon.
19. Miscellaneous. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of California. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
-7-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized.
Dated: February 11, 2000 XOMA LTD.
By:
------------------------------------
Title:
---------------------------------
The common seal of XOMA Ltd. was
affixed hereto in the presence of:
__________________________________
-8-
<PAGE>
FORM OF SUBSCRIPTION
XOMA LTD.
(To be signed only on exercise of Warrant)
TO: ChaseMellon Shareholder Services, L.L.C.,
as Exercise Agent
235 Montgomery Street, 23rd Floor
San Francisco, California 94104
1. The undersigned Holder of the attached original, executed Warrant hereby
elects to exercise its purchase right under such Warrant with respect to
______________ Common Shares, as defined in the Warrant, of XOMA Ltd., a Bermuda
company (the "Company").
2. The undersigned Holder agrees to pay the aggregate purchase price for
such Common Shares (the "Exercise Shares") (i) by lawful money of the United
States or the enclosed certified or official bank check payable in United States
dollars to the order of the Company in the amount of $___________, or (ii) by
wire transfer of United States funds to the account of the Company in the amount
of $____________, which transfer has been made before or simultaneously with the
delivery of this Form of Subscription pursuant to the instructions of the
Company;
3. Please issue a share certificate or certificates representing the
appropriate number of Common Shares in the name of the undersigned or in such
other names as is specified below:
Name:____________________________
Address:_________________________
_________________________
Dated:____________ ___, ____ ____________________________________
(Signature must conform to name of
Holder as specified on the face
of the Warrant)
Name:____________________________________
Address:_________________________________
_________________________________
S-1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of February 11,
2000, by and among XOMA Ltd., a Bermuda company (the "Company"), and Arnhold and
S. Bleichroeder, Inc. and Sutro & Co. Incorporated (together, the "Investors").
WHEREAS:
A. In connection with the Subscription Agreement between the parties
thereto dated as of February 8, 2000 (the "Subscription Agreement"), the Company
has agreed, upon the terms and subject to the conditions contained therein, to
issue to the Investors common share purchase warrants (the "Warrants") to
purchase an aggregate of 250,000 common shares (the "Warrant Shares") of the
Company, par value $.0005 per share (the "Common Shares");
B. To induce the Investors to act as financial advisors to the Company, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute and rules (collectively, the "Securities Act"), and
applicable state securities laws; and
C. Pursuant to the provisions of Section 2(d) of this Agreement, the
Company may from time to time be required to issue additional shares to the
Investors (the "Additional Shares").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investors
hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and pursuant to Rule 415 under the
Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of the Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(ii) "Registrable Securities" means (i) the Warrant Shares and (ii)
the Additional Shares, if any, and (iii) Common Shares issued prior to the
effectiveness of the Registration Statement covering such shares as a
dividend or other distribution with respect to, in exchange for or in
replacement of, the Warrant Shares; provided, however, that any Warrant
Shares sold pursuant to an effective registration
<PAGE>
-2-
statement or pursuant to Rule 144 under the Securities Act shall cease to
be Registrable Securities.
(iii) "Registration Statement" means a registration statement of the
Company under the Securities Act, including any amendment thereto.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Subscription Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare, and, on or prior to
the date which is forty-five (45) days after the Closing Date (as defined in the
Subscription Agreement), file with the SEC a Registration Statement on Form S-3
registering the resale of the Registrable Securities provided, however, that in
the event Form S-3 is not available to the Company, the Company shall file such
other form as may be available if holders who hold Registrable Securities with a
market value of at least One Million Dollars ($1,000,000) deliver a written
request to the Company that the Company do so, where such market value is
determined as of the date of such written request.
(b) Effectiveness. The Company shall use its reasonable best efforts to
obtain effectiveness of the Registration Statement within one-hundred twenty
(120) days after the filing of the Registration Statement (the end of such
period, the "Effectiveness Date") (in the event such Registration Statement is
not effective at the expiration of such 120-day period, the Company shall
continue to use all reasonable commercial efforts to cause it to become
effective until it becomes effective).
(c) No Underwriting. The registration of any Registrable Securities
provided for in this Section 2 shall not be underwritten.
