xoma424b5_110909.htm
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PROSPECTUS
SUPPLEMENT
(To
Prospectus dated October 21, 2008)
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Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-148342
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XOMA
Ltd.
Common
Shares
This
prospectus supplement relates to the issuance and sale of up to 25,000,000 of
our common shares from time to time through our sales agent, Wm Smith &
Co. These sales, if any, will be made pursuant to the terms of an At
Market Issuance Sales Agreement entered into between us and our sales agent, the
form of which was filed on November 9, 2009 with the Securities and Exchange
Commission with our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2009 and is incorporated herein by reference. Our sales
agreement with Wm Smith & Co. is limited to the sale of 25,000,000 common
shares.
Our
common shares are quoted on The NASDAQ Global Market under the symbol
“XOMA.” On November 6, 2009, the last reported sale price of our
common shares on The NASDAQ Global Market was $0.76 per share. Sales
of shares of our common shares under this prospectus supplement, if any, may be
made by any method permitted by law deemed to be an “at the market” offering as
defined in Rule 415 under the Securities Act of 1933, as amended, which includes
sales made directly on The NASDAQ Global Market, on any other existing trading
market for our common shares or to or through a market maker, or in privately
negotiated transactions, subject to our approval. The sales agent
will make all sales using commercially reasonable efforts consistent with its
normal trading and sales practices, on mutually agreeable terms between the
sales agent and us.
Unless we
and our sales agent otherwise agree, the commission to the sales agent for sales
of common shares sold pursuant to the sales agreement will be 3% of the gross
proceeds of the sales price per share but will in no event be less than $0.02
per share. If different than 3% or $0.02 per share, the amount of any
compensation to be received by the sales agent will be disclosed in a separate
prospectus supplement for such shares. The net proceeds to us that we
receive from sales of our common shares will depend on the number of shares
actually sold and the offering price for such shares.
In
connection with the sale of common shares on our behalf, the sales agent may be
deemed an “underwriter” within the meaning of the Securities Act of 1933, as
amended, and the compensation of the sales agent may be deemed to be
underwriting commissions or discounts. We have agreed to provide
indemnification and contribution to the sales agent against certain liabilities,
including liabilities under the Securities Act of 1933.
Investing
in our common shares involves a high degree of risk. Before buying any shares,
you should read the discussion of material risks of investing in our common
shares in the section entitled “RISK FACTORS” in this prospectus supplement and
the additional risk factors contained in our most recent Annual Report on Form
10-K and Quarterly Reports on Form 10-Q, as well as any amendments thereto, as
filed with the Securities and Exchange Commission.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Consent
under the Exchange Control Act 1972 (and its related regulations) has been
obtained from the Bermuda Monetary Authority for the issue and transfer of
XOMA’s shares, options, warrants, depositary receipts, rights, loan notes and
other securities to and between non-residents of Bermuda for exchange control
purposes provided our shares remain listed on an appointed stock exchange, which
includes The NASDAQ Global Market. This prospectus supplement may be filed with
the Registrar of Companies in Bermuda in accordance with Bermuda law. In
granting such consent and in accepting this prospectus supplement for filing,
neither the Bermuda Monetary Authority nor the Registrar of Companies in Bermuda
accepts any responsibility for our financial soundness or the correctness of any
of the statements made or opinions expressed in this prospectus
supplement.
Wm
Smith & Co.
The date
of the Prospectus Supplement is November 9, 2009.
TABLE
OF CONTENTS
Prospectus
Supplement:
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ABOUT
THIS PROSPECTUS SUPPLEMENT
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S-1
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THE
OFFERING
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S-2
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RISK
FACTORS
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S-2
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FORWARD-LOOKING
INFORMATION
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S-3
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USE
OF PROCEEDS
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S-3
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PLAN
OF DISTRIBUTION
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S-4
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LEGAL
MATTERS
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S-5
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|
EXPERTS
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S-5
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WHERE
YOU CAN FIND MORE INFORMATION
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S-5
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Prospectus:
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ABOUT
THIS PROSPECTUS
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1
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ABOUT
XOMA
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1
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RISK
FACTORS
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2
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|
THE
SECURITIES WE MAY OFFER
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2
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|
FORWARD-LOOKING
INFORMATION
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5
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FINANCIAL
RATIOS
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6
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USE
OF PROCEEDS
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6
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|
DESCRIPTION
OF SHARE CAPITAL
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6
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DESCRIPTION
OF DEBT SECURITIES
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13
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DESCRIPTION
OF WARRANTS
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21
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LEGAL
OWNERSHIP OF SECURITIES
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23
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PLAN
OF DISTRIBUTION
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27
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LEGAL
MATTERS
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32
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EXPERTS
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32
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WHERE
YOU CAN FIND MORE INFORMATION
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32
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ABOUT
THIS PROSPECTUS SUPPLEMENT
You
should rely only on the information incorporated by reference or provided in
this prospectus supplement and the accompanying prospectus, or to which we have
referred you. We have not authorized anyone to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. This prospectus supplement
and the accompanying prospectus do not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this prospectus
supplement and the accompanying prospectus in any jurisdiction where it is
unlawful to make such offer or solicitation. You should not assume
that the information contained in this prospectus supplement or the accompanying
prospectus, or any document incorporated by reference in this prospectus
supplement or the accompanying prospectus, is accurate as of any date other than
the date on the front cover of the applicable document. Neither the
delivery of this prospectus supplement nor any distribution of securities
pursuant to this prospectus supplement shall, under any circumstances, create
any implication that there has been no change in the information set forth or
incorporated by reference into this prospectus supplement or in our affairs
since the date of this prospectus supplement. Our business, financial
condition, results of operations and prospects may have changed since that
date.
This
document is in two parts. The first part is the prospectus
supplement, which adds to and updates information contained in the accompanying
prospectus. The second part, the prospectus, provides more general
information, some of which may not apply to this offering. Generally,
when we refer to this prospectus, we are referring to both parts of this
document combined. To the extent there is a conflict between the
information contained in this prospectus supplement, on the one hand, and the
information contained in the accompanying prospectus, on the other hand, you
should rely on the information in this prospectus supplement.
Before
purchasing any securities, you should carefully read both this prospectus
supplement and the accompanying prospectus, together with the additional
information described under the heading, “Where You Can Find More Information,”
in the accompanying prospectus.
Unless
the context otherwise requires, references in this prospectus supplement to
“we”, “us” and “our” refer to XOMA Ltd. and its consolidated
subsidiaries.
THE
OFFERING
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Common
Shares offered by us
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25,000,000
common shares
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Common
Shares to be issued and
outstanding
after the offering
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223,937,455
common shares*
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Use
of Proceeds
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We
intend to use the proceeds for working capital and general corporate
purposes
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Risk
Factors
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You
should carefully consider the information set forth in the section
entitled “RISK FACTORS” in this prospectus supplement and the additional
risk factors contained in our most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, as well as any amendments thereto, as
filed with the Securities and Exchange Commission before deciding whether
to invest in our common shares
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*
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Based
on common shares outstanding at November 5, 2009. Excludes common shares
issuable upon the exercise of options or the conversion of preference
shares outstanding as of November 5,
2009.
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RISK
FACTORS
An
investment in our securities involves a high degree of risk. You
should carefully consider the risk factors set forth below and the additional
risk factors contained in our most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, as well as any amendments thereto, as filed with
the Securities and Exchange Commission before deciding whether to invest in our
common shares. Additional risks and uncertainties that are not yet
identified may also materially harm our business, operating results and
financial condition and could result in a complete loss of your
investment.
We
Have Broad Discretion In Determining How To Use the Proceeds Of This
Offering.
We have
not determined the amounts we plan to spend on any of the areas listed in “Use
of Proceeds” or the timing of such expenditures. As a result, our
management will have broad discretion to allocate the net proceeds from this
offering, and may spend the proceeds in ways with which our shareholders may not
agree. Pending application of the net proceeds as described in “Use
of Proceeds”, we intend to invest the net proceeds of the offering in
interest-bearing accounts and short-term, interest-bearing
securities. These investments may not yield a favorable return to our
shareholders.
FORWARD-LOOKING
INFORMATION
Certain
statements contained in this prospectus supplement and the related documents
incorporated by reference related to the sufficiency of our cash resources and
our efforts to enter into a collaborative arrangement with respect to XOMA 052,
as well as other statements related to current plans for product development and
existing and potential collaborative and licensing relationships, or that
otherwise relate to future periods, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are based on assumptions that
may not prove accurate. Actual results could differ materially from those
anticipated due to certain risks inherent in the biotechnology industry and for
companies engaged in the development of new products in a regulated market.
Among other things, the period for which our cash resources are sufficient could
be shortened if expenditures are made earlier or in larger amounts than
anticipated or are unanticipated, if anticipated revenues or cost sharing
arrangements do not materialize, or if funds are not otherwise available on
acceptable terms; and, we may not be able to enter into a collaborative
arrangement with respect to XOMA 052 on acceptable terms within the timeframes
anticipated or at all. These and other risks, including those related to
inability to comply with NASDAQ’s continued listing requirements; the declining
and generally unstable nature of current economic conditions; the results of
discovery research and preclinical testing; the timing or results of pending and
future clinical trials (including the design and progress of clinical trials;
safety and efficacy of the products being tested; action, inaction or delay by
the FDA, European or other regulators or their advisory bodies; and analysis or
interpretation by, or submission to, these entities or others of scientific
data); changes in the status of existing collaborative relationships; the
ability of collaborators and other partners to meet their obligations; our
ability to meet the demand of the United States government agency with which we
have entered our government contracts; competition; market demands for products;
scale-up and marketing capabilities; availability of additional licensing or
collaboration opportunities; international operations; share price volatility;
our financing needs and opportunities; uncertainties regarding the status of
biotechnology patents; uncertainties as to the costs of protecting intellectual
property; and risks associated with our status as a Bermuda company, are
described in more detail in “RISK FACTORS” included or incorporated by reference
in the prospectus and this prospectus supplement. We undertake no
obligation to publicly update any forward-looking statements, regardless of any
new information, future events or other occurrences. We advise you,
however, to consult any additional disclosures we make in our reports to the SEC
on Forms 10-K, 10-Q and 8-K.
USE
OF PROCEEDS
Because
there is no minimum offering amount required as a condition to closing this
offering, the actual total public offering amount, commissions and proceeds to
us, if any, are not determinable at this time. We currently intend to
use the net proceeds from the sale of the common shares offered by this
prospectus supplement and the accompanying prospectus for general corporate
purposes, which may include research and development expenses, clinical trial
expenses, manufacturing expenses and increasing our working
capital. Pending application of the net proceeds for the specified
purposes, we expect to invest the proceeds in interest-bearing accounts and
short-term, interest-bearing securities.
PLAN
OF DISTRIBUTION
We have
entered into an At Market Issuance Sales Agreement with Wm Smith & Co.,
under which we may sell up to 25,000,000 of our common shares from time to time
through Wm Smith & Co., as our agent for the offer and sale of the common
shares. Wm Smith & Co. may sell the common shares by any method
permitted by law deemed to be an “at the market” offering as defined in Rule 415
of the Securities Act, including without limitation sales made directly on The
NASDAQ Global Market, on any other existing trading market for the common shares
or to or through a market maker. Wm Smith & Co. may also sell the
common shares in privately negotiated transactions, subject to our prior
approval.
Each time
that we wish to issue and sell common shares under the sales agreement, we will
provide Wm Smith & Co. with a placement notice describing the number of
shares to be issued, the time period during which sales are requested to be
made, any limitation on the number of common shares that may be sold in any one
day and any minimum price below which sales may not be made.
Upon
receipt of a placement notice from us, and subject to the terms and conditions
of the sales agreement, Wm Smith & Co. has agreed to use its commercially
reasonable efforts consistent with its normal trading and sales practices to
sell such shares up to the amount specified on such terms. Unless
otherwise specified, the settlement between us and Wm Smith & Co. of our
common shares will occur on the third trading day following the date on which
the sale was made. The obligation of Wm Smith & Co. under the
sales agreement to sell our common shares pursuant to a placement notice is
subject to a number of conditions.
We will
pay Wm Smith & Co. a commission equal to 3% of the gross proceeds of the
sales price not to exceed $0.02 per share of all common shares sold through it
as sales agent under the sales agreement. Because there is no minimum
offering amount required as a condition to closing this offering, the actual
total public offering amount, commissions and proceeds to us, if any, are not
determinable at this time.
In
connection with the sale of our common shares contemplated in this prospectus
supplement, Wm Smith & Co. may be deemed to be an “underwriter” within the
meaning of the Securities Act of 1933, as amended, and the compensation paid to
Wm Smith & Co. may be deemed to be underwriting commissions or
discounts. We have agreed to indemnify Wm Smith & Co. against
certain civil liabilities, including liabilities under the Securities Act of
1933.
Sales of
our common shares as contemplated in this prospectus supplement will be settled
through the facilities of The Depository Trust Company or by such other means as
we and Wm Smith & Co. may agree upon.
The
offering of our common shares pursuant to the sales agreement will terminate on
the earliest of (1) the sale of all of our common shares subject to the sales
agreement, or (2) termination of the sales agreement by us or Wm Smith
& Co. We and Wm Smith & Co. may each terminate the sales
agreement at any time upon 60 days prior notice. Wm Smith & Co.
may terminate the sales agreement at any time in certain circumstances,
including the occurrence of a material adverse change that, in Wm Smith &
Co.’s reasonable judgment, may impair its ability
to sell
the common shares or a suspension or limitation of trading of our common shares
on The NASDAQ Global Market.
This
summary of the material provisions of the sales agreement does not purport to be
a complete statement of its terms and conditions. A copy of the sales
agreement is filed with the SEC and incorporated by reference into the
registration statement of which this prospectus supplement forms a
part.
LEGAL
MATTERS
Certain
matters under Bermuda law with respect to the validity of the securities being
offered hereby will be passed upon by Conyers Dill & Pearman, located in
Hamilton, Bermuda. Certain matters under New York and federal law
with respect to the validity of the securities being offered hereby will be
passed upon by Cahill Gordon & Reindel llp, located in New
York, New York.
EXPERTS
Ernst
& Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2008, and management’s assessment of the
effectiveness of our internal control over financial reporting as of December
31, 2008, as set forth in their reports, which are incorporated by reference in
this prospectus supplement and elsewhere in the registration
statement. Our financial statements and management’s assessment are
incorporated by reference in reliance on Ernst & Young LLP’s reports, given
on their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements, and other information with the SEC. The
public may read and copy any materials filed by us at the SEC’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549 or on the Internet site
maintained by the SEC at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference
Room. Our common shares are listed on The NASDAQ Global Market, and
these reports, proxy statements, and other information are also available for
inspection at the offices of the NASDAQ Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006-1504.
The
prospectus included in this filing is part of a registration statement filed by
us with the SEC. The full registration statement can be obtained from
the SEC, as indicated above, or from us.
The SEC
allows us to “incorporate by reference” the information we file with the
SEC. This permits us to disclose important information to you by
referring to these filed documents. Any information referred to in
this way is considered part of this prospectus supplement. We
incorporate by reference the following documents that have been filed with the
SEC (other
than
information furnished under Item 2.02 or Item 7.01 of Form 8-K and all exhibits
related to such items):
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·
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our
annual report on Form 10-K for the year ended December 31,
2008;
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·
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our
quarterly reports on Form 10-Q for the fiscal quarters ended March 31,
2009, June 30, 2009 and September 30,
2009;
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·
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our
current reports on Form 8-K filed on January 5, 2009, January 20, 2009,
January 21, 2009, February 10, 2009, February 19, 2009, April 9, 2009, May
19, 2009, June 10, 2009, September 14, 2009, September 21, 2009 and
September 25, 2009;
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·
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the
description of the common shares in the registration statement on Form 8-A
dated and filed on April 1, 2003 under Section 12 of the Securities
Exchange Act, including any amendment or report for the purpose of
updating such description (file no. 0-14710);
and
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·
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our
definitive proxy statement filed pursuant to Section 14 of the Exchange
Act in connection with our 2009 Annual Meeting of Shareholders filed with
the SEC on April 14, 2009.
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Any
information in any of the foregoing documents will automatically be deemed to be
modified or superseded to the extent that information in this prospectus or in a
later filed document that is incorporated or deemed to be incorporated herein by
reference modifies or replaces such information.
We also
incorporate by reference any future filings (other than current reports
furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such
form that are related to such items) made with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, until we file a post-effective
amendment which indicates the termination of the offering of the securities made
by this prospectus supplement. Information in such future filings
updates and supplements the information provided in this prospectus
supplement. Any statements in any such future filings will
automatically be deemed to modify and supersede any information in any document
we previously filed with the SEC that is incorporated or deemed to be
incorporated herein by reference to the extent that statements in the later
filed document modify or replace such earlier statements.
You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address:
XOMA
Ltd.
2910
Seventh Street
Berkeley,
California 94710
(510)
204-7200
PROSPECTUS
$150,000,000
Common
Shares
Preference
Shares
Debt
Securities
Warrants
Offered
by
XOMA
Ltd.
From time
to time, we may offer up to $150,000,000 of any combination of the securities
described in this prospectus.
We will
provide specific terms of these offerings and securities in supplements to this
prospectus. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read this
prospectus, the information incorporated by reference in this prospectus and any
prospectus supplement carefully before you invest.
Our
common shares are traded on the Nasdaq Global Market under the symbol
“XOMA.” On October 21, 2008, the last reported sale price of our
common shares was $1.64 per share. You are urged to obtain current
market quotations for our common shares. The applicable prospectus
supplement will contain information, where applicable, as to any other listing
on the Nasdaq Global Market or any securities market or other exchange of the
securities, if any, covered by the prospectus supplement.
Investing
in our securities involves a high degree of risk. See the section
entitled “RISK FACTORS” contained in any supplements to this Prospectus and in
our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
as well as any amendments thereto, as filed with the Securities and Exchange
Commission, and which are incorporated herein by reference in their
entirety.
This
Prospectus may not be used to offer or sell any securities unless accompanied by
a Prospectus Supplement.
The
securities may be sold directly by us to investors, through agents designated
from time to time or to or through underwriters or dealers. For
additional information on the methods of sale, you should refer to the section
entitled “PLAN OF DISTRIBUTION” in this prospectus. If any
underwriters are involved in the sale of any securities with respect to which
this prospectus is being delivered, the names of such underwriters and any
applicable commissions or discounts and over-allotment options will be set forth
in a prospectus supplement. The price to the public of such
securities and the net proceeds we expect to receive from such sale will also be
set forth in a prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
Consent
under the Exchange Control Act 1972 (and its related regulations) has been
obtained from the Bermuda Monetary Authority for the issue and transfer of
XOMA’s shares, options, warrants, depositary receipts, rights, loan notes and
other securities to and between non-residents of Bermuda for exchange control
purposes provided our shares remain listed on an appointed stock exchange, which
includes the Nasdaq Global Market. This prospectus may be filed with
the Registrar of Companies in Bermuda in accordance with Bermuda
law. In granting such consent and in accepting this prospectus for
filing, neither the Bermuda Monetary Authority nor the Registrar of Companies in
Bermuda accepts any responsibility for our financial soundness or the
correctness of any of the statements made or opinions expressed in this
prospectus.
The date
of this prospectus is October 21, 2008
TABLE
OF CONTENTS
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ABOUT
THIS PROSPECTUS
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1
|
|
ABOUT
XOMA
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1
|
|
RISK
FACTORS
|
2
|
|
THE
SECURITIES WE MAY OFFER
|
2
|
|
FORWARD-LOOKING
INFORMATION
|
5
|
|
FINANCIAL
RATIOS
|
6
|
|
USE
OF PROCEEDS
|
6
|
|
DESCRIPTION
OF SHARE CAPITAL
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6
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|
DESCRIPTION
OF DEBT SECURITIES
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13
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DESCRIPTION
OF WARRANTS
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21
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LEGAL
OWNERSHIP OF SECURITIES
|
23
|
|
PLAN
OF DISTRIBUTION
|
27
|
|
LEGAL
MATTERS
|
32
|
|
EXPERTS
|
32
|
|
WHERE
YOU CAN FIND MORE INFORMATION
|
32
|
You
should rely only on the information we have provided or incorporated by
reference in this prospectus or any prospectus supplement. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. No dealer, salesperson or other person
is authorized to give any information or to represent anything not contained in
this prospectus. You must not rely on any unauthorized information or
representation. This prospectus is an offer to sell only the
securities offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. You should assume that the information
in this prospectus or any prospectus supplement is accurate only as of the date
on the front of the document and that any information we have incorporated by
reference is accurate only as of the date of the document incorporated by
reference, regardless of the time of delivery of this prospectus or any sale of
a security.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, using a “shelf” registration
process. Under this shelf registration process, we may sell common
shares, preference shares, debt securities and warrants in one or more offerings
up to a total dollar amount of $150,000,000. This prospectus provides
you with a general description of the securities we may offer. Each
time we sell any securities under this prospectus, we will provide a prospectus
supplement that will contain more specific information about the terms of those
securities. We may also add, update or change in a prospectus
supplement any of the information contained in this prospectus or in documents
we have incorporated by reference into this prospectus. This
prospectus, together with the applicable prospectus supplements and the
documents incorporated by reference into this prospectus, includes all material
information relating to this offering. You should carefully read both
this prospectus and the applicable prospectus supplement together with the
additional information described under “WHERE YOU CAN FIND MORE INFORMATION”
before buying securities in this offering. You should rely only on
the information we have provided or incorporated by reference in this prospectus
or any prospectus supplement. We have not authorized anyone to
provide you with information different from that contained in this
prospectus. No dealer, salesperson or other person is authorized to
give any information or to represent anything not contained in this
prospectus. You must not rely on any unauthorized information or
representation. This prospectus is an offer to sell only the
securities offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. You should assume that the information
in this prospectus or any prospectus supplement is accurate only as of the date
on the front of the document and that any information we have incorporated by
reference is accurate only as of the date of the document incorporated by
reference, regardless of the time of delivery of this prospectus or any sale of
a security.
