Item
1.01. Entry
into a Material Definitive Agreement
On
October 21, 2008, we entered into what is sometimes referred to as an equity
line of credit arrangement with Azimuth Opportunity
Ltd. (“Azimuth”). A copy of the press release issued by us
on October 22, 2008 concerning the transaction is filed herewith as Exhibit
99.1 and is incorporated herein by reference. In connection with this
transaction, we entered into a Common Stock Purchase Agreement with Azimuth (the
“Purchase Agreement”), pursuant to which, and upon the terms and subject to the
conditions set forth therein, Azimuth has committed to purchase up to
$60,000,000 of our common shares, or the number of shares which is one less than
twenty percent (20%) of the issued and outstanding common shares as of October
21, 2008, whichever occurs first, over the 24-month term of the Purchase
Agreement. From time to time ending on November 1, 2010 and at our
sole discretion, we may present Azimuth with draw down notices to purchase our
common shares over 10 consecutive trading days or such other period mutually
agreed upon by us and Azimuth. Each draw down is subject to
limitations based on the price of our common shares and a limit of 2.5% of our
market capitalization at the time of such draw down, provided, however, Azimuth
will not be required to purchase more than $16,000,000 of our common shares in
any single draw down (excluding shares under any call option, which is described
below). We are able to present Azimuth with up to 24 draw down
notices during the term of the Purchase Agreement, with a minimum of five
trading days required between each draw down period. Only one draw
down is allowed in each draw down pricing period, unless otherwise mutually
agreed upon by us and Azimuth.
Once
presented with a draw down notice, Azimuth is required to purchase a pro-rata
portion of the shares allocated to each trading day during the trading period on
which the daily volume weighted average price for our common shares exceeds a
threshold price for such draw down determined by us. The payment
for shares in respect of each draw down notice shall be settled on the
second trading day following the last trading day of each draw down period, or
on such earlier date as we and Azimuth may mutually agree. The per
share purchase price for these shares equals the daily volume weighted average
price of our common shares on each date during the draw down period on which
shares are purchased, less a discount ranging from 2.65% to 6.65%. If
the daily volume weighted average price of our common shares falls below the
threshold price on any trading day during a draw down period, Azimuth will not
be required to purchase the pro-rata portion of common shares allocated to that
day. However, at its election, Azimuth may buy the pro-rata portion
of shares allocated to that day at the threshold price less the discount
described above.
The
Purchase Agreement also provides that from time to time and at our sole
discretion we may grant Azimuth the right to exercise one or more options to
purchase additional common shares during each draw down pricing period as
specified by us. Upon Azimuth’s exercise of
the
option, we will sell to Azimuth our common shares subject to the option at a
price equal to the greater of the daily volume weighted average price of our
common shares on the day Azimuth notifies us of its election to exercise its
option or the threshold price for the option determined by us, less a discount
ranging from 2.65% to 6.65%.
In
addition to our issuance of common shares to Azimuth pursuant to the Purchase
Agreement, our Registration Statement on Form S–3 (File
No. 333-149874) also covers the sale of those shares from time to
time by Azimuth to the public. Azimuth is an “underwriter” within the
meaning of Section 2(a)(11) of the Securities Act of 1933, as
amended.
Azimuth
has informed us that it will use an unaffiliated broker-dealer to effectuate all
sales, if any, of common shares that it may purchase from us pursuant to the
Purchase Agreement. Such sales will be made on the NASDAQ Global
Market at prices and at terms then prevailing or at prices related to the then
current market price. Each such unaffiliated broker-dealer will be an
underwriter within the meaning of Section 2(a)(11) of the Securities
Act. Azimuth has informed us that each such broker-dealer will
receive commissions from Azimuth which will not exceed customary brokerage
commissions. Azimuth also will pay other expenses associated with the
sale of the common shares it acquires pursuant to the Purchase
Agreement.
The
common shares may be sold in one or more of the following manners:
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ordinary
brokerage transactions and transactions in which the broker solicits
purchasers; or
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a
block trade in which the broker or dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block as
principal to facilitate the
transaction.