(d) Additional Shares. If the Registration Statement is not declared
effective prior to or on the Effectiveness Date, the Company shall pay to each
Investor, in cash or Additional Shares (at the Company's option), an amount
equal to 1% of the product of (i) the number of Warrant Shares held by such
Investor, multiplied by (ii) the Purchase Price (as defined in the Subscription
Agreement), for each 15 day period subsequent to the Effectiveness Date during
which the Registration Statement is not effective. Any Additional Shares so
issued will be valued based on the Purchase Price. Such payment shall be made as
soon as practicable after each such 15 day period.
(e) Eligibility for Registration Statement Forms. The Company meets the
requirements for the use of Form S-3 for registration of the Registrable
Securities for resale by the Investors. The Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
maintain such eligibility for the use of Form S-3.
<PAGE>
-3-
(f) Piggy-Back Registration. If at any time the Company determines to
prepare and file with the SEC a Registration Statement in accordance with a
request therefor pursuant to Section 2(f) of the Registration Rights Agreement,
dated the date hereof, by and among the Company and the investors party thereto,
the Company shall send to each Investor written notice of such determination
and, if within twenty (20) days after receipt of such notice such Investor shall
so request in writing, the Company shall include in such Registration Statement
all of the Registrable Securities of such Investor that such Investor requests
to be registered. The obligations of the Company under this Section 2(f) shall
expire after the Company has afforded the opportunity for the Investors to
exercise registration rights under this Section 2(f). Notwithstanding any other
provision of this Agreement, if the Registration Statement required to be filed
pursuant to Section 2(a) of this Agreement shall have been ordered effective by
the SEC and the Company shall have maintained the effectiveness of such
Registration Statement as required by this Agreement and if the Company shall
otherwise have complied in all material respects with its obligations under this
Agreement, then the Company shall not be obligated to register any Registrable
Securities on such Registration Statement referred to in this Section 2(f).
(g) Restrictive Legend.
The Investors acknowledge and agree that until such time as the Warrant
Shares have been registered for resale under the 1933 Act as contemplated
herein, the certificates for the Warrant Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for the Warrant Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned
in the absence of an effective registration statement for the
securities under the Securities Act of 1933, as amended, or an opinion
of counsel that registration is not required under said Act.
Once the Registration Statement required to be filed by the Company
pursuant to Section 2 of this Agreement has been declared effective, thereafter
(i) upon request of an Investor the Company will promptly (but in no event later
than three Trading Days after receipt of such Investor's legended certificates
by the Company) substitute certificates without restrictive legend for
certificates for any Registrable Securities issued prior to the date such
Registration Statement is declared effective by the SEC which bear such
restrictive legend and remove any stop-transfer restriction relating thereto and
(ii) the Company shall not place any restrictive legend on certificates for any
Registrable Securities issued or impose any stop-transfer restriction thereon.
<PAGE>
-4-
3. Obligations of the Company.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) Once declared effective, the Company shall use its reasonable best
efforts to keep the Registration Statement effective pursuant to Rule 415 at all
times (subject to Section 3(e)) until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which all of the Registrable Securities may be immediately sold without
restriction (including without limitation as to volume by each holder thereof)
without registration under the Securities Act (the "Registration Period").
(b) The Company shall (i) prepare and file with the SEC, with notice
thereof to each Investor following such filing, such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement and (ii) as promptly as reasonably practicable after becoming aware of
such fact or even, notify each Investor of the existence of any fact or the
happening of any event of which the Company has knowledge as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Company shall furnish to each Investor such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
(d) The Company shall use reasonable best efforts to register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Investor may reasonably request and maintain such registrations and
qualifications in effect at all times during the Registration Period; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company undue expense or burden, or (v) make any
change in its memorandum of continuance or byelaws.
(e) In the event that, in the reasonable judgment of the Company, it is
advisable to suspend use of the prospectus relating to the Registration
Statement for a discrete period of time (a "Deferral Period") due to pending
material corporate developments or similar
<PAGE>
-5-
material events that have not yet been publicly disclosed and as to which the
Company believes public disclosure will be prejudicial to the Company, the
Company shall deliver a notice in writing, to each Investor, to the effect of
the foregoing and, upon receipt of such notice, each Investor agrees not to
dispose of any Registrable Securities covered by the Registration Statement
(other than in transactions exempt from the registration requirements under the
Securities Act) until the Investors are advised in writing by the Company that
use of the prospectus may be resumed; provided, however, that no Deferral Period
shall be more than thirty (30) consecutive days; provided, further, that the
aggregate number of days in any such Deferral Periods shall be no more than
sixty (60) in any 12-month period.
