FORM OF PREFERRED STOCK SUBSCRIPTION AGREEMENT
THIS PREFERRED STOCK 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"); and
WHEREAS, the Buyer wishes to subscribe for and purchase shares of
non-voting convertible preferred stock of the Company, which will be convertible
into 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;
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 subscribes for and agrees to
purchase from the Company shares (the "Preferred Shares") of Non-Voting
Cumulative Convertible Preferred Stock, Series F, $.05 par value (the "Series F
Preferred Stock"), of the Company in such number as is set forth on the
signature page of this Agreement (subject to reduction as provided in Section
7(b)) at the price per Share and for the aggregate subscription price set forth
on the signature page of this Agreement. The Preferred Shares shall have the
rights, designations and terms as set forth in the form of Certificate of
Designations attached hereto as Annex I (the "Certificate of Designations"). The
aggregate subscription price for the Preferred Shares shall be payable in United
States Dollars. The shares of Common Stock issuable upon conversion of the
Preferred Shares are referred to herein as the "Common Shares." The Common
Shares and the Preferred Shares are referred to herein collectively as the
"Shares."
(b) Form of Payment. The Buyer shall pay the purchase price for the
Preferred Shares by delivering good funds in United
States Dollars to the escrow agent (the "Buyer Escrow Agent") identified in the
Buyer Escrow Instructions attached hereto as Annex II (the "Buyer Escrow
Instructions"). Such funds shall at all times remain the property of the Buyer,
subject to the terms of the Buyer Escrow Instructions, until required to be
released to the Company in accordance with the Buyer Escrow Instructions.
Promptly, but in no event later than two New York Stock Exchange trading days,
following receipt by the Company from the Buyer Escrow Agent of notice of
payment by the Buyer to the Buyer Escrow Agent of the subscription price of the
Preferred Shares, the Company shall deliver certificates for the Preferred
Shares, registered in the name of the Buyer or as otherwise provided in Section
5 of this Agreement, to the escrow agent (the "Company Escrow Agent") identified
in the Company Escrow Instructions attached hereto as Annex III (the "Company
Escrow Instructions"). The Preferred Shares represented by such certificates
shall at all times remain the property of the Company, subject to the terms of
the Company Escrow Instructions, until required to be released to the Buyer in
accordance with the Company Escrow Instructions; provided, however, that in no
event shall the Company be entitled to exercise any voting rights or give any
consent in respect of such Preferred Shares. By signing this Agreement, the
Buyer agrees to all of the terms and conditions of, and becomes a party to, the
Buyer Escrow Instructions, all of the provisions of which are incorporated
herein by this reference as if set forth in full, and the Company agrees to all
of the terms and conditions of, and becomes a party to, the Company Escrow
Instructions, all of the provisions of which are incorporated herein by this
reference as if set forth in full. Neither the Company nor any creditor or
stockholder of the Company or any person claiming rights by, through or on
behalf of the Company shall have any claim, lien, equity, encumbrance or other
right to or in respect of the funds or any other property held pursuant to the
Buyer Escrow Instructions prior to satisfaction of the conditions to the release
thereof to the Company in accordance with the terms of this Agreement and the
Buyer Escrow Instructions. Neither the Buyer nor any creditor or holder of an
equity interest in the Buyer or any person claiming rights by, through or on
behalf of the Buyer shall have any claim, lien, equity, encumbrance or other
right to or in respect of the certificates for the Preferred Shares or any other
property held pursuant to the Company Escrow Instructions prior to satisfaction
of the conditions to the release thereof to the Buyer in accordance with the
terms of this Agreement and the Company Escrow Instructions.
(c) Method of Payment. Payment of the purchase price for the Preferred
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: ODA Fund I, Ltd./XOMA
Not later than 4:00 p.m., New York City time, on the date which is two New York
Stock Exchange trading days after the Company shall have accepted this Agreement
and returned a signed counterpart of this Agreement to the Buyer, the Buyer
shall deposit with the Buyer Escrow Agent the aggregate subscription price for
the Preferred 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 Preferred 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;
(d) The Buyer understands that the Preferred Shares are being offered
and sold, and the Common Shares are being offered, to it in reliance on
exemption from the registration requirements of the 1933 Act provided by
Regulation D and exemptions from state securities laws, including exemptions
available by reason of satisfying the requirements of Regulation D, 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 and in the Prospective Purchaser
Questionnaire, a true and accurate copy of which has been delivered by the Buyer
to the Company (the "Questionnaire"), in order to determine the availability of
such exemptions and the eligibility of the Buyer to acquire the Preferred Shares
and to receive an offer of the Common 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 Preferred Shares and the offer of the Common 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 covering the terms of the
offering of the Shares and the business, finances and operations 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 (1) Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 and Amendment No. 1 thereto on Form
10-K/A, filed March 26, 1996 and Amendment No. 2 thereto on Form 10-K/A, filed
May 23, 1996, (2) Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1996 and June 30, 1996, (3) Current Report on Form 8-K, dated April
22, 1996, (4) Proxy Statement for its 1996 Annual Meeting of Stockholders, and
(5) Registration Statement on Form S-3, filed with the SEC on June 28, 1996
(collectively, the "SEC Reports"), in each case as filed with the SEC. 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, fraudulent
conveyance, 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; and
(h) The Buyer understands that the Shares are being offered by the
Company as part of an offering of shares of Series F Preferred Stock and Common
Stock which may be greater than the number of Shares being purchased hereunder
but that there is no minimum amount of the offering and that the Company may
accept or reject this Agreement in its discretion.
(i) Neither the Buyer (or any predecessor in interest to the Buyer)
nor any person affiliated or associated with the Buyer (or any predecessor in
interest to any such person) purchased any shares of Common Stock during the
period from March 2, 1992 to June 3, 1992, inclusive.
[(j) The purchase of the Preferred 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.] [TO BE INSERTED IF BUYER IS AN OFFSHORE ENTITY]
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
(a) Organization and Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to (i) own, lease
and operate its properties and to carry on its business as now being conducted,
and (ii) to execute, deliver and perform its obligations under this Agreement,
the Registration Rights Agreement, the form of which is attached hereto as Annex
IV (the "Registration Rights Agreement"), the Certificate of Designations, and
the other agreements executed and delivered by the Company in connection
herewith, and to consummate the transactions contemplated hereby. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in all jurisdictions wherein such qualification is necessary and where failure
so to qualify could have a material adverse effect on the financial condition,
results of operations, business or properties of the Company.
(b) Capitalization. The authorized capital stock of the Company
currently consists of (a) 70,000,000 shares of Common Stock, $.0005 par value
per share, of which 34,324,669 shares were outstanding as of August 31, 1996 and
all of which outstanding shares that are outstanding at the date hereof are
fully paid and nonassessable and on the Closing Date (as defined herein) there
will be no material increase from August 31, 1996 in the number of shares of
Common Stock outstanding; and (b) 1,000,000 shares of Preferred Stock, $.05 par
value per share, of which 650,000 shares are designated as Series A Cumulative
Preferred Stock, none of which are outstanding, 7,500 shares are designated as
Convertible Preferred Stock, Series E, none of which are outstanding, and of
which up to 1,600 shares will be designated as Series F Preferred Stock. As of
August 31, 1996, the Company had outstanding options to purchase 3,191,424
shares of Common Stock. The Company does not have outstanding any material
amount of securities (or obligations to issue any such securities) convertible
into, exchangeable for or otherwise entitling the holders thereof to acquire
shares of Common Stock except as disclosed in the SEC Reports. The outstanding
shares of Common Stock and outstanding options, warrants and other securities to
purchase Common Stock have been duly authorized and validly issued. None of such
outstanding shares of Common Stock, options, warrants and other securities has
been issued in violation of the preemptive rights of any securityholder of the
Company. The offers and sales of such outstanding shares of
Common Stock, and outstanding options, warrants and other securities to purchase
Common Stock were at all relevant times either registered under the 1933 Act and
applicable state securities laws, or exempt from such registration requirements.
The authorized shares of Common Stock, and outstanding options, warrants and
other securities to purchase Common Stock conform to the descriptions thereof
contained in the SEC Reports. No holder of any of the Company's securities has
any rights, "demand," "piggy-back" or otherwise, to have such securities
registered by reason of the intention to file, filing or effectiveness of the
Registration Statement required to be filed pursuant to Section 2(a) of the
Registration Rights Agreement.
(c) Concerning the Shares and the Common Stock. The Shares have been
duly authorized and the Preferred Shares, when issued, delivered and paid for in
accordance with this Agreement, and the Common Shares, when issued on conversion
of the Preferred Shares in accordance with the Certificate of Designations, as
the case may be, will be duly and validly authorized and issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder. The Company has not granted any preemptive or
similar rights which would entitle any stockholder of the Company or any other
person 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 on Nasdaq and (3) no suspension of
trading in the Common Stock is in effect.
(d) Subscription Agreement; Registration Rights Agreement. This
Agreement and 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, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
except that rights to indemnity and contribution may be limited by public
policy.
(e) Non-contravention. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company and the consummation by the
Company of the issuance of the Preferred Shares and the issuance of the Common
Shares upon conversion of the Preferred Shares and the other transactions
contemplated by this Agreement, the Registration Rights Agreement and the terms
of the Series F Preferred Stock and the performance by the Company of its
obligations thereunder do not and will not, with or without the giving of notice
or the lapse of time, or both, 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, or result in the modification of, or result in the creation or imposition
of any lien or other encumbrance upon any properties or assets of the Company
pursuant to, 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 in the Questionnaire, of the other buyers of shares of
Series F Preferred Stock in the other Preferred Stock Subscription Agreements
(collectively, the "Other Subscription Agreements") and Questionnaires executed
by such other buyers, and of Carlyle International Securities (the "Placement
Agent") in the letter to be delivered pursuant to Section 8(e) hereof 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 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.
(f) 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 or made by the Company for the issuance and sale of the
Shares as contemplated by this Agreement and the Certificate of Designations,
other than (1) listing of the Common Shares on Nasdaq, (2) the filing of a Form
D relating to the Common Shares by the Company with the SEC and (3) the
requirements of any applicable blue sky laws.
(g) Certain Environmental Matters. In September 1996, the Company
received a notice from the U.S. Environmental Protection Agency ("EPA") that the
Company may have incurred or may incur liability under the Comprehensive
Environmental Response, Compensation and Liability Act in connection with the
RAMP Industries, Inc. site in Denver, Colorado. The notice indicates that the
Company is one of approximately 690 parties to
receive the same notice and that, to date, EPA has identified between 1 and 3
barrels of the approximately 6,000 barrels located at the site when EPA began
clean up as being attributable to the Company. The notice also states that EPA
does not anticipate proposing this site for listing on the National Priorities
List of Superfund Sites. Although the Company has not yet completed its review
of this matter, it has no reason to believe at the date hereof that the outcome
of this matter will have a material adverse effect on its financial condition or
results of operations.
(h) 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 and
the information set forth in Section 3(g) 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.
(i) 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, financial condition or results of operations
of the Company, except as disclosed in the documents referred to in Section 2(e)
hereof.
(j) Absence of Litigation. Except (i) as set forth in the SEC Reports
and as disclosed in Section 3(g) hereof, and (ii) 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, threatened against or affecting the Company, 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 of
the Company 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.
(k) Properties. The Company has good title to all property real and
personal (tangible and intangible) and other assets owned by it, free and clear
of all security interests, charges, mortgages, liens or other encumbrances,
except such as are described in the SEC Reports or such as do not materially
interfere with the use of such property made, or proposed to be made, by the
Company. The leases, licenses or other contracts or instruments under which the
Company leases, holds or is entitled to use any property, real or personal, are
valid, subsisting and enforceable only with such exceptions as do not materially
interfere with the use of such property made, or proposed to be made, by the
Company. The Company has not received notice of any material violation of any
applicable law, ordinance, regulation, order or requirement relating to its
owned or leased properties.
(l) Labor Relations. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(m) SEC Filings. The Company has timely filed all required forms,
reports and other documents with the SEC. All of such forms, reports and other
documents complied, when filed, in all material respects, with all applicable
requirements of the 1933 Act and the Securities Exchange Act of 1934, as amended
(the "1934 Act").
(n) Transfer Agent. The Company has used, and the Company's transfer
agent has accepted, instructions and opinions in substantially the forms
attached as Exhibits 1 and 2 to the Registration Rights Agreement in connection
with the Company's Non-Voting Cumulative Convertible Preferred Stock, Series D,
and the Company has no reason to believe that such transfer agent will not find
acceptable and sufficient instructions and opinions in such form in connection
with the Series F Preferred Stock.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) Transfer Restrictions. The Buyer acknowledges that (1) the
Preferred Shares to be issued to it hereunder have not been and are not being
registered under the provisions of the 1933 Act and, except as provided in the
Registration Rights Agreement, the Common Shares have not been and are not being
registered under the 1933 Act, and the Preferred Shares may not be transferred
unless (A) the Preferred Shares to be transferred are subsequently registered
thereunder for resale by the Buyer 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 Preferred
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
registration of the Common Shares pursuant to the Registration Rights 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 the
certificates for the Preferred 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 Preferred Shares):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws. The securities have been acquired for investment and
may not be sold, transferred or assigned in the absence of (1) an
effective registration statement for these shares under the Securities
Act of 1933, as amended, or an opinion reasonably satisfactory in
form, scope and substance to the Company of counsel reasonably
satisfactory to the Company that registration is not required under
said Act and (2) registration under or compliance with such state
securities laws.
(c) Registration Rights Agreement. The parties hereto agree to enter
into the Registration Rights Agreement, in the form attached hereto as Annex IV,
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) Nasdaq Listing; Reporting Status. Promptly but in no event later
than five business days following the Closing Date, the Company will file with
Nasdaq an application or other document required by Nasdaq for the listing of
the Common Shares with Nasdaq and shall provide evidence of such filing to the
Buyer. So long as the Buyer beneficially owns any of the Preferred Shares or the
Common Shares, the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of the 1934 Act, and 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. The Company will use its commercially reasonable efforts to
maintain the listing of the Common Stock on Nasdaq or another national
securities exchange for at least six months following the latest date of
conversion of Preferred Shares.
(f) Use of Proceeds. The Company will use the proceeds from the sale
of the Preferred Shares for internal working capital 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 Preferred Shares for sale to the Buyer pursuant to this Agreement and
the Common Shares for sale to the Buyer on conversion of the Preferred Shares
under such of the securities or "blue sky" laws of jurisdictions in the United
States as shall be applicable to the sale of the Preferred Shares to the Buyer
pursuant to this Agreement and issuance of the Common Shares on conversion of
the Preferred Shares. The Company shall furnish to the Buyer copies of all
filings, applications, orders and grants or confirmations of exemptions relating
to such securities or "blue sky" laws on or before the Closing Date. The Buyer
agrees to cooperate with the Company in connection with such actions and, upon
request of the Company, to provide all information, if any, concerning the Buyer
required for such actions.
(h) Limitation on Certain Sales of Common Shares. The Buyer agrees
that, except as hereinafter provided, the Buyer shall not make open market sales
of more than [BEFORE SIGNING INSERT PRO RATA PORTION OF 375,000] Common Shares
(such amount to be subject to equitable adjustment from time to time for stock
splits, stock dividends, combinations, capital reorganizations and similar
events relating to the Common Stock occurring on or after the date of this
Agreement) during any calendar week, unless otherwise agreed to in advance by
the Company. Amounts of Common Shares not sold in any calendar week shall not be
cumulative and may not be carried forward to any future calendar week.
Notwithstanding the foregoing, if on or after the date on which the Registration
Statement required to be filed by the Company with the SEC pursuant to Section
2(a) of the Registration Rights Agreement is first declared effective by the SEC
(the "SEC Effective Date") the arithmetic average of the Closing Prices (as
defined herein) during any period of five consecutive trading days is 20% or
more above the Closing Price on the trading day immediately preceding such
five-day period then, during the period of ten consecutive trading days
immediately following such five-day period the foregoing restriction on the
amount of Common
Shares which may be sold by the Buyer shall be inapplicable. If any such ten-day
period shall end on any day other than a Friday, then, during the portion of
such calendar week after such ten-day period, the Buyer shall not make open
market sales of Common Shares in an amount in excess of an amount equal to the
product obtained by multiplying (1) [BEFORE SIGNING INSERT PRO RATA PORTION OF
75,000] Common Shares (such amount to be subject to equitable adjustment from
time to time for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock occurring on or
after the date of this Agreement) times (2) the number of trading days in such
calendar week falling after the last day in such ten-day period. As used herein,
the "Closing Price" on any date shall mean (i) if the Common Stock is listed on
a national securities exchange, the last reported bid price per share of the
Common Stock on the principal securities exchange on which the Common Stock is
listed that shall be consolidated for consolidated trading, if applicable to
such exchange, on such date, or (ii) if the Common Stock is not so listed, the
last reported bid price per share of the Common Stock as reported on Nasdaq on
such date, or (iii) if the Common Stock is neither so listed nor so reported,
the last reported bid price per share of the Common Stock as quoted by a
registered broker-dealer on such date; provided that such quotes must have been
available for at least five days in the preceding thirty-day period, or (iv) if
the Common Stock is not so listed, so reported or so quoted, the fair value of
the Common Stock on such date, as reasonably determined by the Board of
Directors of the Company in good faith after taking into account such factors as
the Board of Directors of the Company may deem appropriate, including one or
more professional valuations. Notwithstanding the foregoing limitation, the
Buyer shall be permitted to tender all or any portion of the Common Shares in
connection with any tender offer or exchange offer for outstanding shares of
Common Stock.
(i) Certain Future Financings. The Company shall not issue any equity
securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any equity securities of the Company during the
period from the date of acceptance of this Agreement by the Company to the date
which is 90 days after the SEC Effective Date without the prior written consent
of the Buyer (which consent shall not be unreasonably withheld or delayed);
provided, however, that nothing in this Section 4(i) shall prohibit the Company
from issuing securities (x) as part of a transaction involving a strategic
alliance, collaboration, joint venture, partnership or other similar arrangement
of the Company, (y) pursuant to compensation plans for employees, directors,
officers, advisers or consultants of the Company or (z) upon exercise of
conversion, exchange, purchase or similar rights issued, granted or given by the
Company and outstanding as of the date of this Agreement.
(j) Certain Information. From the date hereof to the SEC Effective
Date, the Company shall provide to Och-Ziff Capital Management L.L.C.
information concerning all material developments relating to the matter
described in Section 3(g) hereof of which the Company has knowledge during such
period.
5. TRANSFER OF PREFERRED SHARES; CONVERSION PROCEDURE.
(a) Limitation on Transfer Agent Instructions; Certain Transfers. The
Company warrants that no instruction contrary to the instructions referred to in
Section 3(l) of the Registration Rights Agreement will be given by the Company
to the Company's transfer agent for the Common Stock with respect to the Common
Shares and that the Common Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in the
Registration Rights Agreement. If the Buyer provides the Company with an opinion
of counsel that registration of a proposed resale by the Buyer of any of the
Preferred 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 and
such proposed transfer otherwise meets the requirements of the Certificate of
Designations, the Company shall permit the transfer of such Preferred Shares.
(b) Conversion Procedure. In connection with the exercise of
conversion rights relating to the Preferred Shares, the Buyer shall complete,
sign and furnish to the Company by personal delivery, courier or telephone line
facsimile transmission (in each case to be effective on receipt and in the case
of telephone line facsimile transmission, the original conversion certificate
shall promptly be sent to the Company by overnight courier service) a conversion
certificate in the form attached hereto as Annex V, which shall satisfy the
requirements of Section 8(c) of the Certificate of Designations.
6. STOCK DELIVERY INSTRUCTIONS.
The certificates for the Preferred Shares shall be delivered by the
Company to the Company Escrow Agent pursuant to Section 1(b) hereof on a
delivery against payment basis upon release from escrow in accordance with
Section 7(b).
7. CLOSING DATE; ESCROW RELEASES.
(a) The date and time of the issuance and sale of the Preferred 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 aggregate subscription price for the Preferred Shares with the
Buyer Escrow Agent in accordance with Section 1(c) hereof, or such other
mutually agreed to time. The closing shall occur on the Closing Date at the Law
Offices of Brian W Pusch, Penthouse Suite, 29 West 57th Street, New York, New
York. The Buyer and the Company agree that, upon completion of the closing on
the Closing Date, the Preferred Shares shall be deemed to be outstanding for all
purposes and the escrow created by the Company Escrow Instructions shall serve
so that all acts necessary for the issuance of the Preferred Shares shall be
deemed to have occurred on the Closing Date and only delivery of the Preferred
Shares to the Buyer shall not have occurred; provided, however, that the
Preferred Shares shall not be deemed fully paid until the purchase price
therefor as provided in this Agreement shall have been released to the Company
from the escrow created by the Buyer Escrow Instructions, which release shall
occur only as provided herein, and the Buyer shall have no liability for payment
of such purchase price other than in accordance with the Buyer Escrow
Instructions.
(b)(1) Promptly after the SEC Effective Date, the Company shall notify
the Buyer (the "Company Notice") that the SEC Effective Date has occurred.
Promptly, but in no event later than two New York Stock Exchange trading days
after the Company Notice has been given to the Buyer, the Company shall notify
the Company Escrow Agent that the SEC Effective Date has occurred. If
(A) no Insolvency Event (as defined herein) shall have occurred and be
continuing;
(B) the representations and warranties of the Company in this
Agreement made on the date of this Agreement and on the Closing Date shall
have been true and correct in all material respects on the date of this
Agreement and on the Closing Date;
(C) the Company shall have performed on or before the SEC Effective
Date all covenants and agreements of the Company required to be performed
on or before the SEC Effective Date;
(D) the Company shall have furnished to the Buyer a written opinion,
dated the SEC Effective Date, addressed to the Buyer, of Cahill Gordon &
Reindel, special counsel for the Company substantially in the form attached
hereto as Annex VI and a written statement of Christopher J. Margolin, Vice
President, General Counsel and Secretary of the Company substantially in
the form attached hereto as Annex VII ; and
(E) the Company shall have furnished to the Buyer a certificate of the
Company, dated the SEC Effective Date, signed by any two of the five
executive officers of the
Company, to the effect that the signers of such certificate have examined
the Registration Statement and related prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement made on the date of this Agreement and on the Closing Date were
true and correct in all material respects on the date of this Agreement and
on the Closing Date, and the Company has performed on or before the SEC
Effective Date all covenants and agreements of the Company required to be
performed on or before the SEC Effective Date; and
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened by the SEC.
then promptly, but in no event later than two New York Stock Exchange trading
days after the later of (x) the date the Company Notice has been given to the
Buyer, and (y) the date of delivery to the Buyer of the documents specified in
the foregoing clauses (D) and (E), the Buyer shall notify the Buyer Escrow Agent
that (1) the SEC Effective Date has occurred and (2) all conditions precedent to
the release of the portion of the Escrow Funds (as defined in the Buyer Escrow
Instructions) to be released to the Company have been satisfied or waived. The
Company and the Buyer agree that, on the latest of (1) the date of receipt by
the Company Escrow Agent of such notice from the Company, (2) the date of
receipt by the Buyer Escrow Agent of such notice from the Buyer, (3) the date of
receipt by the escrow agent acting on behalf of the Company in connection with
the Other Subscription Agreements of the latest of the notices from the Company
to release the securities held by such escrow agents to the buyers under the
Other Subscription Agreements, and (4) the date of receipt by the escrow agent
acting on behalf of the buyers in connection with the Other Subscription
Agreements of the latest of the notices from such buyers to release funds held
by such escrow agents to the Company, or as promptly as practicable thereafter,
the certificate(s) for the Preferred Shares shall be released to the Buyer in
accordance with Section 1 of the Company Escrow Instructions and the portion of
the Escrow Funds to be released to the Company shall be released to the Company
in accordance with Section 1 of the Buyer Escrow Instructions.
(2) As used herein, the term "Insolvency Event" means
(A) a decree or order for relief by a court having jurisdiction in the
premises shall have been entered in respect of the Company in an
involuntary case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency
or other similar law, including any such decree or order appointing a
custodian or receiver or liquidator or trustee or assignee of the Company
or of all or a major part of its property, or for the winding-up or
liquidation of its affairs (or any petition seeking such decree or order
shall have been filed with such a court and shall not have been withdrawn
or dismissed); or
(B) the Company shall commence a voluntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or shall
consent to the appointment of or taking possession by a custodian or
receiver or liquidator or trustee or assignee of the Company or of all or a
major part of its property, or shall make an assignment for the benefit of
creditors.
(3) Notwithstanding any other provision of this Agreement or any of
the other documents contemplated hereby, if on the date on which the Escrow
Funds are to be released to the Company and the certificate(s) for the Preferred
Shares are to be released to the Buyer any Preferred Shares would not, by reason
of the provisions of Section 8(d)(1) of the Certificate of Designations, be
convertible into shares of Common Stock had all Preferred Shares been
surrendered for conversion into Common Stock on such date (determined without
regard to the proviso to the second sentence of Section 8(a) of the Certificate
of Designations), then the number of Preferred Shares to be released to the
Buyer from the escrow created by the Company Escrow Instructions shall be
reduced pro rata with all other outstanding shares of Series F Preferred Stock
and shares of Series F Preferred Stock which the Company has so agreed to issue
and the amount of Escrow Funds to be released to the Company shall be reduced
accordingly so that the provisions of Section 8(d)(1) of the Certificate of
Designations would not so limit the conversion of any such shares of Series F
Preferred Stock on such date. If the provisions of this Section 7(b)(3) become
applicable, the Company shall instruct the Company Escrow Agent to reduce the
number of Preferred Shares to be released to the Buyer as provided herein (and
shall arrange to subdivide appropriately the certificate(s) for Preferred Shares
held by the Company Escrow Agent to permit such reduction), to release such
reduced number of Preferred Shares to the Buyer and to release the balance of
the shares of Series F Preferred Stock held by the Company Escrow Agent to the
Company, and the Buyer shall instruct the Buyer Escrow Agent to reduce the
amount of the Escrow Funds to be released to the Company as provided herein, to
release such reduced amount of Escrow Funds to the Company and to release the
balance of the Escrow Funds to the Buyer.
(c) If the SEC Effective Date does not occur within 90 days after the
Closing Date, the Buyer shall have the right,
exercisable by notice to the Company pursuant to this Agreement and to the Buyer
Escrow Agent pursuant to the Buyer Escrow Instructions given at any time prior
to the SEC Effective Date, to terminate the escrow under the Buyer Escrow
Instructions as to all or any portion of the Preferred Shares, whereupon, the
Company shall be entitled to release of the certificates for the Preferred
Shares as to which the escrow created by the Buyer Escrow Instructions is to be
so terminated from the escrow created by the Company Escrow Instructions and the
Buyer shall be entitled to release of an amount equal to all or such portion of
the subscription price for the Preferred Shares as to which the escrow created
by the Buyer Escrow Instructions is to be so terminated, together with interest
thereon as contemplated by the Buyer Escrow Instructions, from the escrow
created by the Buyer Escrow Instructions, and (x) if the Buyer has so notified
the Company and the Buyer Escrow Agent that it wishes to terminate the escrow
created by the Buyer Escrow Instructions with respect to all of the Preferred
Shares, then the Company and the Buyer shall have no further obligations or
liabilities to one another under this Agreement or in connection with the
transactions contemplated hereby and (y) if the Buyer has so notified the
Company and the Buyer Escrow Agent that it wishes to terminate the escrow
created by the Buyer Escrow Instructions with respect to a portion of the
Preferred Shares, then the Company and the Buyer shall have no further
obligations or liabilities to one another in respect of the Preferred Shares as
to which the escrow created by the Buyer Escrow Instructions is so terminated
under this Agreement or in connection with the transactions contemplated hereby.
If the Buyer exercises its right to terminate the escrow created by the Buyer
Escrow Instructions with respect to a portion of the Preferred Shares, then the
Company shall promptly deliver to the Company Escrow Agent a substitute
certificate or certificates for Preferred Shares in such denomination or
denominations as shall be required to accommodate the reduction in the number of
Preferred Shares to be released to the Buyer from the escrow created by the
Company Escrow Instructions.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell the
Preferred Shares to the Buyer pursuant to this Agreement is conditioned upon:
(a) The receipt and acceptance by the Company of the Buyer's
subscription for the Preferred Shares 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 Buyer Escrow Agent of good funds as
payment in full of an amount equal to the
subscription price for the Preferred Shares in accordance with Section 1(c)
hereof;
(c) No legal action, suit or proceeding shall be pending or threatened
which (i) demands damages for any alleged liability asserted to arise by reason
of the transaction contemplated by this Agreement and/or (ii) seeks to restrain
or prohibit the transactions contemplated by this Agreement;
(d) The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement and in the Questionnaire 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 the Closing Date; and
(e) The Company shall have received a letter, dated the Closing Date,
from the Placement Agent addressed to the Company in the form attached hereto as
Annex VIII.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Shares is conditioned upon:
(a) Delivery by the Company to the Company Escrow Agent of the
certificates for the Preferred Shares in accordance with this Agreement;
(b) No legal action, suit or proceeding shall be pending or threatened
which (i) demands damages for any alleged liability asserted to arise by reason
of the transaction contemplated by this Agreement and/or (ii) seeks to restrain
or prohibit the transactions contemplated by this Agreement;
(c) 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;
(d) The receipt by the Buyer of confirmation of the filing with the
Secretary of State of the State of Delaware of the Certificate of Designations
in the form attached hereto as Annex I; and
(e) On the Closing Date, the Buyer having received opinions of counsel
for the Company, dated the Closing Date, substantially in the forms of Annex IX
and Annex X attached hereto.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of California without regard to principles of
conflicts of laws.
(b) This Agreement may be executed in counterparts and by the parties
hereto on separate counterparts, all of which together shall constitute one and
the same instrument. A facsimile transmission of this signed Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.
(c) The headings and captions of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement.
(f) Any notices required or permitted to be given under the terms of
this Agreement shall be in writing and shall be delivered personally (which
shall include telephone line facsimile transmission) or by courier and shall be
effective upon receipt, 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 (facsimile number (510) 649-7571, in the case of the Company, and
facsimile number ______________, in the case of the Buyer) or such other address
as a party shall have provided by notice to the other party in accordance with
this provision. The Buyer hereby designates as its address and telephone line
facsimile number for any notice required or permitted to be given to the Buyer
pursuant to the Certificate of Designations the address and facsimile number
shown on the signature page of this Agreement, until the Buyer shall designate
another address or telephone line facsimile number for such purpose by notice to
the Company.
(g) This Agreement shall be binding on the parties hereto and their
respective successors and permitted assigns. Neither the Company nor the Buyer
may assign its rights or obligations under this Agreement without the prior
written consent of the other party hereto.
(h) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
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 SERIES F PREFERRED STOCK: __________
PRICE PER SHARE: $10,000.00
AGGREGATE SUBSCRIPTION PRICE: $_______________
For purposes of Section 8(a) of the Certificate of Designations, the
Buyer hereby agrees to the following percentage as the Buyer's Restriction
Percentage:
Please Check One:
---
/__/ 4.9 percent
---
/__/ 9.9 percent
If no box is checked, there will be no such limit.
NAME OF BUYER: ______________________
SIGNATURE ____________________________
Title: _______________________________
Date: _______________________________
Address: __________________________
__________________________
__________________________
Facsimile Number: ____________________
This Agreement has been accepted as of the date set forth
below.
XOMA CORPORATION
By: ______________________________
Peter Davis
Vice President, Finance and
Chief Financial Officer
Date: ____________________________