<SEC-DOCUMENT>0001140361-13-045845.txt : 20131212
<SEC-HEADER>0001140361-13-045845.hdr.sgml : 20131212
<ACCEPTANCE-DATETIME>20131212161026
ACCESSION NUMBER:		0001140361-13-045845
CONFORMED SUBMISSION TYPE:	424B5
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20131212
DATE AS OF CHANGE:		20131212

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			XOMA Corp
		CENTRAL INDEX KEY:			0000791908
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				942756657
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-191078
		FILM NUMBER:		131273642

	BUSINESS ADDRESS:	
		STREET 1:		2910 SEVENTH ST
		CITY:			BERKELEY
		STATE:			CA
		ZIP:			94710
		BUSINESS PHONE:		5106441170

	MAIL ADDRESS:	
		STREET 1:		2910 SEVENTH ST
		CITY:			BERKELEY
		STATE:			CA
		ZIP:			94710

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	XOMA LTD /DE/
		DATE OF NAME CHANGE:	19990107

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	XOMA CORP /DE/
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
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<DESCRIPTION>XOMA CORP 424B5 12-12-2013
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<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Filed Pursuant to Rule 424(b)(5)</div>

<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;Registration No.&#160;&#160;333-191078</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">This prospectus supplement relates to an effective registration statement under the Securities Act of 1933, but is not complete and may be changed.&#160;&#160;This prospectus supplement and the accompanying prospectus are not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.</div>

<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;<a name="FIS_SUBJECT_STOCK_INFO"><!--Anchor--></a></div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">SUBJECT TO COMPLETION, DATED DECEMBER 12, 2013</div>

<div>&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 20, 2013</div>

<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Common Stock</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><img src="image00001.jpg"></div>

<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We are offering&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares of our common stock.&#160;&#160;</div>

<div><br>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;Our common stock is listed on The NASDAQ Global Market under the symbol &#8220;XOMA.&#8221; The last reported sale price of our common stock on The NASDAQ Global Market on December 11, 2013, was $5.62 per share.</div>

<div><br>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The underwriters have an option to purchase a maximum of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional shares of our common stock.</div>

<div><br>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Investing in our common stock involves a high degree of risk. See the risks set forth under the heading &#8220;Risk Factors&#8221; beginning on page S-6 of this prospectus.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;&#160;</div>
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<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 1.8pt">Price to Public</div>
</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 2px solid; VERTICAL-ALIGN: bottom" valign="bottom" colspan="2">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 1.8pt">Underwriting</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 1.8pt">Discounts and </div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 1.8pt">Commissions <sup style="vertical-align: text-top; line-height: 1; font-size: smaller;">(1)</sup></div>
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<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 1.8pt">Proceeds to Us</div>
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<tr>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">Per Share</div>
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<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">Total</div>
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<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
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<td style="WIDTH: 36pt">&#160;</td>
<td style="WIDTH: 27pt; VERTICAL-ALIGN: top; align: right">
<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">(1)</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We refer you to &#8220;Underwriting&#8221; beginning on page S-27 of this prospectus supplement for additional information regarding underwriting compensation.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Delivery of the shares of common stock is expected to be made on or about December&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; , 2013.</div>

<div><br>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">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.&#160;&#160;Any representation to the contrary is a criminal offense.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 14pt; FONT-WEIGHT: bold">Credit Suisse</div>
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<div>&#160;</div>
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<td style="WIDTH: 22.55%; VERTICAL-ALIGN: top">
<div>&#160;</div>
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<td style="WIDTH: 3.43%; VERTICAL-ALIGN: top">
<div>&#160;</div>
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<td style="WIDTH: 34.66%; VERTICAL-ALIGN: top">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 14pt; FONT-WEIGHT: bold">Jefferies</div>
</td>
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<tr>
<td style="WIDTH: 35.94%; VERTICAL-ALIGN: top">&#160;</td>
<td style="WIDTH: 3.43%; VERTICAL-ALIGN: top"></td>
<td style="WIDTH: 22.55%; VERTICAL-ALIGN: top"></td>
<td style="WIDTH: 3.43%; VERTICAL-ALIGN: top"></td>
<td style="WIDTH: 34.66%; VERTICAL-ALIGN: top"></td>
</tr>