4. Obligations of the Investors.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that each of the Investors shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be required to effect the registration of such
Registrable Securities, and shall execute such documents in connection with such
registration, as the Company may reasonably request.
(b) Each Investor, by acceptance of the Warrants, agrees to cooperate with
the Company as reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless the
Investor has notified the Company in writing of the Investor's election to
exclude the Registrable Securities from the Registration Statement.
(c) For any offer or sale of any of the Registrable Securities under the
Registration Statement by the Investor in a transaction that is not exempt under
the Securities Act, the Investor, in addition to complying with any other
federal securities laws, shall deliver a copy of the final prospectus (together
with any amendment of or supplement to such prospectus) of the Company covering
the Registrable Securities, in the form furnished to the Investor by the
Company, to the purchaser of any of the Registrable Securities on or before the
settlement date for the purchase of such Registrable Securities.
(d) Upon the receipt by an Investor of any notice from the Company of (1)
the existence of any fact or the happening of any event as a result of which the
prospectus included in the Registration Statement contains an untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, (2) the issuance by the SEC of any stop order or
injunction suspending or enjoining the use or the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose, or
the taking of any
<PAGE>
-6-
similar action by the securities regulators of any state or other jurisdiction,
or (3) the request by the SEC or any other federal or state governmental agency
for amendments or supplements to the Registration Statement or related
prospectus or for additional information related thereto, the Investor shall
forthwith discontinue disposition of its Registrable Securities covered by the
Registration Statement or related prospectus (other than in transactions exempt
from the registration requirements under the Securities Act) until receipt of
the supplemented or amended prospectus or until such Investor is advised in
writing by the Company that the use of the applicable prospectus may be resumed.
In such a case, the Company shall as promptly as reasonably practicable (i)
prepare an amendment to correct or update the prospectus, (ii) use its
reasonable best efforts to remove the impediments referred to in subclause (2)
above, (iii) comply with the requests referred to in subclause (3) above and
(iv) send each Investor an updated prospectus and advise each Investor in
writing that the Investors may continue disposition of their Registrable
Securities (subject to Section 3(e)) registered by the Registration Statement.
5. Expenses.
All reasonable expenses incurred by the Company in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualification fees,
printers and accounting fees and the fees and disbursements of counsel for the
Company shall be borne by the Company. Each Investor shall be responsible for
any stock transfer taxes that may be payable by such Investor, and all brokerage
commissions relating to Registrable Securities. The Company shall not be
responsible for the fees and disbursements of counsel for the Investor except as
set forth in the Subscription Agreement.
6. Indemnification.
In the event any Registrable Securities are included in the Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor, its directors and officers and each person who controls
such Investor within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), if any (each, an
"Indemnified Person"), against any losses, claims, damages or liabilities to
third parties (collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such Claims arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of the Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company
<PAGE>
-7-
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the provisions set forth in Section
6(c), the Company shall reimburse the Indemnified Person for any legal fees or
other expenses reasonably incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly stating that such information is for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (ii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld; and
(iii) with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, such corrected prospectus was
timely furnished to such Indemnified Person by the Company pursuant to Section
3(c) hereof, and the Indemnified Person was promptly advised in writing not to
use the uncorrected prospectus prior to the use giving rise to a Violation and
such Indemnified Person, notwithstanding such advice, used such uncorrected
prospectus.