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Azimuth
has agreed that during the term of and for a period of 90 days after the
termination of the Purchase Agreement, neither Azimuth nor any of its affiliates
will, directly or indirectly, sell any of our securities except the shares that
it owns or has the right to purchase pursuant to the provisions of a draw down
notice. Azimuth has agreed that during the period listed above it
will not enter into a short position with respect to our common shares except
that Azimuth may sell shares that it is obligated to purchase under a pending
draw down notice but has not yet taken possession of so long as Azimuth covers
any such sales with the shares purchased pursuant to such draw down
notice. Azimuth has further agreed that during the periods listed
above it will not grant any option to purchase or acquire any right to dispose
or otherwise dispose for value of any of our common shares or any securities
convertible into, or exchangeable for, or warrants to purchase, any of our
common shares, or enter into any swap, hedge or other agreement that transfers,
in whole or in part, the economic risk of ownership of our common shares, except
for the sales permitted by the prior two sentences.
In
addition, Azimuth and any unaffiliated broker-dealer will be subject to
liability under the federal securities laws and must comply with the
requirements of the Securities Act and the Securities Exchange Act of 1934,
including without limitation, Rule 10b–5 and Regulation M under the Exchange
Act. These rules and regulations may limit the timing of purchases
and sales of common shares by Azimuth or any unaffiliated
broker-dealer. Under these rules and regulations, Azimuth and any
unaffiliated broker-dealer:
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may
not engage in any stabilization activity in connection with our
securities;
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must
furnish each broker which offers our common shares covered by the
prospectus that is a part of our Registration Statement with the number of
copies of such prospectus and any prospectus supplement which are
required by each broker; and
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may
not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Exchange Act.
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These
restrictions may affect the marketability of the common shares by Azimuth and
any unaffiliated broker-dealer.
Subject
to limited exceptions, we have agreed to indemnify and hold harmless Azimuth,
each of its affiliates, employees, representatives and advisors and any
unaffiliated broker-dealer and each person who controls Azimuth or any
unaffiliated broker-dealer against certain liabilities, including liabilities
under the Securities Act, which may be based upon, among other things, any
untrue statement or alleged untrue statement of a material fact contained in or
incorporated by reference in our Registration Statement, or any omission or
alleged omission to state in the Registration Statement or any Issuer Free
Writing Prospectus or any document incorporated by reference therein, a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless made or omitted in reliance upon written information
provided to us by Azimuth or any unaffiliated broker-dealer. We have
agreed to pay up to thirty-five thousand dollars ($35,000) of Azimuth’s
attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket
expenses) incurred by Azimuth in connection with the preparation, negotiation,
execution and delivery of the Purchase Agreement and related transaction
documentation, and up to $12,500 each quarter during the term of the equity line
to cover ongoing due diligence and review of documentation. Further,
we have agreed that if we issue a draw down notice and fail to deliver the
shares to Azimuth on the applicable settlement date, and such failure continues
for ten trading days, we will pay Azimuth liquidated damages in cash or
restricted common shares, at the option of Azimuth.
Azimuth
has agreed to indemnify and hold harmless us and each of our directors, officers
and persons who control us against certain liabilities, including liabilities
under the Securities Act, which may be based upon, among other things, an untrue
statement, alleged untrue statement,
omission
or alleged omission, included in the prospectus that forms a part of our
Registration Statement or any prospectus supplement or permitted free writing
prospectus or any amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished by Azimuth to us for inclusion
therein, or any omission or alleged omission to state in such prospectus,
prospectus supplement or permitted free writing prospectus or any amendment or
supplement thereto a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, the untrue statement, alleged untrue statement, omission or alleged
omission was made in reliance upon, and in conformity with, written information
provided to us by Azimuth.
Reedland
Capital Partners, an Institutional Division of Financial West Group, member
FINRA/SIPC (“Reedland”), is acting as placement agent in connection with the
sale of our common shares to Azimuth under the Purchase Agreement. We
have agreed to pay Reedland, upon each such sale, a placement fee equal to 1.35%
of the aggregate dollar amount of common shares purchased by
Azimuth.
The
foregoing descriptions are qualified in their entirety by reference to the
Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1 and
incorporated by reference herein.
Item
9.01. Exhibits
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10.1.
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Common
Stock Purchase Agreement, dated as of October 21, 2008, by and between
XOMA Ltd. and Azimuth Opportunity Ltd.
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99.1.
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Press
Release dated October 22, 2008.
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EXHIBIT
INDEX
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Number
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Description
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10.1.
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Common
Stock Purchase Agreement, dated as of October 21, 2008, by and between
XOMA Ltd. and Azimuth Opportunity Ltd.
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99.1.
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Press
Release dated October 22, 2008.
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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.
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Dated: October
22, 2008
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XOMA
LTD.
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By:
/s/ Christopher
J. Margolin
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Christopher J. Margolin
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Vice
President, General
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Counsel and Secretary
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