ABOUT
XOMA
XOMA
Ltd., a Bermuda company (“XOMA” or “we”), is a leader in the discovery,
development and manufacture of therapeutic antibodies. Our expanding
pipeline includes XOMA 052, an anti-IL-1 beta antibody, and XOMA 629, a
synthetic peptide compound derived from bactericidal/permeability-increasing
protein.
XOMA’s
proprietary development pipeline is primarily funded by multiple revenue streams
resulting from the licensing of its antibody technologies, product royalties,
development collaborations and biodefense contracts. XOMA’s
technologies and experienced team have contributed to the success of marketed
antibody products, including RAPTIVA®
(efalizumab) for chronic moderate to severe plaque psoriasis and LUCENTIS®
(ranibizumab injection) for wet age-related macular degeneration.
XOMA has
a premier antibody discovery and development platform that includes six antibody
phage display libraries and XOMA’s proprietary Human Engineering(tm) and
bacterial cell expression (BCE) technologies. For example, XOMA’s
bacterial cell expression technology is a key breakthrough biotechnology for the
discovery and manufacturing of antibodies
and other
proteins. As a result, more than 50 pharmaceutical and biotechnology
companies have signed BCE licenses.
In
addition to developing its own products, XOMA develops products for premier
pharmaceutical companies including Novartis AG, Schering-Plough Research
Institute and Takeda Pharmaceutical Company Limited. XOMA has a fully integrated
product development infrastructure, extending from pre-clinical science to
product launch, and a team of 300 employees at its Berkeley, California
location.
RISK
FACTORS
Except
for the historical information contained in this prospectus or incorporated by
reference, this prospectus (and the information incorporated by reference in
this prospectus) contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
discussed here or incorporated by reference. Factors that could cause
or contribute to such differences include those discussed in the section
entitled “RISK FACTORS” contained in any supplements to this prospectus and in
our most recent annual report on Form 10-K and quarterly reports on Form 10-Q
filed with the SEC, as well as any amendments thereto reflected in subsequent
filings with the SEC, which are incorporated herein by reference in their
entirety.
Investment
in our securities involves risks. Prior to making a decision about
investing in our securities, you should consider carefully the risk factors,
together with all of the other information contained or incorporated by
reference in this prospectus and any prospectus supplement, including any
additional specific risks described in any prospectus
supplement. Each of these risk factors could adversely affect our
business, operating results and financial condition, which may result in the
loss of all or part of your investment.
Keep
these risk factors in mind when you read forward-looking statements contained
elsewhere or incorporated by reference in this prospectus and the prospectus
supplement. These statements relate to our expectations about future
events. Discussions containing forward-looking statements may be
found, among other places, in “Business” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” incorporated by
reference from our annual reports on Form 10-K and our quarterly reports on Form
10-Q, as well as any amendments thereto reflected in subsequent filings with the
SEC. These forward-looking statements are based largely on our
expectations and projections about future events and future trends affecting our
business, and so are subject to risks and uncertainties, including the risks and
uncertainties described below under “FORWARD-LOOKING INFORMATION,” that could
cause actual results to differ materially from those anticipated in the
forward-looking statements.
THE
SECURITIES WE MAY OFFER
We may
offer our common shares and preference shares, various series of debt securities
and/or warrants to purchase any of such securities, with a total value of up to
$150,000,000, from time to time under this prospectus at prices and on terms to
be determined by market conditions at the time of offering. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer a type or series of securities, we
will
provide a
prospectus supplement that will describe the specific amounts, prices and other
important terms of the securities, including, to the extent
applicable:
designation
or classification;
aggregate
principal amount or aggregate offering price;
maturity,
if applicable;
rates and
times of payment of interest or dividends, if any;
redemption,
conversion or sinking fund terms, if any;
voting or
other rights, if any;
conversion
prices, if any; and
important
federal income tax considerations.
The
prospectus supplement also may add, update or change information contained in
this prospectus or in documents we have incorporated by
reference. However, no prospectus supplement shall offer a security
that is not registered and described in this prospectus at the time of its
effectiveness.
This
Prospectus may not be used to consummate a sale of securities unless it is
accompanied by a Prospectus Supplement.
We may
sell the securities directly to or through agents, underwriters or
dealers. We, and our agents or underwriters, reserve the right to
accept or reject all or part of any proposed purchase of
securities. If we do offer securities through agents or underwriters,
we will include in the applicable prospectus supplement:
the names
of those agents or underwriters;
applicable
fees, discounts and commissions to be paid to them;
details
regarding over-allotment options, if any; and
the net
proceeds to us.
Common
Shares. We may issue common shares from time to
time. Holders of common shares are entitled to one vote per share on
all matters submitted to a vote of shareholders. Subject to the
rights of any series of preference shares issued from time to time, all actions
submitted to a vote of shareholders shall be voted on by the holders of common
shares, voting together as a single class (together with the Series A Preference
Shares (as described below), if any), except as provided by law.
Preference
Shares. We may issue preference shares from time to time, in
one or more series. Our board of directors shall determine the
rights, preferences, privileges and restrict-
tions of
the preference shares, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of any
series. Convertible preference shares will be convertible into our
common shares or convertible into or exchangeable for our other
securities. Conversion may be mandatory or at your option and would
be at prescribed conversion rates.
If we
sell any series of preference shares under this prospectus and applicable
prospectus supplements, we will fix the rights, preferences, privileges,
qualifications and restrictions of the preference shares of such series in the
resolutions creating that series. We will incorporate by reference
into the registration statement of which this prospectus is a part the form of
any resolutions that set out the terms of the series of preference shares we are
offering before the issuance of such series of preference shares. We
urge you to read the prospectus supplements related to the series of preference
shares being offered, as well as the complete resolutions that set out the terms
of such series of preference shares.
Debt
Securities. We may offer debt securities from time to time, in
one or more series, as either senior or subordinated debt or as senior or
subordinated convertible debt. The senior debt securities will rank
equally with any other unsecured and unsubordinated debt. The
subordinated debt securities will be subordinate and junior in right of payment,
to the extent and in the manner described in the instrument governing the debt,
to all of our senior indebtedness. Convertible debt securities will
be convertible into or exchangeable for our common shares or our other
securities. Conversion may be mandatory or at your option and would
be at prescribed conversion rates.
The debt
securities will be issued under one or more documents called indentures, which
are contracts between us and a to be named national banking association or other
eligible party, as trustee. In this prospectus, we have summarized
certain general features of the debt securities. We urge you,
however, to read the prospectus supplements related to the series of debt
securities being offered, as well as the complete indentures that contain the
terms of the debt securities. Forms of indentures have been filed as
exhibits to the registration statement of which this prospectus is a part, and
supplemental indentures and forms of debt securities containing the terms of
debt securities being offered will be filed as exhibits to the registration
statement of which this prospectus is a part or will be incorporated by
reference from reports we file with the SEC.
Warrants. We
may issue warrants for the purchase of common shares, preference shares and/or
debt securities in one or more series. We may issue warrants
independently or together with common shares, preference shares and/or debt
securities, and the warrants may be attached to or separate from these
securities.
The
warrants will be evidenced by warrant certificates issued under one or more
warrant agreements, which are contracts between us and an agent for the holders
of the warrants. In this prospectus, we have summarized certain
general features of the warrants. We will incorporate by reference
into the registration statement of which this prospectus is a part the form of
warrant agreement, including a form of warrant certificate, that describes the
terms of the series of warrants we are offering before the issuance of the
related series of warrants. We urge you to read the prospectus
supplements related to the series of warrants being offered, as well as
the
complete
warrant agreements and warrant certificates that contain the terms of the
applicable series of warrants.
FORWARD-LOOKING
INFORMATION
Certain
statements contained in this prospectus and the related documents incorporated
by reference related to the sufficiency of our cash resources, levels of future
revenues, losses, expenses and cash, future sales of approved products, as well
as other statements related to current plans for product development and
existing and potential collaborative and licensing relationships, or that
otherwise relate to future periods, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”). These statements are based on
assumptions that may not prove accurate. Actual results could differ materially
from those anticipated due to certain risks inherent in the biotechnology
industry and for companies engaged in the development of new products in a
regulated market. Among other things, the period for which our cash
resources are sufficient could be shortened if expenditures are made earlier or
in larger amounts than anticipated or are unanticipated, if anticipated revenues
or cost sharing arrangements do not materialize, if funds are not otherwise
available on acceptable terms; revenue levels may be other than as expected if
sales of approved products are lower than expected; losses may be other than as
expected for any of the reasons affecting revenues and expenses; expense levels
and cash utilization may be other than as expected due to unanticipated changes
in our research and development programs; and the sales efforts for approved
products may not be successful if the parties responsible for marketing and
sales fail to meet their commercialization goals, due to the strength of the
competition, if physicians do not adopt the product as treatment for their
patients or if remaining regulatory approvals are not obtained. These
and other risks, including those related to the results of pre-clinical testing;
the timing or results of pending and future clinical trials (including the
design and progress of clinical trials; safety and efficacy of the products
being tested; action, inaction or delay by the FDA, European or other regulators
or their advisory bodies; and analysis or interpretation by, or submission to,
these entities or others of scientific data); changes in the status of existing
collaborative relationships; the ability of collaborators and other partners to
meet their obligations; our ability to meet the demand of the United States
government agency with which we have entered our first government contract;
competition; market demands for products; scale-up and marketing capabilities;
availability of additional licensing or collaboration opportunities;
international operations; share price volatility; our financing needs and
opportunities; uncertainties regarding the status of biotechnology patents;
uncertainties as to the costs of protecting intellectual property; and risks
associated with our status as a Bermuda company, are described in more detail in
“RISK FACTORS” in any supplement to this prospectus. We undertake no
obligation to publicly update any forward-looking statements, regardless of any
new information, future events or other occurrences. We advise you,
however, to consult any additional disclosures we make in our reports to the SEC
on Forms 10-K, 10-Q and 8-K.
FINANCIAL
RATIOS
The
following table sets forth our ratio of earnings to fixed charges and the amount
of deficiency for periods in which the ratio indicates less than one-to-one
coverage:
|
|
|
Year
Ended December 31,
|
|
|
Six
Months
Ended
June
30, 2008
|
2007
|
2006
|
2005
|
2004
|
2003
|
|
|
|
|
|
|
|
|
|
Ratio
of earnings to fixed charges (1)
|
N/A
(2)
|
N/A
(2)
|
N/A
(2)
|
1.65
|
N/A
(2)
|
N/A
(2)
|
|
(1)
|
For
these purposes, earnings are defined as income before income taxes and
fixed charges and fixed charges are defined as interest expense and the
portion of rental expense which is deemed to represent
interest.
|
|
(2)
|
Earnings
were insufficient to cover fixed charges by $31.3 million for the six
months ended June 30, 2008 and $0.7 million, $38.9 million, $77.7 million
and $56.8 million for the years ended December 31, 2007, 2006, 2004 and
2003, respectively.
|
USE
OF PROCEEDS
Unless
otherwise provided in the applicable prospectus supplement, we intend to use the
net proceeds from the sale of the securities under this prospectus for general
corporate purposes, including research and development projects, the development
or acquisition of new products or technologies, equipment acquisitions, general
working capital and operating expenses.
We have
not determined the amounts we plan to spend on any of the areas listed above or
the timing of these expenditures. As a result, our management will
have broad discretion to allocate the net proceeds from our sale of
securities. We will set forth in the prospectus supplement our
intended use for the net proceeds received from the sale of any securities.
Pending application of the net proceeds, we intend to invest the net proceeds in
investment-grade, interest-bearing securities.
DESCRIPTION
OF SHARE CAPITAL
The
following statements with respect to our share capital are subject to the
detailed provisions of our memorandum of continuance and
bye-laws. These statements do not purport to be complete and, while
we believe the descriptions of the material provisions of the memorandum of
continuance and bye-laws incorporated by reference are accurate statements with
respect to such material provisions, such statements are subject to the detailed
provisions in the memorandum of continuance and bye-laws, to which reference is
hereby made for a full description of such provisions.
Common
Shares
General
Our
memorandum of continuance and bye-laws provide that our authorized common share
capital is limited to 210,000,000 common shares, par value U.S.$.0005 per
share. As of June 30, 2008, there were 132,330,012 common shares
issued and outstanding.
Voting
The
holders of common shares are entitled to one vote per share. Subject
to the rights of any series of preference shares issued from time to time, all
actions submitted to a vote of shareholders shall be voted on by the holders of
common shares, voting together as a single class (together with the Series A
Preference Shares (as described below) and any other shares having general
voting rights, if any), except as provided by law.
Dividends
Holders
of common shares are entitled to participate, on a share for share basis, with
the holders of any other common shares issued and outstanding, with respect to
any dividends declared by our board of directors, subject to the rights of
holders of preference shares. Dividends will generally be payable in U.S.
dollars. We have not paid cash dividends on the common
shares. We currently do not intend to pay dividends and intend to
retain any of our earnings for use in our business and the financing of our
capital requirements for the foreseeable future. The payment of any
future cash dividends on the common shares is necessarily dependent upon our
earnings and financial needs, along with applicable legal and contractual
restrictions.
Liquidation
Upon our
liquidation, holders of our common shares will be entitled to receive any assets
remaining after the payment of our debts and the expenses of the liquidation,
subject to such special rights as may be attached to any other class of
shares.
Redemption
The
common shares are not subject to redemption either by us or the holders
thereof.
Variation
of Rights
Under our
bye-laws, if at any time our share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of the issue of the shares of that class) may be varied with the consent in
writing of the holders of a majority of the issued shares of that class or with
the sanction of a resolution passed by the holders of a majority of such shares
at a separate general meeting.
Transfer
Agent and Registrar
The
transfer agent and branch registrar for our common shares is Mellon Investor
Services LLC.
Listing
on the Nasdaq Global Market
Our
common shares are listed on the Nasdaq Global Market under the symbol
“XOMA.”
Preference
Shares
General
Under our
memorandum of continuance and bye-laws, we have the authority to issue 1,000,000
preference shares, par value U.S.$.05 per share. Of these, 210,000
preference shares have been designated Series A Preference Shares (the “Series A
Preference Shares”) and 8,000 preference shares have been designated Series B
Preference Shares (the “Series B Preference Shares”). Under our
bye-laws, subject to the special rights attaching to any class of our shares not
being varied and to any resolution approved by the holders of 75% of the issued
shares entitled to vote in respect thereof, our board of directors may establish
one or more classes or series of preference shares having the number of shares,
designations, relative voting rights, dividend rates, liquidation and other
rights, preferences and limitations that the board of directors fixes without
any shareholder approval.
The
following summary of terms of our preference shares is not
complete. You should refer to the provisions of our memorandum of
continuance and bye-laws and the resolutions containing the terms of each class
or series of the preference shares which have been or will be filed with the SEC
at or prior to the time of issuance of such class or series of preference shares
and described in the applicable prospectus supplement. The applicable
prospectus supplement may also state that any of the terms set forth herein are
inapplicable to such series of preference shares, provided that the information
set forth in such prospectus supplement does not constitute material changes to
the information herein such that it alters the nature of the offering or the
securities offered.
Issuances
of preference shares are subject to the applicable rules of the Nasdaq Stock
Market or other organizations on whose systems our preference shares may then be
quoted or listed.
Depending
upon the terms of preference shares established by our board of directors, any
or all series of preference shares could have preferences over the common shares
with respect to dividends and other distributions and upon our
liquidation. Issuance of any such shares with voting powers, or
issuance of additional common shares, would dilute the voting power of the
issued and outstanding common shares.
Terms
The terms
of each series of preference shares will be described in any prospectus
supplement related to such series of preference shares. The board of
directors in approving the creation of a series of preference shares has
authority to determine, and the applicable prospectus supplement may set forth
with respect to such series, the following terms, among others:
the
number of shares constituting that series and the distinctive designation of
that series;
the
dividend rate on the shares of that series, if any, whether dividends will be
cumulative and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of that series;
the
voting rights for shares of the series, if any, in addition to the voting rights
provided by law;
the
conversion or exchange privileges for shares of the series, if any (including,
without limitation, conversion into common shares), and the terms and conditions
of such conversion or exchange, including provisions for adjustment of the
conversion or exchange rate in such events as the board will
determine;
whether
or not the shares of that series will be redeemable and, if so, the terms and
conditions of such redemption, including the manner of selecting shares for
redemption if less than all shares are to be redeemed, the date or dates upon or
after which they will be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at different
redemption dates;
any
sinking fund for the redemption or purchase of shares of that series and the
terms and amount of such sinking fund;
the
conditions and restrictions upon the creation of indebtedness of XOMA or any of
our subsidiaries, upon the issue of any additional shares (including additional
shares of such series or any other series) and upon the payment of dividends or
the making of other distributions on, and the purchase, redemption or other
acquisition by us or any of our subsidiaries of, any of our issued and
outstanding shares;
the
rights of the shares of that series in the event of our voluntary or involuntary
liquidation, dissolution or winding up, and the relative rights of priority, if
any, of payment of shares of that series; and
any other
relative participating, optional or other special rights, qualifications,
limitations or restrictions of that series.
The
Series A Preference Shares
There are
no Series A Preference Shares issued and outstanding. Pursuant to the
rights of the Series A Preference Shares, subject to the rights of holders of
any shares of any series of preference shares ranking prior and superior, the
holders of Series A Preference Shares
are
entitled to receive, when, as and if declared by our board of directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year, commencing on
the first dividend payment date after the first issuance of a share or fraction
of a share of Series A Preference Shares, in an amount per share equal to the
greater of (a) U.S.$1.00 or (b) 1,000 times the aggregate per share amount of
all cash dividends, plus 1,000 times the aggregate per share amount of all
non-cash dividends or other distributions, other than a dividend or bonus issue
payable in common shares, declared on the common shares since the immediately
preceding dividend payment date, or, with respect to the first dividend payment
date, since the first issuance of Series A Preference Shares.
In
addition to any other voting rights required by law, holders of Series A
Preference Shares have the right to vote on all matters submitted to a vote of
our shareholders with each share of Series A Preference Shares entitled to 1,000
votes. Except as otherwise provided by law, holders of Series A
Preference Shares, holders of common shares and holders of any other shares
having general voting rights vote together as one class on all matters submitted
to a vote of our shareholders.
Unless
otherwise provided in the rights attaching to a subsequently designated series
of our preference shares, the Series A Preference Shares rank junior to any
other series of preference shares subsequently issued as to the payment of
dividends and distribution of assets on liquidation, dissolution or winding-up
and rank senior to the common shares. Upon any liquidation,
dissolution or winding-up of us, no distributions shall be made to holders of
shares ranking junior to the Series A Preference Shares unless, prior thereto,
the holders of Series A Preference Shares shall have received an amount equal to
accrued and unpaid dividends and distributions, whether or not declared, to the
date of such payment, plus an amount equal to the greater of (1) U.S.$100.00 per
share or (2) an aggregate amount per share equal to 1,000 times the aggregate
amount to be distributed per share to holders of common shares or to the holders
of shares ranking on parity with the Series A Preference Shares, except
distributions made ratably on the Series A Preference Shares and all other such
parity shares in proportion to the total amount to which the holders of all such
shares are entitled upon such liquidation, dissolution or
winding-up.
If we
enter into any consolidation, amalgamation, merger, combination or other
transaction in which common shares are exchanged for or changed into cash, other
securities and/or any other property, then any Series A Preference Shares issued
and outstanding shall at the same time be similarly exchanged or changed in an
amount per share equal to 1,000 times the aggregate amount of cash, securities
and/or other property, as the case may be, into which or for which each common
share is changed or exchanged.
The
Series A Preference Shares are not redeemable.
Preference
Share Purchase Rights
Our board
of directors has adopted a shareholder rights agreement, or rights
agreement. Pursuant to the rights agreement, we issued one preference
share purchase right, or right, for each issued and outstanding common
share. Each right entitles the holder to purchase
from us a
unit consisting of one one-thousandth of a Series A Preference Share at a cash
exercise price of $30.00 per unit, subject to adjustment.
The
rights are attached to all issued and outstanding common shares. The
rights will separate from the common shares and will be distributed to holders
of common shares upon the earliest of (i) ten business days after the first
public announcement that a person or group of affiliated or associated persons
(a person or group of affiliated or associated persons being referred to as an
Acquiring Person) has acquired beneficial ownership of 20% or more of the common
shares then issued and outstanding (the date of said announcement being referred
to as the Share Acquisition Date), (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person
or group of persons becoming an Acquiring Person or (iii) the declaration by our
board of directors that any person is an “Adverse Person” (the earliest of such
dates being referred to as the Distribution Date). For purposes of
the rights agreement, beneficial ownership of our common shares is generally
determined pursuant the applicable rules and regulations under the Exchange Act
and beneficial owners of new notes or existing notes will be considered
beneficial owners of the common shares into which their notes are
convertible.
Our board
of directors may generally declare a person to be an Adverse Person after a
declaration that such person has become the beneficial owner of 10% or more of
the issued and outstanding common shares and a determination that (i) such
beneficial ownership by such person is intended to cause or is reasonably likely
to cause us to repurchase the common shares owned by such person or to cause us
to enter into other transactions not in our best long-term interests or (ii)
such beneficial ownership is reasonably likely to cause a material adverse
impact on our business or prospects. The rights are not exercisable
until the Distribution Date and will expire on December 31, 2012, unless
previously redeemed or exchanged by us.
In the
event that a person becomes an Acquiring Person or our board of directors
determines that a person is an Adverse Person, each holder of a right will
thereafter have the right (each right being referred to as a Subscription Right)
to receive upon exercise that number of units of Series A Preference Shares
having a market value of two times the exercise price of the rights. In the
event that, at any time following the Share Acquisition Date, (i) we consolidate
with, or merge or amalgamate with and into, any person, and we are not the
surviving corporation; (ii) any person consolidates or amalgamates with us, or
merges or amalgamates with and into us and we are the continuing or surviving
corporation of such transaction and, in connection with such transaction, all or
part of the common shares are changed into or exchanged for other securities of
any other person or cash or any other property, or (iii) 50% or more of our
assets are sold or otherwise transferred, provision shall be made so that each
holder of a right shall thereafter have the right (each right being referred to
as a Merger Right) to receive, upon exercise, common shares of the acquiring
company having a market value equal to two times the exercise price of the
rights. Rights that are beneficially owned by an Acquiring or Adverse
Person may, under certain circumstances, become null and void.
At any
time after a person becomes an Acquiring Person or our board of directors
determines that a person is an Adverse Person, our board of directors may
exchange all or any part of the then outstanding and exercisable rights for
common shares or units of Series A Preference Shares at an exchange ratio of one
common share or one unit of Series A Preference
Shares
per right. Notwithstanding the foregoing, our board of directors
generally will not be empowered to effect such exchange at any time after any
person becomes the beneficial owner of 50% or more of the common shares then
issued and outstanding.
The
rights may be redeemed in whole, but not in part, at a price of U.S. $.001 per
right by our board of directors at any time prior to the date on which a person
is declared to be an Adverse Person, the tenth business day after the Share
Acquisition Date, the occurrence of an event giving rise to the Merger Right or
the expiration date of the rights agreement.
Prior to
the earlier of the Distribution Date and the Share Acquisition Date, our board
may amend the rights agreement as we deem necessary or desirable without the
approval of any holders of rights or common shares. From and after
the earlier of the Distribution Date and the Share Acquisition Date, the rights
agreement may be amended without the approval of any holders of rights only to
(i) cure an ambiguity, (ii) correct defective or inconsistent provisions, (iii)
shorten or lengthen any time period in the rights agreement if directors in
office prior to the acquisition of shares continue to represent a majority of
the board, or (iv) change provisions as we deem necessary, but that will not
adversely affect the interests of holders of the rights. Under no
circumstances, however, can the rights agreement be amended to lengthen a time
period relating to when the rights may be redeemed if the rights are not then
redeemable.
The
Series B Preference Shares
8,000
Series B Preference Shares have been designated for issuance, of which 2,959
Series B Preference Shares were issued upon conversion of the convertible
subordinated loans to us made by Genentech in connection with the funding of our
development costs for RAPTIVA®
following the regulatory approval of RAPTIVA®. Pursuant
to the rights of the Series B Preference Shares, the holders of Series B
Preference Shares are not entitled to receive any dividends on the Series B
Preference Shares.
The
Series B Preference Shares rank senior with respect to rights on our
liquidation, winding-up and dissolution to all classes of common
shares. Upon any of our voluntary or involuntary liquidation,
dissolution or winding-up, holders of Series B Preference Shares will be
entitled to receive U.S. $10,000 per share of Series B Preference Shares before
any distribution is made on the common shares. The holders of Series
B Preference Shares have no voting rights, except as required under Bermuda
law.
The
holders of Series B Preference Shares have the right to convert Series B
Preference Shares into common shares at a conversion price equal to
approximately $7.75 per common share, subject to customary anti-dilution
adjustments.
The
Series B Preference Shares will be automatically converted into common shares at
their then effective conversion rate immediately upon the transfer by the
initial holder to any third party which is not an affiliate of such
holder.
We will
have the right, at any time and from time to time, to redeem any or all Series B
Preference Shares for cash in an amount equal to the conversion price multiplied
by the number of common shares into which each such share of Series B Preference
Shares would then be convertible.
DESCRIPTION
OF DEBT SECURITIES
The
following description, together with the additional information we include in
any applicable prospectus supplements, summarizes the material terms and
provisions of the debt securities that we may offer under this
prospectus. While the terms we have summarized below will apply
generally to any future debt securities we may offer under this prospectus, we
will describe the particular terms of any debt securities that we may offer in
more detail in the applicable prospectus supplement. The terms of any
debt securities we offer under a prospectus supplement may differ from the terms
we describe below. However, no prospectus supplement shall
fundamentally change the terms that are set forth in this prospectus or offer a
security that is not registered and described in this prospectus at the time of
its effectiveness. As of September 30, 2007, we had $49.2 million
aggregate principal amount of debt outstanding, approximately $30.3 million of
which was secured by the payment rights due to XOMA (US) LLC relating to
RAPTIVA®,
LUCENTIS® and
CIMZIA®.
We will
issue the senior debt securities under the senior indenture that we will enter
into with the trustee to be named in the senior indenture. We will
issue the subordinated debt securities under the subordinated indenture that we
will enter into with the trustee to be named in the subordinated
indenture. We have filed forms of these documents as exhibits to the
registration statement which includes this prospectus. We use the
term “indentures” in this prospectus to refer to both the senior indenture and
the subordinated indenture.
The
indentures will be qualified under the Trust Indenture Act of
1939. We use the term “debenture trustee” to refer to either the
trustee under the senior indenture or the trustee under the subordinated
indenture, as applicable.
The
following summaries of material provisions of the senior debt securities, the
subordinated debt securities and the indentures are subject to, and qualified in
their entirety by reference to, all the provisions of the indenture applicable
to a particular series of debt securities. We urge you to read the
applicable prospectus supplements related to the debt securities that we sell
under this prospectus, as well as the indenture that contains the terms of the
debt securities. Except as we may otherwise indicate, the terms of
the senior indenture and the subordinated indenture are identical.
General
We will
describe in each prospectus supplement the following terms relating to a series
of debt securities:
the
title;
the
principal amount being offered, and if a series, the total amount authorized and
the total amount outstanding;
any limit
on the amount that may be issued;
whether
or not we will issue the series of debt securities in global form, the terms and
who the depositary will be;
the
maturity date;
whether
and under what circumstances, if any, we will pay additional amounts on any debt
securities held by a person who is not a United States person for tax purposes,
and whether we can redeem the debt securities if we have to pay such additional
amounts;
the
annual interest rate, which may be fixed or variable, or the method for
determining the rate and the date interest will begin to accrue, the dates
interest will be payable and the regular record dates for interest payment dates
or the method for determining such dates;
whether
or not the debt securities will be secured or unsecured, and the terms of any
secured debt;
whether
or not the debt securities will be convertible into or exchangeable for other of
our securities, and identifying the securities into which the debt will be
convertible or exchangeable and the terms of conversion;
the terms
of the subordination of any series of subordinated debt;
the place
where payments will be payable;
restrictions
on transfer, sale or other assignment, if any;
our
right, if any, to defer payment of interest and the maximum length of any such
deferral period;
the date,
if any, after which, and the price at which, we may, at our option, redeem the
series of debt securities pursuant to any optional or provisional redemption
provisions and the terms of those redemptions provisions;
the date,
if any, on which, and the price at which we are obligated, pursuant to any
mandatory sinking fund or analogous fund provisions or otherwise, to redeem, or
at the holder’s option to purchase, the series of debt securities and the
currency or currency unit in which the debt securities are payable;
whether
the indenture will restrict our ability and/or the ability of our subsidiaries
to:
incur
additional indebtedness;
issue
additional securities;
create
liens;
pay
dividends and make distributions in respect of our shares and the shares of our
subsidiaries;
redeem
shares;
place
restrictions on our subsidiaries’ ability to pay dividends, make distributions
or transfer assets;
make
investments or other restricted payments;
sell or
otherwise dispose of assets;
enter
into sale-leaseback transactions;
engage in
transactions with shareholders and affiliates;
issue or
sell shares of our subsidiaries; or
effect an
amalgamation, consolidation or merger;
whether
the indenture will require us to maintain any interest coverage, fixed charge,
cash flow-based, asset-based or other financial ratios;
a
discussion of any material or special United States federal income tax
considerations applicable to the debt securities;
information
describing any book-entry features;
provisions
for a sinking fund purchase or other analogous fund, if any;
whether
the debt securities are to be offered at a price such that they will be deemed
to be offered at an “original issue discount” as defined in paragraph (a) of
Section 1273 of the Internal Revenue Code;
the
denominations in which we will issue the series of debt securities, if other
than denominations of $1,000 and any integral multiple thereof; and
any other
specific terms, preferences, rights or limitations of, or restrictions on, the
debt securities, including any additional events of default or covenants
provided with respect to the debt securities, and any terms that may be required
by us or advisable under applicable laws or regulations.
Conversion
or Exchange Rights
We will
set forth in the prospectus supplement the terms on which a series of debt
securities may be convertible into or exchangeable for our common shares or our
other securities. We will include provisions as to whether conversion
or exchange is mandatory, at the option of the holder or at our
option. We may include provisions pursuant to which the number of our
common shares or other securities that the holders of the series of debt
securities receive would be subject to adjustment.
Amalgamation,
Consolidation, Merger or Sale
The
indentures will not contain any covenant that restricts our ability to
amalgamate, consolidate or merge, or sell, convey, transfer or otherwise dispose
of all or substantially all of our assets. However, any successor to
or acquiror of such assets must assume all of our obligations under the
indentures or the debt securities, as appropriate. If the debt
securities are convertible into or exchangeable for our other securities or
securities of other entities, the person with whom we amalgamate, consolidate or
merge or to whom we sell all of our property must make provisions for the
conversion or exchange of the debt securities into securities that the holders
of the debt securities would have received if they had converted the debt
securities before the amalgamation, consolidation, merger or sale.
Events
of Default Under the Indenture
The
following are events of default under the indentures with respect to any series
of debt securities that we may issue:
if we
fail to pay interest when due and payable and our failure continues for 90 days
and the time for payment has not been extended or deferred;
if we
fail to pay the principal, premium or sinking fund payment, if any, when due and
payable and the time for payment has not been extended or delayed;
if we
fail to observe or perform any other covenant contained in the debt securities
or the indentures, other than a covenant specifically relating to another series
of debt securities, and our failure continues for 90 days after we receive
notice from the debenture trustee or holders of at least 25% in aggregate
principal amount of the outstanding debt securities of the applicable series;
and
if
specified events of bankruptcy, insolvency or reorganization occur.
If an
event of default with respect to debt securities of any series occurs and is
continuing, other than an event of default specified in the last bullet point
above, the debenture trustee or the holders of at least 25% in aggregate
principal amount of the outstanding debt securities of that series, by notice to
us in writing, and to the debenture trustee if notice is given by such holders,
may declare the unpaid principal of, premium, if any, and accrued interest, if
any, due and payable immediately. If an event of default specified in
the last bullet point above occurs with respect to us, the principal amount of
and accrued interest, if any, of each issue of debt securities then outstanding
shall be due and payable without any notice or other action on the part of the
debenture trustee or any holder.
The
holders of a majority in principal amount of the outstanding debt securities of
an affected series may waive any default or event of default with respect to the
series and its consequences, except defaults or events of default regarding
payment of principal, premium, if any, or interest, unless we have cured the
default or event of default in accordance with the indenture. Any waiver shall
cure the default or event of default.
Subject
to the terms of the indentures, if an event of default under an indenture shall
occur and be continuing, the debenture trustee will be under no obligation to
exercise any of its rights or powers under such indenture at the request or
direction of any of the holders of the applicable series of debt securities,
unless such holders have offered the debenture trustee reasonable
indemnity. The holders of a majority in principal amount of the
outstanding debt securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the debenture trustee, or exercising any trust or power conferred on the
debenture trustee, with respect to the debt securities of that series, provided
that:
the
direction so given by the holder is not in conflict with any law or the
applicable indenture; and
subject
to its duties under the Trust Indenture Act of 1939, the debenture trustee need
not take any action that might involve it in personal liability or might be
unduly prejudicial to the holders not involved in the proceeding.
A holder
of the debt securities of any series will only have the right to institute a
proceeding under the indentures or to appoint a receiver or trustee, or to seek
other remedies if:
the
holder has given written notice to the debenture trustee of a continuing event
of default with respect to that series;
the
holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series have made written request, and such holders have
offered reasonable indemnity to the debenture trustee to institute the
proceeding as trustee; and
the
debenture trustee does not institute the proceeding, and does not receive from
the holders of a majority in aggregate principal amount of the outstanding debt
securities of that series other conflicting directions within 90 days after the
notice, request and offer.
These
limitations do not apply to a suit instituted by a holder of debt securities if
we default in the payment of the principal, premium, if any, or interest on, the
debt securities.
We will
periodically file statements with the debenture trustee regarding our compliance
with specified covenants in the indentures.
Modification
of Indenture; Waiver
We and
the debenture trustee may change an indenture without the consent of any holders
with respect to specific matters:
to fix
any ambiguity, defect or inconsistency in the indenture;
to comply
with the provisions described above under “Amalgamation, Consolidation, Merger
or Sale”;
to comply
with any requirements of the SEC in connection with the qualification of any
indenture under the Trust Indenture Act of 1939;
to add
to, delete from or revise the conditions, limitations, and restrictions on the
authorized amount, terms, or purposes of issue, authentication and delivery of
debt securities, as set forth in the indenture;
to
provide for the issuance of and establish the form and terms and conditions of
the debt securities of any series as provided under “General” to establish the
form of any certifications required to be furnished pursuant to the terms of the
indenture or any series of debt securities, or to add to the rights of the
holders of any series of debt securities;
to
evidence and provide for the acceptance of appointment hereunder by a successor
trustee;
to
provide for uncertificated debt securities and to make all appropriate changes
for such purpose;
to add to
our covenants such new covenants, restrictions, conditions or provisions for the
protection of the holders, and to make the occurrence, or the occurrence and the
continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an event of default; or
to change
anything that does not materially adversely affect the interests of any holder
of debt securities of any series.
In
addition, under the indentures, the rights of holders of a series of debt
securities may be changed by us and the debenture trustee with the written
consent of the holders of at least a majority in aggregate principal amount of
the outstanding debt securities of each series that is
affected. However, we and the debenture trustee may only make the
following changes with the consent of each holder of any outstanding debt
securities affected:
extending
the fixed maturity of the series of debt securities;
reducing
the principal amount, reducing the rate of or extending the time of payment of
interest, or reducing any premium payable upon the redemption of any debt
securities; or
reducing
the percentage of debt securities, the holders of which are required to consent
to any amendment, supplement, modification or waiver.
Discharge
Each
indenture provides that we can elect to be discharged from our obligations with
respect to one or more series of debt securities, except for specified
obligations, including obligations to:
register
the transfer or exchange of debt securities of the series;
replace
stolen, lost or mutilated debt securities of the series;
maintain
paying agencies;
hold
monies for payment in trust;
recover
excess money held by the debenture trustee;
compensate
and indemnify the debenture trustee; and
appoint
any successor trustee.
In order
to exercise our rights to be discharged, we must deposit with the debenture
trustee money or government obligations sufficient to pay all the principal of,
any premium, if any, and interest on, the debt securities of the series on the
dates payments are due.
Form,
Exchange and Transfer
We will
issue the debt securities of each series only in fully registered form without
coupons and, unless we otherwise specify in the applicable prospectus
supplement, in denominations of $1,000 and any integral multiple
thereof. The indentures provide that we may issue debt securities of
a series in temporary or permanent global form and as book-entry securities that
will be deposited with, or on behalf of, The Depository Trust Company or another
depositary named by us and identified in a prospectus supplement with respect to
that series. See “LEGAL OWNERSHIP OF SECURITIES” for a further
description of the terms relating to any book-entry securities.
At the
option of the holder, subject to the terms of the indentures and the limitations
applicable to global securities described in the applicable prospectus
supplement, the holder of the debt securities of any series can exchange the
debt securities for other debt securities of the same series, in any authorized
denomination and of like tenor and aggregate principal amount.
Subject
to the terms of the indentures and the limitations applicable to global
securities set forth in the applicable prospectus supplement, holders of the
debt securities may present the debt securities for exchange or for registration
of transfer, duly endorsed or with the form of transfer endorsed thereon duly
executed if so required by us or the security registrar, at the office of the
security registrar or at the office of any transfer agent designated by us for
this purpose. Unless otherwise provided in the debt securities that
the holder presents for transfer or exchange, we will make no service charge for
any registration of transfer or exchange, but we may require payment of any
taxes or other governmental charges.
We will
name in the applicable prospectus supplement the security registrar, and any
transfer agent in addition to the security registrar, that we initially
designate for any debt securities. We may at any time designate
additional transfer agents or rescind the designation of any transfer agent or
approve a change in the office through which any transfer agent acts, except
that we will be required to maintain a transfer agent in each place of payment
for the debt securities of each series.
If we
elect to redeem the debt securities of any series, we will not be required
to:
issue,
register the transfer of, convert or exchange any debt securities of that series
during a period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption of any debt securities that may be selected
for redemption and ending at the close of business on the day of the mailing;
or
register
the transfer of, convert or exchange any debt securities so selected for
redemption, in whole or in part, except the unredeemed portion of any debt
securities we are redeeming in part.
Information
Concerning the Debenture Trustee
The
debenture trustee, other than during the occurrence and continuance of an event
of default under an indenture, undertakes to perform only those duties as are
specifically set forth in the applicable indenture. Upon an event of
default under an indenture, the debenture trustee must use the same degree of
care as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the debenture trustee is under no
obligation to exercise any of the powers given it by the indentures at the
request of any holder of debt securities unless it is offered reasonable
security and indemnity against the costs, expenses and liabilities that it might
incur.
Payment
and Paying Agents
Unless we
otherwise indicate in the applicable prospectus supplement, we will make payment
of the interest on any debt securities on any interest payment date to the
person in whose name the debt securities, or one or more predecessor securities,
are registered at the close of business on the regular record date for the
interest.
We will
pay principal of and any premium and interest on the debt securities of a
particular series at the office of the paying agents designated by us, except
that unless we otherwise indicate in the applicable prospectus supplement, we
will make interest payments by check that we will mail to the holder or by wire
transfer to certain holders. Unless we otherwise indicate in a
prospectus supplement, we will designate the corporate trust office of the
debenture trustee in the City of New York as our sole paying agent for payments
with respect to debt securities of each series. We will name in the
applicable prospectus supplement any other paying agents that we initially
designate for the debt securities of a particular series. We will
maintain a paying agent in each place of payment for the debt securities of a
particular series.
All money
we pay to a paying agent or the debenture trustee for the payment of the
principal of or any premium or interest on any debt securities that remains
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to us, and the holder of the debt security
thereafter may look only to us for payment thereof.
Governing
Law
The
indentures and the debt securities will be governed by and construed in
accordance with the laws of the State of New York, except to the extent that the
Trust Indenture Act of 1939 is applicable.
Subordination
of Subordinated Debt Securities
The
subordinated debt securities will be unsecured and will be subordinate and
junior in priority of payment to certain of our other indebtedness to the extent
described in a prospectus supplement. The subordinated indenture does
not limit the amount of subordinated debt securities that we may issue. It also
does not limit us from issuing any other secured or unsecured debt.
DESCRIPTION
OF WARRANTS
The
following description, together with the additional information we may include
in any applicable prospectus supplements, summarizes the material terms and
provisions of the warrants that we may offer under this prospectus and the
related warrant agreements and warrant certificates. While the terms
summarized below will apply generally to any warrants that we may offer, we will
describe the particular terms of any series of warrants in more detail in the
applicable prospectus supplement. If we indicate in the prospectus
supplement, the terms of any warrants offered under that prospectus supplement
may differ from the terms described below. However, no prospectus
supplement shall fundamentally change the terms that are set forth in this
prospectus or offer a security that is not registered and described in this
prospectus at the time of its effectiveness. We will incorporate by
reference into the registration statement of which this prospectus is a part the
form of warrant agreement, including a form of warrant certificate, that
describes the terms of the series of warrants we are offering before the
issuance of the related series of warrants. The following summaries
of material provisions of the warrants and the warrant agreements are subject
to, and qualified in their entirety by reference to, all the provisions of the
warrant agreement applicable to a particular series of warrants. We
urge you to read the applicable prospectus supplements related to the warrants
that we sell under this prospectus, as well as the complete warrant agreements
that contain the terms of the warrants.
Terms
We will
describe in the applicable prospectus supplement the terms of the series of
warrants, including:
the
offering price and aggregate number of warrants offered;
the
currency for which the warrants may be purchased;
if
applicable, the designation and terms of the securities with which the warrants
are issued and the number of warrants issued with each such security or with a
specified principal amount of such security;
if
applicable, the date on and after which the warrants and the related securities
will be separately transferable;
in the
case of warrants to purchase debt securities, the principal amount of debt
securities purchasable upon exercise of one warrant and the price at which, and
currency in which, this principal amount of debt securities may be purchased
upon such exercise;
in the
case of warrants to purchase common shares or preference shares, the number of
common shares or preference shares, as the case may be, purchasable upon the
exercise of one warrant and the price at which these shares may be purchased
upon such exercise;
the
effect of any amalgamation, consolidation, merger, sale or other disposition of
our business on the warrant agreements and the warrants;
the terms
of any rights to redeem or call the warrants;
any
provisions for changes to or adjustments in the exercise price or number of
securities issuable upon exercise of the warrants;
the dates
on which the right to exercise the warrants will commence and
expire;
the
manner in which the warrant agreements and warrants may be
modified;
U.S.
federal income tax consequences of holding or exercising the
warrants;
the terms
of the securities issuable upon exercise of the warrants; and
any other
specific terms, preferences, rights or limitations of or restrictions on the
warrants.
Before
exercising their warrants, holders of warrants will not have any of the rights
of holders of the securities purchasable upon such exercise,
including:
in the
case of warrants to purchase debt securities, the right to receive payments of
principal of, or premium, if any, or interest on, the debt securities
purchasable upon exercise or to enforce covenants in the applicable indenture;
or
in the
case of warrants to purchase common shares or preference shares, the right to
receive dividends, if any, or, payments upon our liquidation, dissolution or
winding up or to exercise voting rights, if any.
Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in
the applicable prospectus supplement at the exercise price that we describe in
the applicable prospectus supplement. Unless we otherwise specify in
the applicable prospectus supplement, holders of the warrants may exercise the
warrants at any time up to 5:00 P.M. New York time on the expiration date that
we set forth in the applicable prospectus supplement. After the close
of business on the expiration date, unexercised warrants will become
void.
Holders
of the warrants may exercise the warrants by delivering the warrant certificate
representing the warrants to be exercised together with specified information,
and paying the required amount to the warrant agent in immediately available
funds, as provided in the applicable prospectus supplement. We will
set forth on the reverse side of the warrant certificate
and in
the applicable prospectus supplement the information that the holder of the
warrant will be required to deliver to the warrant agent.
Upon
receipt of the required payment and the warrant certificate properly completed
and duly executed at the corporate trust office of the warrant agent or any
other office indicated in the applicable prospectus supplement, we will issue
and deliver the securities purchasable upon such exercise. If fewer
than all of the warrants represented by the warrant certificate are exercised,
then we will issue a new warrant certificate for the remaining amount of
warrants. If we so indicate in the applicable prospectus supplement,
holders of the warrants may surrender securities or rights to purchase
securities as all or part of the exercise price for warrants.
Enforceability
of Rights by Holders of Warrants
Each
warrant agent will act solely as our agent under the applicable warrant
agreement and will not assume any obligation or relationship of agency or trust
with any holder of any warrant. A single bank or trust company may
act as warrant agent for more than one issue of warrants. A warrant
agent will have no duty or responsibility in case of any default by us under the
applicable warrant agreement or warrant, including any duty or responsibility to
initiate any proceedings at law or otherwise, or to make any demand upon
us. Any holder of a warrant may, without the consent of the related
warrant agent or the holder of any other warrant, enforce by appropriate legal
action its right to exercise, and receive the securities purchasable upon
exercise of, its warrants.
LEGAL
OWNERSHIP OF SECURITIES
We can
issue securities in registered form or in the form of one or more global
securities. We describe global securities in greater detail
below. We refer to those persons who have securities registered in
their own names on the books that we or any applicable trustee, depositary or
warrant agent maintain for this purpose as the “holders” of those
securities. These persons are the legal holders of the
securities. We refer to those persons who, indirectly through others,
own beneficial interests in securities that are not registered in their own
names, as “indirect holders” of those securities. As we discuss
below, indirect holders are not legal holders, and investors in securities
issued in book-entry form or in street name will be indirect
holders.
Book-Entry
Holders
We may
issue securities in book-entry form only, as we will specify in the applicable
prospectus supplement. This means securities may be represented by
one or more global securities registered in the name of a financial institution
that holds them as depositary on behalf of other financial institutions that
participate in the depositary’s book-entry system. These
participating institutions, which are referred to as participants, in turn, hold
beneficial interests in the securities on behalf of themselves or their
customers.
Only the
person in whose name a security is registered is recognized as the holder of
that security. Securities issued in global form will be registered in
the name of the depositary or its participants. Consequently, for
securities issued in global form, we will recognize only the depositary as the
holder of the securities, and we will make all payments on the securities to
the
depositary. The
depositary passes along the payments it receives to its participants, which in
turn pass the payments along to their customers who are the beneficial
owners. The depositary and its participants do so under agreements
they have made with one another or with their customers; they are not obligated
to do so under the terms of the securities.
As a
result, investors in a book-entry security will not own securities
directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution that
participates in the depositary’s book-entry system or holds an interest through
a participant. As long as the securities are issued in global form,
investors will be indirect holders, and not holders, of the
securities.
Street
Name Holders
We may
terminate a global security or issue securities in non-global
form. In these cases, investors may choose to hold their securities
in their own names or in “street name.” Securities held by an investor in street
name would be registered in the name of a bank, broker or other financial
institution that the investor chooses, and the investor would hold only a
beneficial interest in those securities through an account he or she maintains
at that institution.
For
securities held in street name, we will recognize only the intermediary banks,
brokers and other financial institutions in whose names the securities are
registered as the holders of those securities, and we will make all payments on
those securities to them. These institutions pass along the payments
they receive to their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they are legally
required to do so. Investors who hold securities in street name will
be indirect holders, not holders, of those securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable trustee and of any
third parties employed by us or a trustee, run only to the legal holders of the
securities. We do not have obligations to investors who hold
beneficial interests in global securities, in street name or by any other
indirect means. This will be the case whether an investor chooses to
be an indirect holder of a security or has no choice because we are issuing the
securities only in global form.
For
example, once we make a payment or give a notice to the holder, we have no
further responsibility for the payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect holders but does not do
so. Similarly, we may want to obtain the approval of the holders to
amend an indenture, to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of the indenture or for other
purposes. In such an event, we would seek approval only from the
holders, and not the indirect holders, of the securities. Whether and
how the holders contact the indirect holders is up to the holders.
Special
Considerations for Indirect Holders
If you
hold securities through a bank, broker or other financial institution, either in
book-entry form or in street name, you should check with your own institution to
find out:
how it
handles securities payments and notices;
whether
it imposes fees or charges;
how it
would handle a request for the holders’ consent, if ever required;
whether
and how you can instruct it to send you securities registered in your own name
so you can be a holder, if that is permitted in the future;
how it
would exercise rights under the securities if there were a default or other
event triggering the need for holders to act to protect their interests;
and
if the
securities are in book-entry form, how the depositary’s rules and procedures
will affect these matters.
Global
Securities
A global
security is a security that represents one or any other number of individual
securities held by a depositary. Generally, all securities
represented by the same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that
we deposit with and register in the name of a financial institution or its
nominee that we select. The financial institution that we select for
this purpose is called the depositary. Unless we specify otherwise in
the applicable prospectus supplement, The Depository Trust Company, New York,
New York, known as DTC, will be the depositary for all securities issued in
book-entry form.
A global
security may not be transferred to or registered in the name of anyone other
than the depositary, its nominee or a successor depositary, unless special
termination situations arise. We describe those situations below
under “Special Situations When a Global Security Will Be
Terminated.” As a result of these arrangements, the depositary, or
its nominee, will be the sole registered owner and holder of all securities
represented by a global security, and investors will be permitted to own only
beneficial interests in a global security. Beneficial interests must
be held by means of an account with a broker, bank or other financial
institution that in turn has an account with the depositary or with another
institution that does. Thus, an investor whose security is
represented by a global security will not be a holder of the security, but only
an indirect holder of a beneficial interest in the global security.
If the
prospectus supplement for a particular security indicates that the security will
be issued in global form only, then the security will be represented by a global
security at all times unless and until the global security is
terminated. If termination occurs, we may issue the
securities
through another book-entry clearing system or decide that the securities may no
longer be held through any book-entry clearing system.
Special
Considerations for Global Securities
As an
indirect holder, an investor’s rights relating to a global security will be
governed by the account rules of the investor’s financial institution and of the
depositary, as well as general laws relating to securities
transfers. We do not recognize an indirect holder as a holder of
securities and instead deal only with the depositary that holds the global
security.
If
securities are issued only in the form of a global security, an investor should
be aware of the following:
An
investor cannot cause the securities to be registered in his or her name, and
cannot obtain non-global certificates for his or her interest in the securities,
except in the special situations we describe below;
An
investor will be an indirect holder and must look to his or her own bank or
broker for payments on the securities and protection of his or her legal rights
relating to the securities, as we describe above;
An
investor may not be able to sell interests in the securities to some insurance
companies and to other institutions that are required by law to own their
securities in non-book-entry form;
An
investor may not be able to pledge his or her interest in a global security in
circumstances where certificates representing the securities must be delivered
to the lender or other beneficiary of the pledge in order for the pledge to be
effective;
The
depositary’s policies, which may change from time to time, will govern payments,
transfers, exchanges and other matters relating to an investor’s interest in a
global security. We and any applicable trustee have no responsibility for any
aspect of the depositary’s actions or for its records of ownership interests in
a global security. We and the trustee also do not supervise the depositary in
any way;
The
depositary may, and we understand that DTC will, require that those who purchase
and sell interests in a global security within its book-entry system use
immediately available funds, and your broker or bank may require you to do so as
well; and
Financial
institutions that participate in the depositary’s book-entry system, and through
which an investor holds its interest in a global security, may also have their
own policies affecting payments, notices and other matters relating to the
securities. There may be more than one financial intermediary in the chain of
ownership for an investor. We do not monitor and are not responsible for the
actions of any of those intermediaries.
Special
Situations When a Global Security Will Be Terminated
In a few
special situations described below, the global security will terminate and
interests in it will be exchanged for physical certificates representing those
interests. After that exchange, the choice of whether to hold
securities directly or in street name will be up to the investor. Investors must
consult their own banks or brokers to find out how to have their interests in
securities transferred to their own name, so that they will be direct
holders. We have described the rights of holders and street name
investors above.
The
global security will terminate when the following special situations
occur:
if the
depositary notifies us that it is unwilling, unable or no longer qualified to
continue as depositary for that global security and we do not appoint another
institution to act as depositary within 90 days;
if we
notify any applicable trustee that we wish to terminate that global security;
or
if an
event of default has occurred with regard to securities represented by that
global security and has not been cured or waived.
The
prospectus supplement may also list additional situations for terminating a
global security that would apply only to the particular series of securities
covered by the prospectus supplement. When a global security
terminates, the depositary, and not we or any applicable trustee, is responsible
for deciding the names of the institutions that will be the initial direct
holders.
PLAN
OF DISTRIBUTION
General
We may
sell the securities through underwriters or dealers, through agents, or directly
to one or more purchasers. A prospectus supplement or supplements
will describe the terms of the offering of the securities,
including:
the name
or names of any underwriters, if any;
the
purchase price of the securities and the proceeds we will receive from the
sale;
any
over-allotment options under which underwriters may purchase additional
securities from us;
any
agency fees or underwriting discounts and other items constituting agents’ or
underwriters’ compensation;
any
public offering price;
any
discounts or concessions allowed or reallowed or paid to dealers;
and
any
securities exchange or market on which the securities may be
listed.
If
underwriters are used in the sale, they will acquire the securities for their
own account and may resell the securities from time to time in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale. The obligations of the underwriters to purchase the
securities will be subject to the conditions set forth in the applicable
underwriting agreement. We may offer the securities to the public
through underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Subject to certain conditions, the
underwriters will be obligated to purchase all of the securities offered by the
prospectus supplement. Any public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may change from time to
time. We may use underwriters with whom we have a material
relationship. We will describe in the prospectus supplement, naming
the underwriter, the nature of any such relationship.
We may
sell securities directly or through agents we designate from time to
time. We will name any agent involved in the offering and sale of
securities and we will describe any commissions we will pay the agent in the
prospectus supplement. Unless the prospectus supplement states
otherwise, our agent will act on a best-efforts basis for the period of its
appointment. However, no prospectus supplement shall fundamentally
change the terms that are set forth in this prospectus or offer a security that
is not registered and described in this prospectus at the time of its
effectiveness.
We may
authorize agents or underwriters to solicit offers by certain types of
institutional investors to purchase securities from us at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the
future. We will describe the conditions to these contracts and the
commissions we must pay for solicitation of these contracts in the prospectus
supplement.
We may
provide agents and underwriters with indemnification against civil liabilities
related to this offering, including liabilities under the Securities Act, or
contribution with respect to payments that the agents or underwriters may make
with respect to these liabilities. Agents and underwriters may engage
in transactions with, or perform services for, us in the ordinary course of
business.
All
securities we offer, other than common shares, will be new issues of securities
with no established trading market. Any underwriters may make a
market in these securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. We cannot
guarantee the liquidity of the trading markets for any securities.
Any
underwriter may engage in overallotment, stabilizing transactions, short
covering transactions and penalty bids in accordance with Regulation M under the
Exchange Act. Overallotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Short covering transactions involve purchases of
the securities in the open market after the distribution is completed to cover
short positions. Penalty bids permit the underwriters to reclaim a
selling concession from a dealer when the securities originally sold by the
dealer are purchased in a covering transaction to cover short
positions. Those
activities
may cause the price of the securities to be higher than it would otherwise
be. If commenced, the underwriters may discontinue any of the
activities at any time.
Any
underwriters who are qualified market makers on the Nasdaq Global Market may
engage in passive market making transactions in the securities on the Nasdaq
Global Market in accordance with Rule 103 of Regulation M, during the business
day prior to the pricing of the offering, before the commencement of offers or
sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a
price not in excess of the highest independent bid for such security; if all
independent bids are lowered below the passive market maker’s bid, however, the
passive market maker’s bid must then be lowered when certain purchase limits are
exceeded.
In
compliance with guidelines of the Financial Industry Regulatory Authority, or
FINRA, the maximum consideration or discount to be received by any FINRA member
or independent broker dealer may not exceed 8% of the aggregate amount of the
securities offered pursuant to this prospectus and any applicable prospectus
supplement.
Equity
Line
On
October 21, 2008, we entered into what is sometimes referred to as an equity
line of credit arrangement with Azimuth Opportunity
Ltd. (“Azimuth”). A copy of the press release issued by us
on October 21, 2008 concerning the transaction is filed herewith as Exhibit 1
and is incorporated herein by reference. In connection with this
transaction, we entered into a Common Stock Purchase Agreement with Azimuth (the
“Purchase Agreement”), pursuant to which, and upon the terms and subject to the
conditions set forth therein, Azimuth has committed to purchase up to
$60,000,000 of our common shares, or the number of shares which is one less than
twenty percent (20%) of the issued and outstanding common shares as of October
21, 2008, whichever occurs first, over the 24-month term of the Purchase
Agreement. From time to time ending on November 1, 2010 and at our
sole discretion, we may present Azimuth with draw down notices to purchase our
common shares over 10 consecutive trading days or such other period mutually
agreed upon by us and Azimuth. Each draw down is subject to
limitations based on the price of our common shares and a limit of 2.5% of our
market capitalization at the time of such draw down, provided, however, Azimuth
will not be required to purchase more than $16,000,000 of our common shares in
any single draw down (excluding shares under any call option, which is described
below). We are able to present Azimuth with up to 24 draw down
notices during the term of the Purchase Agreement, with a minimum of five
trading days required between each draw down period. Only one draw
down is allowed in each draw down pricing period, unless otherwise mutually
agreed upon by us and Azimuth.
Once
presented with a draw down notice, Azimuth is required to purchase a pro-rata
portion of the shares allocated to each trading day during the trading period on
which the daily volume weighted average price for our common shares exceeds a
threshold price for such draw down determined by us. The payment for
shares in respect of each draw down notice shall be settled on the second
trading day following the last trading day of each draw down period, or on such
earlier date as we and Azimuth may mutually agree. The per share
purchase price for these shares equals the daily volume weighted average price
of our common shares on each date
during
the draw down period on which shares are purchased, less a discount ranging from
2.65% to 6.65%. If the daily volume weighted average price of our
common shares falls below the threshold price on any trading day during a draw
down period, Azimuth will not be required to purchase the pro-rata portion of
common shares allocated to that day. However, at its election,
Azimuth may buy the pro-rata portion of shares allocated to that day at the
threshold price less the discount described above.
The
Purchase Agreement also provides that from time to time and at our sole
discretion we may grant Azimuth the right to exercise one or more options to
purchase additional common shares during each draw down pricing period as
specified by us. Upon Azimuth’s exercise of the option, we will sell
to Azimuth our common shares subject to the option at a price equal to the
greater of the daily volume weighted average price of our common shares on the
day Azimuth notifies us of its election to exercise its option or the threshold
price for the option determined by us, less a discount ranging from 2.65% to
6.65%.
In
addition to our issuance of common shares to Azimuth pursuant to the Purchase
Agreement, our Registration Statement on Form S–3 (File
No. 333-149874) also covers the sale of those shares from time to
time by Azimuth to the public. Azimuth is an “underwriter” within the
meaning of Section 2(a)(11) of the Securities Act of 1933, as
amended.
Azimuth
has informed us that it will use an unaffiliated broker-dealer to effectuate all
sales, if any, of common shares that it may purchase from us pursuant to the
Purchase Agreement. Such sales will be made on the NASDAQ Global
Market at prices and at terms then prevailing or at prices related to the then
current market price. Each such unaffiliated broker-dealer will be an
underwriter within the meaning of Section 2(a)(11) of the Securities
Act. Azimuth has informed us that each such broker-dealer will
receive commissions from Azimuth which will not exceed customary brokerage
commissions. Azimuth also will pay other expenses associated with the
sale of the common shares it acquires pursuant to the Purchase
Agreement.
The
common shares may be sold in one or more of the following manners:
ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
or
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.
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:
may not
engage in any stabilization activity in connection with our
securities;
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
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.
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 Reg-
istration
Statement or any prospectus supplement or permitted free writing prospectus or
any amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished by Azimuth to us for inclusion therein, or any
omission or alleged omission to state in such prospectus, prospectus supplement
or permitted free writing prospectus or any amendment or supplement thereto a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent, but only to the extent, the untrue
statement, alleged untrue statement, omission or alleged omission was made in
reliance upon, and in conformity with, written information provided to us by
Azimuth.
Reedland
Capital Partners, an Institutional Division of Financial West Group, member
FINRA/SIPC (“Reedland”), is acting as placement agent in connection with the
sale of our common shares to Azimuth under the Purchase Agreement. We
have agreed to pay Reedland, upon each such sale, a placement fee equal to 1.35%
of the aggregate dollar amount of common shares purchased by
Azimuth.
LEGAL
MATTERS
Certain
matters under Bermuda law with respect to the validity of the securities being
offered hereby will be passed upon by Conyers Dill & Pearman, located in
Hamilton, Bermuda. Certain matters under New York and federal law with respect
to the validity of the securities being offered hereby will be passed upon by
Cahill Gordon & Reindel LLP, located in New York, New York.
EXPERTS
Ernst
& Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2006, and management’s assessment of the
effectiveness of our internal control over financial reporting as of December
31, 2006, as set forth in their reports, which are incorporated by reference in
this prospectus and elsewhere in the registration statement. Our
financial statements and management’s assessment are incorporated by reference
in reliance on Ernst & Young LLP’s reports, given on their authority as
experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file
reports, proxy statements, and other information with the SEC. The
public may read and copy any materials filed by us at the SEC’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549 or on the Internet site
maintained by the SEC at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference
Room. Our common shares are listed on the Nasdaq Global Market, and
these reports, proxy statements, and other information are also available for
inspection at the offices of the Nasdaq Stock Market, 1735 K Street, N.W.,
Washington, D.C. 20006-1504.
This
prospectus is part of a registration statement filed by us with the
SEC. The full registration statement can be obtained from the SEC, as
indicated above, or from us.
The SEC
allows us to “incorporate by reference” the information we file with the
SEC. This permits us to disclose important information to you by
referring to these filed documents. Any information referred to in this way is
considered part of this prospectus. We incorporate by reference the
following documents that have been filed with the SEC (other than information
furnished under Item 2.02 or Item 7.01 of Form 8-K and all exhibits related to
such items):
our
annual report on Form 10-K for the year ended December 31, 2007 and the
amendment to our annual report on Form 10-K for the year ended December 31, 2007
filed on March 14, 2008;
our
quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2008 and
June 30, 2008 and the amendment to our quarterly report on Form 10-Q for the
fiscal quarter ended June 30, 2008, which was filed on September 11,
2008;
our
current reports on Form 8-K filed on March 14, 2008, April 2, 2008, April 9,
2008, May 12, 2008, July 28, 2008, October 17, 2008 and October 22,
2008;
the
description of the common shares in the registration statement on Form 8-A dated
and filed on April 1, 2003 under Section 12 of the Securities Exchange Act,
including any amendment or report for the purpose of updating such description
(file no. 0-14710); and
our
definitive proxy statement filed pursuant to Section 14 of the Exchange Act in
connection with our 2008 Annual Meeting of Shareholders filed with the SEC on
April 9, 2008.
Any
information in any of the foregoing documents will automatically be deemed to be
modified or superseded to the extent that information in this prospectus or in a
later filed document that is incorporated or deemed to be incorporated herein by
reference modifies or replaces such information.
We also
incorporate by reference any future filings (other than current reports
furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such
form that are related to such items) made with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, until we file a post-effective
amendment which indicates the termination of the offering of the securities made
by this prospectus. Information in such future filings updates and
supplements the information provided in this prospectus. Any
statements in any such future filings will automatically be deemed to modify and
supersede any information in any document we previously filed with the SEC that
is incorporated or deemed to be incorporated herein by reference to the extent
that statements in the later filed document modify or replace such earlier
statements.
You may
request a copy of these filings, at no cost, by writing or telephoning us at the
following address:
XOMA
Ltd.
2910
Seventh Street
Berkeley,
California 94710
(510)
204-7200
-36-