(b) In connection with the Registration Statement, each Investor, severally
and not jointly, agrees to indemnify and hold harmless, to the same extent and
in the same manner set forth in Section 6(a), the Company, each of its officers
and directors and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act (each, an "Indemnified
Party"), against any Claim to which any of them may become subject, under the
Securities Act, the Exchange Act or other federal or state securities law,
insofar as such Claim arises out of or is based upon any Violation by such
Investor, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly stating that such
information is for use in connection with the Registration Statement; and
subject to Section 6(c) such Investor will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld; provided,
<PAGE>
-8-
further, however, that the Investor shall be liable under this Agreement
(including this Section 6(b) and Section 7) for only that amount as does not
exceed the gross proceeds to the Investor as a result of the sale of Registrable
Securities pursuant to the Registration Statement containing the Violation.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if such
Investor timely notified the Company in writing of the untrue statement or
omission of material fact contained in the preliminary prospectus and the
Company failed to make such correction to the prospectus.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party of
notice of the commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be (which consent shall not be
unreasonably withheld); provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the Indemnified Person or Indemnified
Party, as applicable, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. With respect to the foregoing proviso, the indemnifying party shall
pay for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable (together with appropriate local counsel),
and such legal counsel shall be selected by the Investors, if the Investors are
entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, shall relieve such indemnifying party of
liability to the Indemnified Person or Indemnified Party under this Section 6 to
the extent the indemnifying party's ability to defend such action is prejudiced
by such failure.
7. General Provisions.
(a) Registered Holder. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
<PAGE>
-9-
(b) Notices. All notices which may be required pursuant to this Agreement
(i) shall be in writing, (ii) shall be addressed as follows:
If to the Company:
XOMA Ltd.
2910 Seventh Street
Berkeley, California 94710
Attn: Legal Department
Facsimile: (510) 649-7571
With a copy to:
Cahill Cordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Geoffrey E. Liebmann, Esq.
Facsimile: (212) 269-5420
If to the Investors:
Arnhold and S. Bleichroeder, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attn: Frederick Arnold
Facsimile: (212) 299-4410
Sutro & Co. Incorporated
11150 Santa Monica Boulevard
Suite 1500
Los Angeles, CA 90025
Attn: Mark Tunney
Facsimile: (310) 477-6060
With a copy to:
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, 29th Floor
San Francisco, California 94114
Attn: Paul A. Reiner, Esq.
Facsimile: (415) 217-5333
<PAGE>
-10-
(or to such other person or address as either party may so designate from time
to time), (iii) shall be mailed, postage prepaid, by registered mail or
certified mail, return receipt requested, sent by nationally-recognized
overnight carrier or transmitted by courier for hand delivery and (iv) shall be
deemed to have been given on the date of receipt. Any such notice may be sent by
facsimile transmission but shall in such case be subsequently confirmed by a
writing mailed, sent or transmitted as set forth above and shall be deemed to
have been given on the date of receipt of such facsimile transmission subject to
receipt of such confirmation.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
(d) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties regarding the subject matter hereof and thereof,
and there are no prior written or oral promises or representations not
incorporated herein or therein. No amendment or modification of the terms of
this Agreement shall be binding on either party unless reduced to writing and
signed by an authorized officer of the party to be bound.
(e) Binding Effect; Assignability. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assignable by either party,
either in whole or in part, except as provided in the next sentence. The rights
to have the Company register Common Shares pursuant to this Agreement and rights
to Additional Shares, if any, pursuant to Section 2(d) of this Agreement shall
be automatically assigned by an Investor to any Permitted Transferee of all or
any portion of such securities only if: (i) the Investor agrees in writing with
the Permitted Transferee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such Permitted
Transferee and (B) the securities with respect to which such registration rights
are being transferred or assigned, and (iii) the Permitted Transferee agrees in
writing with the Company to be bound by all of the provisions contained herein.
(f) Waiver. The waiver by a party hereto of any breach of or default under
any of the provisions of this Agreement or the failure of a party to enforce any
of the provisions of this Agreement or to exercise any right hereunder shall not
be construed as a waiver of any other breach or default or as a waiver of any
such rights or provisions hereunder.
(g) Severability. If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective only to the
extent of such invalidity or unenforceability, without in any way affecting the
remaining parts of this Agreement. In addition, the part that is ineffective
shall be deemed reformed in such a manner as to as nearly approximate the intent
of the parties as possible.
<PAGE>
-11-
(h) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.
<PAGE>
-12-
IN WITNESS WHEREOF, the Company and the Investors have caused this
Agreement to be duly executed as of the date first above written.
XOMA Ltd.
By:
-----------------------------------------
Name: Christopher J. Margolin
Title: Vice President, General Counsel
and Secretary
ARNHOLD AND S. BLEICHROEDER, INC.
By:
-----------------------------------------
Name:
Title:
SUTRO & CO. INCORPORATED
By:
-----------------------------------------
Name:
Title:
