SUBSCRIPTION AGREEMENT
(GFL Performance Fund Limited)
THIS SUBSCRIPTION AGREEMENT, dated as of the date of
acceptance set forth below, by and between XOMA CORPORATION, a
Delaware corporation, with headquarters located at 2910 Seventh
Street, Berkeley, California 94710 (the "Company"), and the
undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from
securities registration afforded by Rule 506 under Regulation D
("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
WHEREAS, the Buyer wishes to purchase, upon the terms and
subject to the conditions of this Agreement, shares of Common
Stock, $.0005 par value, and the related Preferred Stock Purchase
Rights (the "Common Stock") of the Company upon the terms and
subject to the conditions of this Agreement, subject to acceptance
of this Agreement by the Company; and
WHEREAS, contemporaneously with the execution and
delivery of this Agreement, the Company and Genesee Fund
Limited-Portfolio B ("GFL-B") are executing and delivering a
Preferred Stock Subscription Agreement (the "GFL-B Subscription
Agreement"), providing for the purchase, upon the terms and subject
to the conditions provided therein, by GFL-B of shares of
non-voting convertible preferred stock of the Company for an
aggregate subscription price of $5,000,000.00;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) Subscription. The undersigned hereby agrees to
purchase from the Company the numbers of shares (the "Shares") of
Common Stock set forth on the signature page of this Agreement; at
the price per share and for the aggregate purchase price set forth
on the signature page of this Agreement. The purchase price for
the Shares shall be payable in United States Dollars.
(b) Form of Payment. The Buyer shall pay the purchase
price for the Shares by delivering good funds in United States
Dollars to the escrow agent identified in the Joint Escrow
Instructions attached hereto as Annex I (the "Escrow Agent"). Such
delivery of funds shall be made against delivery by the Company of
the certificates for the Shares registered in the name of the
Buyer. Promptly following payment by the Buyer to the Escrow Agent
of the purchase price of the Shares, the Company shall deliver
certificates for the Shares, registered in the name of the Buyer,
to the Escrow Agent. By signing this Agreement, the Buyer and the
Company each agrees to all of the terms and conditions of, and
becomes a party to, the Joint Escrow Instructions attached hereto
as Annex I, all of the provisions of which are incorporated herein
by this reference as if set forth in full.
(c) Method of Payment. Payment of the purchase price
for the Shares shall be made by wire transfer of funds to:
Citibank, N.A.
153 East 53rd Street
New York, New York 10043
ABA#021000089
For Further Credit to A/C#37179446
for credit to the account of Brian W. Pusch Attorney
Escrow Account
Reference: GFL/XOMA
Not later than 4:00 p.m., New York City time, on the date which is
one New York Stock Exchange trading day after the Company shall
have accepted this Agreement and the GFL-B Subscription Agreement
and returned a signed counterpart of this Agreement to the Buyer,
the Buyer shall deposit with the Escrow Agent the aggregate
purchase price for the Shares.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and
agrees with, the Company as follows:
(a) The Buyer is purchasing the Shares for its own
account for investment only and not with a view towards the public
sale or distribution thereof;
(b) The Buyer is an "accredited investor" as that term
is defined in Rule 501 of the General Rules and Regulations under
the 1933 Act by reason of Rule 501(a)(3);
(c) All subsequent offers and sales of the Shares by the
Buyer shall be made pursuant to registration of the Shares being
offered and sold under the 1933 Act or pursuant to an exemption
from registration;
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(d) The Buyer understands that the Shares are being
offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the
Buyer set forth herein in order to determine the availability of
such exemptions and the eligibility of the Buyer to acquire the
Shares;
(e) The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and
sale of the Shares which have been requested by the Buyer. The
Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has had the opportunity to
obtain and to review the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 (the "1995 Form 10-K"), as
filed with the SEC. The Company has not filed any reports or other
information with the SEC since December 31, 1995, except the 1995
Form 10-K. The Buyer understands that its investment in the Shares
involves a high degree of risk;
(f) The Buyer understands that no United States federal
or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Shares;
(g) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors~ rights generally; and
(h) The purchase of the Shares by the Buyer pursuant to
this Agreement does not require any governmental or regulatory
consent, approval or filing on the part of the Buyer or, to the
knowledge of the Buyer, on the part of the Company, under the
securities or similar laws of the jurisdiction in which the Buyer's
principal executive offices are located.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
(a) Concerning the Shares. The Shares have been duly
authorized and, when issued and paid for in accordance with this
Agreement, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal
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liability by reason of being such holder. There are no preemptive
rights of any stockholder of the Company, as such, to acquire the
Shares. The Common Stock is listed for trading on the Nasdaq
National Market ("Nasdaq") and (1) the Company and the Common Stock
meet the criteria for continued listing and trading on Nasdaq; (2)
the Company has not been notified since January 1, 1994 by the
National Association of Securities Dealers, Inc. of any failure or
potential failure to meet the criteria for continued listing and
trading of the Common Stock on Nasdaq and (3) no suspension of
trading in the Common Stock is in effect; and the filing by the
Company of the listing application for the Shares with Nasdaq after
the Closing Date (as required by Section 4(e)), rather than prior
to the Closing Date, will not have any material adverse effect on
the listing of the Common Stock on Nasdaq.
(b) Subscription Agreement; Registration Rights
Agreement. This Agreement and the Registration Rights Agreement,
the form of which is attached hereto as Annex II (the "Registration
Rights Agreement"), have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered on
behalf of the Company and assuming the due authorization, execution
and delivery hereof and thereof by the Buyer, this Agreement is and
the Registration Rights Agreement, when executed and delivered by
the Company, will be valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as
to enforceability to general principles of equity and to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting the enforcement of
creditors~ rights generally and except that rights to indemnity and
contribution may be limited by public policy.
(c) Non-contravention. The execution and delivery of
this Agreement and the Registration Rights Agreement by the Company
and the consummation by the Company of the issuance of the Shares
and the other transactions contemplated by this Agreement and the
Registration Rights Agreement do not and will not conflict with or
result in a breach or violation by the Company of any of the terms
or provisions of, or constitute a default under, the certificate of
incorporation or by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument
to which the Company is a party or by which it or any of its
properties or assets are bound, or (assuming the representations
and warranties of the Buyer in Section 2 hereof and of Michael
Arnouse in his option agreement with the Company, a copy of which
has been furnished to the Buyer, are true and correct) any
applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state
regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any of its properties or
assets, which conflict, breach, violation or default could have a
material adverse effect on the validity or enforceability of this
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Agreement, the Registration Rights Agreement or the issuance of the
Preferred Shares or the transactions contemplated by this
Agreement, the Registration Rights Agreement or the terms of the
Preferred Shares or on any right or remedy of the Buyer under this
Agreement, the Registration Rights Agreement or the terms of the
Preferred Shares; provided, however, that the Company makes no
representation or warranty in this Section 3(c) with regard to any
law, rule or regulation of any jurisdiction outside the United
States or any decree, judgment or order of any court outside the
United States having jurisdiction over the Company or any of its
properties or assets which law, rule or regulation becomes
applicable to the Company or which court acquires jurisdiction over
the Company solely by reason of the Buyer's status as a corporation
organized under the laws of the British Virgin Islands or
headquartered in Curacao, Netherlands Antilles.
(d) Approvals. No authorization, approval or consent
of, or filing with, any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market
or the stockholders of the Company is required to be obtained by
the Company for the issuance and sale of the Shares as contemplated
by this Agreement, other than (1) listing of the Common Shares on
Nasdaq, (2) the requirements of any applicable blue sky laws and
(3) the filing of a Form D relating to the Shares by the Company
with the SEC.
(e) Information Provided. The information provided by
or on behalf of the Company to the Buyer and referred to in Section
2(e) of this Agreement does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
(f) Absence of Certain Changes. Since December 31,
1995, there has been no material adverse change and no material
adverse development in the business, properties, operations,
condition (financial or other) or results of operations of the
Company, except as disclosed in the documents referred to in
Section 2(e) hereof.
(g) Absence of Litigation. Except (i) as set forth in
the 1995 10-K, (ii) as described in the letter, dated the date
hereof, heretofore delivered by the Company to the Buyer, and (iii)
for applications and proceedings relating to regulatory approval of
new drugs or the granting of patents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board or body pending or, to the knowledge of the Company or any of
its subsidiaries, threatened against or affecting the Company or
any of its subsidiaries, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the properties,
business, condition (financial or other) or results of operations
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of the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement or any of the documents
contemplated hereby or which would materially adversely affect the
validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of
such other documents.
4. Certain Covenants and Acknowledgments.
(a) Transfer Restrictions. The Buyer acknowledges that
(1) the Shares have not been and, except as provided in the
Registration Rights Agreement referred to in Section 4(c) of this
Agreement, are not being registered under the 1933 Act, and may not
be transferred unless (A) subsequently registered thereunder for
resale by the holder or (B) the Buyer shall have delivered to the
Company an opinion, reasonably satisfactory in form, scope and
substance to the Company, of counsel reasonably satisfactory to the
Company (which shall include, but not be limited to, counsel who
represented the Buyer in connection with the negotiation and
execution of this Agreement) to the effect that the Shares to be
sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Shares made
in reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any resale of such Shares under
circumstances in which the seller, or the person through whom the
sale is made, may be deemed to be an underwriter, as that term is
used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (3) neither the Company nor any other person is
under any obligation to register the Shares (other than pursuant to
the Registration Rights Agreement referred to in Section 4(c) of
this Agreement) under the 1933 Act or to comply with the terms and
conditions of any exemption thereunder.
(b) Restrictive Legend. The Buyer acknowledges and
agrees that, until such time as the Shares have been registered
under the 1933 Act as contemplated by the Registration Rights
Agreement, the certificates for the Shares, may bear a restrictive
legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for the
Shares until such registration):
The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended. The securities have been acquired for
investment and may not be sold, transferred or assigned
in the absence of an effective registration statement for
the securities under the Securities Act of 1933, as
amended, or an opinion reasonably satisfactory in form,
scope and substance to the Company of counsel reasonably
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satisfactory to the Company that registration is not
required under said Act.
(c) Registration Rights Agreement. The parties hereto
agree to enter into the Registration Rights Agreement, in the form
attached hereto as Annex II, on or before the Closing Date.
(d) Form D. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D and to provide
a copy thereof to the Buyer promptly after such filing. The Buyer
agrees to cooperate with the Company in connection with such filing
and, upon request of the Company, to provide all information
relating to the Buyer required for such filing.
(e) Authorization for Trading; Reporting Status. On or
before the date which is five days after the Closing Date, the
Company shall file a listing application for the Shares with Nasdaq
and shall provide evidence of such filing to the Buyer. So long as
the Buyer beneficially owns any of the Shares, during the 18 months
following the Closing Date the Company shall file all reports
required to be filed with the SEC pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and during such 18-month period the Company shall not
terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination.
(f) Use of Proceeds. The Company will use the proceeds
from the sale of the Shares for the Company's internal working
capital purposes and shall not, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation,
partnership enterprise or other person; provided, however, that
nothing in this Section 4(f) shall prohibit the Company from using
such proceeds for the acquisition of or investment in businesses,
product lines or technologies in the fields of research,
development or marketing of pharmaceutical products for the
treatment of human and animal diseases and illnesses or from making
any loan to any business engaged in such activity and in which the
Company owns an interest having a majority of the voting or similar
power of such business.
(g) Blue Sky Laws. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify, or
to obtain an exemption for, the Shares for sale to the Buyer
pursuant to this Agreement under such of the securities or "blue
sky" laws of jurisdictions in the United States as shall be
applicable to the sale of the Shares to the Buyer pursuant to this
Agreement. The Company shall furnish copies of all filings,
applications, orders and grants or confirmations of exemptions
relating to such securities or "blue sky" laws on or prior to the
Closing Date. The Buyer agrees to cooperate with the Company in
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connection with such actions and, upon request of the Company, to
provide all information, if any, concerning the Buyer required for
such actions.
5. TRANSFER AGENT INSTRUCTIONS
Promptly following the delivery by the Buyer to the
Escrow Agent of the aggregate purchase price for the Shares in
accordance with Section 1(c) hereof, and prior to the Closing Date,
the Company will instruct its transfer agent to issue one or more
certificates for the Shares, bearing the restrictive legend
specified in Section 4(b) of this Agreement prior to registration
of the Shares under the 1933 Act, registered in the name of the
Buyer as set forth on the signature page of this Agreement or its
nominee and in such denominations specified by the Buyer at least
one business day prior to the Closing Date. The Company warrants
that no instruction other than such instructions referred to in
this Section 5 and stop transfer instructions to give effect to
Section 4(a) hereof prior to registration of the Shares under the
1933 Act will be given by the Company to the transfer agent with
respect to the Shares and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Registration Rights
Agreement. Nothing in this Section shall affect in any way the
Buyer's representations and warranties in Section 2 hereof or the
Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Shares. If the Buyer provides
the Company with an opinion of counsel reasonably satisfactory to
the Company that registration of a resale by the Buyer of any of
the Shares is not required under the 1933 Act and which opinion
otherwise meets the requirements of clause (1)(B) of Section 4(a)
of this Agreement, the Company shall permit the transfer of such
Shares and promptly instruct the Company's transfer agent to issue
one or more share certificates in such name and in such
denominations as specified by the Buyer. The provisions of Section
3(l) of the Registration Rights Agreement shall supersede this
Section 5 once said Section 3(l) becomes applicable.
6. STOCK DELIVERY INSTRUCTIONS.
The certificates for the Shares shall be delivered by the
Company to the Escrow Agent pursuant to Section 1(b) hereof on a
delivery against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Shares
(the "Closing Date") shall be 12:00 noon, New York City time, on
the date which is two New York Stock Exchange trading days after
the date on which the Buyer has deposited the purchase price for
the Shares with the Escrow Agent in accordance with Section 1(c)
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hereof, or such other mutually agreed to time. The closing shall
occur on the Closing Date at the offices of the Escrow Agent.
8. CONDITIONS TO THE COMPANY~S OBLIGATION TO SELL AND
ISSUE.
The Buyer understands that the Company's obligations to
sell the Shares to the Buyer pursuant to this Agreement are
conditioned upon:
(a) The receipt and acceptance by the Company of this
Agreement as evidenced by execution of this Agreement by the
Company and the return of an executed copy hereof to the Buyer or
its legal counsel;
(b) Delivery by the Buyer to the Escrow Agent of good
funds as payment in full of an amount equal to the purchase price
for the Shares in accordance with Section 1(c) hereof; and
(c) The accuracy on the Closing Date of the
representations and warranties of the Buyer contained in this
Agreement as if made on the Closing Date and the performance by the
Buyer on or before the Closing Date of all covenants and agreements
of the Buyer required to be performed on or before such Closing
Date.
9. CONDITIONS TO THE BUYER~S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligations to
purchase the Shares are conditioned upon:
(a) Delivery by the Company to the Escrow Agent of the
certificates for the Shares in accordance with this Agreement;
(b) The accuracy on the Closing Date of the
representations and warranties of the Company contained in this
Agreement as if made on the Closing Date and the performance by the
Company on or before the Closing Date of all covenants and
agreements of the Company required to be performed on or before
such Closing Date;
(c) Receipt by the Buyer on the Closing Date of an
opinion of counsel for the Company, dated the Closing Date, in
form, scope and substance reasonably satisfactory to the Buyer, to
the effect set forth in Annex III attached hereto; and
(d) The closing under the GFL-B Subscription Agreement
shall have occurred.
10. GOVERNING LAW; MISCELLANEOUS. This Agreement shall
be governed by and interpreted in accordance with the laws of the
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State of California without regard to principles of conflict of
laws. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto. The headings of this
Agreement are for convenience of reference and shall not form part
of, or affect the interpretation of, this Agreement. If any
provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this
Agreement or the validity or enforceability of this Agreement in
any other jurisdiction. This Agreement may be amended only by an
instrument in writing signed by the party to be charged with
enforcement. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by mail or delivered
personally (which shall include telephone line facsimile
transmission) or by courier and shall be effective five days after
being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier, in each case addressed to a party at such
party's address shown in the introductory paragraph or on the
signature page of this Agreement or such other address as a party
shall have provided by notice to the other party in accordance with
this provision. The Buyer shall have the right to assign its
rights and obligations under this Agreement with respect to the
purchase of all or any portion of the Shares to any Permitted
Transferee (as herein defined), provided such assignee, by written
instrument duly executed by such assignee, assumes all obligations
of the Buyer hereunder with respect to the purchase of the portion
of the Shares so assigned and makes the same representations and
warranties with respect thereto as the Buyer makes in this
Agreement, whereupon the Buyer shall be relieved of any further
obligations, responsibilities and liabilities with respect to the
purchase of all or the portion of the Shares the obligation for the
purchase of which has been so assigned. In the case of any such
assignment, the Company shall agree in writing with such assignee
to make available to such assignee the benefits of the Registration
Rights Agreement with respect to the Shares with respect to which
the purchase under this Agreement has been so assigned. As used
herein, Permitted Transferee means any person who (1) is an
"accredited investor" (as defined in Regulation D under the 1933
Act) and (2) is either (A) any one of up to five investment funds
for which Genesee Advisers serves as the principal adviser or (B)
a person as to whom the Company shall have consented to such
assignment, such consent not to be unreasonably withheld (it being
understood that a proposed assignment by the Buyer to a competitor
or potential competitor of the Company or a person which the
Company determines in good faith is accumulating or is likely to
accumulate ownership of shares of Common Stock for hostile or
unfriendly purposes may constitute a basis for withholding such
consent).
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IN WITNESS WHEREOF, this Agreement has been duly executed
by the Buyer or one of its officers thereunto duly authorized as of
the date set forth below.
NUMBER OF SHARES OF COMMON STOCK:
PRICE PER SHARE:
AGGREGATE PURCHASE PRICE: $2,000,000.00
NAME OF BUYER: GFL PERFORMANCE FUND LIMITED
SIGNATURE ____________________________
Title: _______________________________
Date: ____________________________
Address: c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands Antilles
This Agreement has been accepted as of the date set forth
below.
XOMA CORPORATION
By: ________________________
John L. Castello
Chairman of the Board,
President and
Chief Executive Officer
Date: _____________________