<tr>
<td style="WIDTH: 35.94%; VERTICAL-ALIGN: top">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Cowen and Company</div>
</td>
<td style="WIDTH: 3.43%; VERTICAL-ALIGN: top">
<div>&#160;</div>
</td>
<td style="WIDTH: 22.55%; VERTICAL-ALIGN: top">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Piper Jaffray</div>
</td>
<td style="WIDTH: 3.43%; VERTICAL-ALIGN: top">
<div>&#160;</div>
</td>
<td style="WIDTH: 34.66%; VERTICAL-ALIGN: top">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">RBC Capital Markets</div>
</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"></div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 0.8pt">&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;The date of this prospectus supplement is December&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; , 2013.</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="FORM424B5_HTM_TOC"><!--Anchor--></a><a name="TABLEOFCONTENTS"><!--Anchor--></a>TABLE OF CONTENTS</div>

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<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 0.8pt">Prospectus Supplement</div>
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<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-RIGHT: 0.8pt">Prospectus</div>
</td>
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<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#ABOUTTHIS">ABOUT THIS PROSPECTUS SUPPLEMENT</a></div>
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<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-ii</div>
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<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#AboutthisProspectus">ABOUT THIS PROSPECTUS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">i</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#PROSPECTUSSUPPLEMENTSUMMA">PROSPECTUS SUPPLEMENT SUMMARY</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-1</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#Summary2">SUMMARY</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">1</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#RISKFACTORS">RISK FACTORS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-6</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div>&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#TheSecuritiesWeMayOffer">THE SECURITIES WE MAY OFFER</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">3</div>
</td>
</tr>

<tr style="HEIGHT: 13px">
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#FORWARD-LOOKING">FORWARD-LOOKING INFORMATION</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-24</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#RiskFactors2">RISK FACTORS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">5</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#USEOFPROCEEDS">USE OF PROCEEDS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-25</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#Forward-LookingStatements">FORWARD-LOOKING STATEMENTS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">5</div>
</td>
</tr>

<tr style="HEIGHT: 13px">
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#DILUTION">DILUTION</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-26</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#FinancialRatios"><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">FINANCIAL </font>RATIOS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">6</div>
</td>
</tr>

<tr style="HEIGHT: 12px">
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#UNDERWRITING">UNDERWRITING</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-27</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#UseofProceeds2">USE OF PROCEEDS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">6</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#S_LEGALMATTERS">LEGAL MATTERS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-30</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#DescriptionofCapitalStock">DESCRIPTION OF CAPITAL STOCK</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">7</div>
</td>
</tr>

<tr style="HEIGHT: 9px">
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#EXPERTS">EXPERTS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-30</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#DescriptionofDebtSecuriti">DESCRIPTION OF DEBT SECURITIES</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">11</div>
</td>
</tr>

<tr style="HEIGHT: 14px">
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#WHEREYOUCANFIND">WHERE YOU CAN FIND MORE INFORMATION</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-30</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#DescriptionofWarrants">DESCRIPTION OF WARRANTS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">17</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#INCORPORATION">INCORPORATION OF DOCUMENTS BY REFERENCE</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">S-30</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#LegalOwnershipofSecuritie">LEGAL OWNERSHIP OF SECURITIES</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">19</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none"></td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none"></td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#PlanofDistribution">PLAN OF DISTRIBUTION</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">22</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.14%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 3.37%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 44%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt"><a href="#LegalMatters2">LEGAL MATTERS</a></div>
</td>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #cceeff; WIDTH: 5.13%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">23</div>
</td>
</tr>

<tr>
<td style="BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; WIDTH: 42.8%; VERTICAL-ALIGN: top; BORDER-TOP: medium none; BORDER-RIGHT: medium none">
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><a name="TAB1"><!--Anchor--></a>You should rely only on the information incorporated by reference or provided in this prospectus supplement, the accompanying prospectus and any free writing prospectus that we have authorized for use in connection with this offering. Neither we nor the underwriters have 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 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, and any free writing prospectus that we have authorized for use in connection with this offering is accurate only as of the date of those respective documents.&#160;&#160;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.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="ABOUTTHIS"><!--Anchor--></a>ABOUT THIS PROSPECTUS SUPPLEMENT</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;This prospectus supplement is part of a registration statement (No. 333-191078) that we filed with the Securities and Exchange Commission, or the SEC, using a &#8220;shelf&#8221; registration process. Under the registration statement, we registered the offering by us of common stock, preferred stock, debt securities and warrants for sale from time to time in one or more offerings. This prospectus supplement provides specific information about the offering by us of our common stock under the shelf registration statement. 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.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Before purchasing any securities, you should carefully read both this prospectus supplement and the accompanying prospectus, together with the documents incorporated by reference herein as described under the heading &#8220;Incorporation of Documents By Reference&#8221; and the additional information described under the heading, &#8220;Where You Can Find More Information&#8221; in this prospectus supplement, as well as any free writing prospectus prepared by or on behalf of us or to which we have referred you.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;Unless the context otherwise requires, references in this prospectus supplement to &#8220;we&#8221;, &#8220;us&#8221; and &#8220;our&#8221; refer to XOMA Corporation and its consolidated subsidiaries.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus supplement and the accompanying prospectus, including the information incorporated by reference into this prospectus supplement and the accompanying prospectus, include trademarks, service marks and trade names owned by us or others. XOMA, the XOMA logo and all other XOMA product and service names are registered or unregistered trademarks of XOMA Corporation or a subsidiary of XOMA Corporation in the United States and in other selected countries. EYEGUARD is a service mark of a subsidiary of XOMA Corporation in the United States.&#160;&#160;All other trademarks, service marks and trade names included or incorporated by reference in this prospectus supplement and the accompanying prospectus are the property of their respective owners.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="PROSPECTUSSUPPLEMENTSUMMA"><!--Anchor--></a>&#160;<a name="FORM424B5_HTM_PROSP"><!--Anchor--></a>PROSPECTUS SUPPLEMENT SUMMARY</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This summary highlights selected information about our company, this offering and information appearing elsewhere in this prospectus supplement, in the accompanying prospectus, in the documents we incorporate by reference and in any free writing prospectus that we have authorized for use in connection with this offering. This summary is not complete and does not contain all the information that you should consider before investing in our common stock. You should read this entire prospectus supplement and the accompanying prospectus carefully, including the &#8220;Risk Factors&#8221; contained in this prospectus supplement</font>&#160;<font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">beginning on page S-6 of this prospectus supplement</font><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">, the accompanying prospectus and the financial documents and notes incorporated by reference in this prospectus supplement and the accompanying prospectus</font>&#160;<font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">and any free writing prospectus that we have authorized for use in connection with this offering, before making an investment decision. This prospectus supplement may add to, update or change information in the accompanying prospectus.</font></div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Overview</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">XOMA Corporation (&#8220;XOMA&#8221;), a Delaware corporation, discovers and develops innovative antibody-based therapeutics.&#160;&#160;Our lead drug candidate, gevokizumab, is a potent, fully humanized monoclonal antibody with unique allosteric modulating properties that binds to the inflammatory cytokine interleukin-1 beta (&#8220;IL-1 beta&#8221;).&#160; We believe, by targeting IL-1 beta, gevokizumab has the potential to address the underlying inflammatory causes of a wide range of diseases that have been identified as unmet medical needs.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">Together with our development partner, Les Laboratoires Servier (&#8220;Servier&#8221;), a leading independent pharmaceutical company in France, we initiated three Phase 3 clinical trials evaluating gevokizumab for the treatment of non-infectious uveitis (&#8220;NIU&#8221;) involving the intermediate and/or posterior segment of the eye and Beh&#231;et&#8217;s uveitis, a severe subset of NIU.&#160; XOMA is responsible for all of the clinical study sites in the United States, and Servier is responsible for all of the clinical study sites outside of the United States.&#160; These studies are known as the EYEGUARD&#8482; program, which includes EYEGUARD-A (patients with acute NIU), EYEGUARD-B (patients with Beh&#231;et&#8217;s uveitis), and EYEGUARD-C (patients with NIU controlled with corticosteroids, with or without immunosuppressive medications).&#160; The pace of enrollment in EYEGUARD-A and C has been slower than both Servier and we had anticipated.&#160; We increased the number of study sites in the United States, and we now have 68 of the targeted 70 U.S. clinical sites up and running where we are working to accelerate enrollment.&#160; We have been working closely with Servier to identify ways to expedite the site activation process outside the United States, and Servier believes it will have 53 of its targeted 70 non U.S. sites open by year end.&#160; We continue to anticipate disclosing the top-line results of the EYEGUARD studies in 2014.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">Based upon what we believe are&#160;compelling data from our pilot study in pyoderma gangrenosum (&#8220;PG&#8221;), a rare ulcerative skin disease, we intend to solicit feedback from the U.S. Food and Drug Administration (&#8220;FDA&#8221;) about further assessing PG as a potential indication for gevokizumab in phase 3 trials.&#160;Earlier in 2013, we reported encouraging top-line results from the moderate-to-severe inflammatory acne study, and in October 2013, we announced encouraging top-line results from our proof-of-concept study in erosive osteoarthritis of the hand (&#8220;EOA&#8221;) patients with elevated C-reactive protein. We anticipate selecting either EOA or moderate-to-severe inflammatory acne for Phase 3 development upon completion of and positive date from&#160;the ongoing Phase 2 EOA program and the completion of market analysis for the acne indication.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">We also have clinical studies assessing gevokizumab&#8217;s potential to treat several rare diseases.&#160; Two studies are being conducted in collaboration with the United States National Institutes of Health (&#8220;NIH&#8221;).&#160; In March 2013, we announced a gevokizumab study in patients with non-infectious anterior scleritis had opened for enrollment at the National Eye Institute (&#8220;NEI&#8221;).&#160; In August 2013, we announced a gevokizumab clinical study in patients with inflammatory autoimmune inner ear disease (&#8220;AIED&#8221;) will be run by the North Shore-Long Island Jewish Health System in collaboration with the National Institute on Deafness and Other Communication Disorders.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">Separately, Servier instituted its own active development program for gevokizumab beyond the NIU and Beh&#231;et&#8217;s uveitis Phase 3 program.&#160; In 2012, Servier initiated a gevokizumab Phase 2 study in patients with acute coronary syndrome, a cardiovascular disease.&#160;&#160;Servier also began testing gevokizumab in a variety of small clinical studies, including polymyositis/dermatomyositis and Schnitzler syndrome; a third study in Giant Cell Arteritis, is expected to open shortly.&#160; Servier indicated these are the first studies in an extensive multi-indication exploratory program it expects to be conducting.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">We entered into a license and collaboration agreement with Servier in December 2010 to jointly develop and commercialize gevokizumab in multiple indications.&#160;&#160;Under the terms of that agreement, Servier has worldwide rights to gevokizumab for cardiovascular disease and diabetes indications and rights outside the United States and Japan to all other indications.&#160;&#160;We retain development and commercialization rights in the United States and Japan to all indications except cardiovascular disease and diabetes and have an option to reacquire rights to these indications from Servier in these territories.&#160;&#160;Additionally, we continue to develop our proprietary preclinical pipeline, primarily focusing on the development of allosteric modulating monoclonal antibodies.</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Corporate Strategy</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">We are committed to establishing XOMA as a commercial organization in the United States to ensure we capture the value from our product discovery and development programs.&#160; Our commercialization strategy is to market our products in the United States through our own focused sales teams calling on the specialist prescriber.&#160; For indications that will require clinical studies that are prohibitively large or the targeted patient populations are not treated by the specialist provider, we will seek a development and commercialization partner.&#160; For gevokizumab, we select our clinical development indications based upon data that supports IL-1 beta&#8217;s role in the disease state and upon data indicating the affected patients are treated by a specialized physician base.&#160; Additionally, we may seek to expand our pipeline by developing additional proprietary products and technologies and by entering into additional licensing and collaborative arrangements with pharmaceutical and biotechnology companies.&#160; The principal elements of our corporate strategy are to:</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Complete Phase 3 clinical development for gevokizumab, our lead product candidate, in non-infectious uveitis.&#160;&#160;</font> With Servier, we launched the global gevokizumab Phase 3 clinical development program, named EYEGUARD&#8482;, in 2012.&#160; The global program includes two Phase 3 trials in active and controlled NIU involving the intermediate and/or posterior segments of the eye (EYEGUARD-A and EYEGUARD-C, respectively) and a Phase 3 trial outside the United States in a subset of NIU patients who suffer from Beh&#231;et&#8217;s uveitis (EYEGUARD-B).&#160; The EYEGUARD-A study defines active NIU as a vitreous haze score of equal to or greater than two on the SUN/NEI scale.&#160; The vitreous is a normally transparent gel that fills the eyeball behind the lens, and vitreous haze is the clouding of that gel.&#160; The EYEGUARD-C study is designed to determine if physicians can reduce or eliminate corticosteroid use from NIU patients without causing their disease to flare, or exacerbate.&#160; The EYEGUARD-B study also is designed to determine if physicians can reduce or eliminate corticosteroid use from Beh&#231;et&#8217;s patients without causing an acute exacerbation of their uveitis.&#160; In addition to establishing efficacy, we believe&#160;these trials have been designed to provide&#160;data necessary to meet&#160;the FDA minimum requirements for demonstrating&#160;safety for ophthalmic indications: at least 300 patients must be treated for at least six months and 100 patients for one year at the to-be-marketed dose.&#160; We believe we will have top-line results from all three studies in 2014.&#160; We believe we need positive results from any two of these three studies in order to file a Biologics Licensing Application (&#8220;BLA&#8221;) with the FDA.</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Advance secondary Phase 3 clinical development strategy for gevokizumab in Beh&#231;et&#8217;s uveitis.</font>&#160; As a parallel strategy to accelerate our path to commercialization, we plan to seek guidence from&#160;the FDA to determine the requirements necessary to support&#160;a BLA in Beh&#231;et&#8217;s uveitis.&#160; In 2012, Servier launched an open-label Phase 2 study in patients with Beh&#231;et&#8217;s disease and a history of severe uveitis who were treated with corticosteroids and at least one pre-specified immunosuppressant.&#160;Fifteen evaluable patients presented with elevated vitreous haze resulting from their Beh&#231;et&#8217;s uveitis.&#160; All of the evaluable patients responded to gevokizumab treatment, most within one week, and all of the patients had uveitis haze reduction of at least one unit.&#160; Eleven of the fifteen&#160;patients met a prerequisite for enrollment in our Phase 3 EYEGUARD-A study, a vitreous haze score of greater than or equal to two on the NEI/SUN scale.&#160; Eight of these eleven patients showed a two-unit reduction in vitreous haze at about day 70.</td>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">We believe Servier&#8217;s results when combined with those of our initial Phase 2 study are compelling for the submission of a BLA for Beh&#231;et&#8217;s uveitis.&#160; The FDA may require us to conduct a confirmatory study in patients with Beh&#231;et&#8217;s uveitis to support a BLA filing in this indication; therefore we have begun identifying clinical sites with Beh&#231;et&#8217;s uveitis patients that are not being accessed in Servier&#8217;s EYEGUARD-B clinical program.&#160;Depending upon&#160;feedback from FDA and what&#160;additional data the Agency may require we provide to support a BLA for Beh&#231;et&#8217;s uveitis, we&#160;hope to be able to file a BLA for the Beh&#231;et&#8217;s uveitis indication by the end of 2014.</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Pursue a Phase 3 program in PG, a rare disease classified under the broader indication of neutrophilic dermatoses</font><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">.</font>&#160; In 2013, we launched a pilot study to determine gevokizumab&#8217;s ability to treat acute inflammatory PG, one of several rare diseases classified under the broader cluster of neutrophilic dermatoses.&#160; We designed the study to enroll as many as four patients to receive gevokizumab 60 mg, dosed once monthly for three months.&#160; After this cohort had completed one dose, we reviewed the data and elected not to proceed to a higher dosing regimen, as the patients were responding to gevokizumab.&#160; Three patients showed improvement in ulcer size by Day 28.&#160; One patient had total resolution of the ulcer by Day 84; a second patient had 93% improvement in ulcer size by Day 56.&#160; Two additional patients have been enrolled in the pilot program.&#160; We intend to present data from all six patients to the FDA and request FDA guidance on the requirements for a&#160;Phase 3 program in PG, if not in several indications that are classified as neutrophilic dermatoses.</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Complete the POC studies in EOA to determine the requirements for a Phase 3 clinical program.</font>&#160; In October 2013, we announced the Day 84 results from our Phase 2 POC study in EOA patients with elevated C-reactive protein ("CRP") levels greater than or equal to 2.5 mg/L.&#160; The POC study in EOA is a double-blind, placebo-controlled study to determine if gevokizumab can improve the pain, stiffness, and physical function associated with EOA after three and six months of treatment, based upon the Australian/Canadian Osteoarthritis Hand Index ("AUSCAN&#8482;") scoring scale.&#160; AUSCAN is a validated self-administered questionnaire specifically designed to assess the three dimensions of pain, disability, and joint stiffness of osteoarthritis of the hand using a series of 15 questions.&#160; We enrolled 85 EOA patients who were randomized 2:1 to receive 60 mg of gevokizumab or placebo, dosed subcutaneously once monthly.</td>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">In this study, the percent change in AUSCAN score is measured from baseline on a monthly basis, with efficacy assessments calculated at Day 84 and Day 168.&#160; The Day 84 results demonstrate gevokizumab-treated patients experienced greater improvements in their mean AUSCAN score than patients in the placebo-treated group.&#160; After three months of treatment, patients who received gevokizumab (n=57) demonstrated a 23 percent reduction from baseline in the composite AUSCAN score compared to a 14 percent reduction reported by patients in the placebo arm (n=28).&#160; In addition to AUSCAN score, the study includes radiographic images at Day 84 and Day 168 to assess the potential change in joint damage from baseline.&#160; The study is continuing on a blinded basis until all patients receive the full six months of treatment.&#160;</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">In order to assess the therapeutic effect of gevokizumab in patients without high levels of CRP, we launched a supplemental EOA study in May 2013.&#160; This study has met its 90-patient enrollment target.&#160; The primary endpoint of this study is the percent reduction in AUSCAN score at Day 84, and its results will be used to determine the entry criteria for our Phase 3 program.</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">Upon completion of both studies and the analysis of radiographic images of the affected joints in the patients with elevated CRP, both of which are expected to occur during the first quarter of 2014, we intend to request guidance from FDA regarding&#160;the requirements for a potential Phase 3 program. </div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Continue our market analysis for gevokizumab as a potential treatment for moderate to severe acne</font>.&#160; The first study we conducted in our proof-of-concept program was in patients with moderate to severe inflammatory acne.&#160; This study delivered very encouraging results in January 2013.&#160; The Phase 2 study was designed to evaluate the efficacy and safety of gevokizumab for the treatment of the inflammatory lesions seen in patients with moderate to severe acne vulgaris.&#160; FDA guidelines suggest drugs for this disease will be evaluated according to two criteria; inflammatory lesion count and the Investigator Global Assessment (&#8220;IGA&#8221;), which we included as the pre-specified endpoints.</td>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">Treatment groups were well balanced with a mean baseline of approximately 31 inflammatory lesions. &#160;The high-dose group showed a reduction in mean inflammatory count beginning at day 28, and the reduction in inflammatory lesions was statistically significantly different from placebo at day 42.&#160; The peak effect was approximately a 70 percent improvement in lesion count at day 56 versus a 55 percent improvement in the placebo group.&#160; The high-dose group demonstrated both a clinically and statistically significant improvement in IGA on day 84.&#160; We achieved a 31 percent responder rate versus a&#160;five percent responder rate in the placebo group.</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">Taken in total, we believe gevokizumab has potential in the treatment of moderate to severe acne patients.&#160; We are conducting a thorough analysis of the acne market to determine the appropriate patient population and the benefits physicians would desire from a biologic therapeutic option.</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Continue to assess gevokizumab&#8217;s ability to treat a variety of rare diseases</font>.&#160; In April 2013, the NEI, one of the&#160;NIH, opened its non-infectious, active, anterior scleritis trial for patient enrollment.&#160; The open-label single-arm Phase 1/2 study is designed to assess the safety and potential efficacy of gevokizumab in 10 patients experiencing non-infectious, active, anterior scleritis, which is the inflammation of the sclera (the fibrous white membrane surrounding the eyeball excluding the cornea).&#160;</td>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">In August 2013, we announced a single-center clinical trial in ten patients with AIED, which falls under the umbrella of sensorineural hearing loss.&#160; Patients with AIED usually experience multiple episodes of rapid hearing loss either concurrently or sequentially in both ears.&#160; This study will be run by Feinstein Institute for Medical Research, Hearing &amp; Speech Center at North Shore-Long Island Jewish Health System in collaboration with, and with funding from, the National Institute on Deafness and Other Communication Disorders and the NIH.</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Establish commercial-scale manufacturing for gevokizumab</font>.&#160; In August 2012, we and Servier announced we had entered into an agreement with Boehringer Ingelheim to transfer XOMA's technology and processes for the validation of our technology and processes in preparation for the commercial manufacture of gevokizumab.&#160; Upon the successful completion of the transfer and the establishment of biological comparability, including validation of the XOMA processes, it is our intention that Boehringer Ingelheim will produce gevokizumab for XOMA's commercial use at its facility in Biberach, Germany.</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Advance our proprietary preclinical pipeline candidates and generate revenues from our proprietary technologies.</font> We will continue to develop our proprietary preclinical pipeline, primarily focusing on the development of allosteric modulating monoclonal antibodies.&#160;&#160;Our most advanced program, which targets the insulin receptor, has generated three new classes of fully human monoclonal antibodies.&#160; These allosteric modulating antibodies activate (XMet A) or sensitize (XMet S) or antagonize/deactivate (XMet D) the insulin receptor in vivo.&#160; XMet A and XMet S represent the potential for distinct, new therapeutic approaches for the treatment of patients with diabetes.&#160;&#160;Separate studies of XMet A and XMet S have demonstrated reduced fasting blood glucose levels and improved glucose tolerance in mouse models of diabetes.&#160;&#160;We expect to seek a collaborative partner for each of XMet A and XMet S development and commercialization at a future date.</td>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">In the case of XOMA-247 (XMet D), a fully human, allosteric, monoclonal antibody to deactivate the insulin receptor, we plan to develop this compound internally, as it has potential as a treatment for as many as three ultra-rare life-threatening or severely debilitating diseases: insulinomas, congenital hyperinsulinism (&#8220;CHI&#8221;), and hyperinsulinemic hypoglycemia in post-gastric bypass surgery patients.&#160; In preclinical models, XOMA-247 has emulated the glucose lowering seen in patients with insulinomas, a beta cell tumor that over secretes insulin, and with CHI, a hereditary disease resulting in lack of insulin regulation and profound hypoglycemia that can result in seizures and brain damage.&#160; These models demonstrated XOMA-247 was capable of restoring fasting blood glucose to normal levels.&#160; We continue our work and are conducting IND-enabling studies, and we anticipate filing an IND for endogenous hypoglycemia in 2014.</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Complete current biodefense contracts.</font>&#160; To date, we have been awarded four contracts, totaling approximately $120 million, from NIAID to support development of XOMA 3AB and several additional product candidates for the treatment of botulism poisoning with botulinum toxin serotype A, B and E, as well as C and D.&#160;&#160;In addition, our biodefense programs included two subcontracts from SRI International totaling $4.3 million, funded through NIAID, for the development of antibodies to neutralize H1N1 and H5N1 influenza viruses and the virus that causes severe acute respiratory syndrome (&#8220;SARS&#8221;).</td>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">NIAID has completed a Phase 1 trial of XOMA 3AB, a novel formulation of three antibodies designed to prevent and treat botulism poisoning from serotype A.&#160;&#160;This double-blind, dose-escalation study in 24 healthy volunteers was designed to assess the safety and tolerability and determine the pharmacokinetic profile of XOMA 3AB.&#160; This trial has been completed, and no drug product related Serious Adverse Events have been observed.&#160;&#160; The results of this trial strongly support our platform approach for the remaining serotype directed anti-toxins.</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 54pt; FONT-SIZE: 10pt">In 2012, we announced we will complete NIAID biodefense contracts currently in place but will not actively pursue future contracts.&#160;&#160;Should the government choose to acquire XOMA 3AB or other biodefense products in the future, we expect to be able to provide these antibodies through an outside manufacturer.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 31.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 4.5pt; FONT-SIZE: 10pt">At September 30, 2013, XOMA had cash, cash equivalents, and short-term investments of $74.0 million.&#160;&#160;&#160;</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; shares (or&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares if the underwriters exercise their option in full)</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our common stock is listed on The NASDAQ Global Market under the symbol &#8220;XOMA.&#8221;</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We currently intend to use the net proceeds from this offering for continued development, preclinical testing and clinical studies related to gevokizumab and our XMet platform. We intend to use the remainder of the net proceeds for general research and development, business development and other corporate purposes as determined by our management. See &#8220;Use of Proceeds&#8221; on page S-25 of this prospectus supplement.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">You should carefully consider the information in &#8220;Risk Factors&#8221; beginning on page S-6 of this prospectus supplement for a discussion of factors you should consider carefully when making a decision to invest in our common stock.</div>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">The number of shares of our common stock that will be issued and outstanding immediately after this offering as shown above is based on 92,701,155 shares of common stock issued and outstanding as of September 30, 2013, and excludes the following:</td>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">shares of common stock issuable upon the exercise of stock options outstanding, of which there were 7,506,341 outstanding as of September 30, 2013, with a weighted average exercise price of $8.23 per share;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">shares of common stock issuable upon the vesting of outstanding restricted stock units, of which there were 2,371,573 outstanding as of September 30, 2013;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">shares of common stock issuable upon the exercise of our outstanding warrants, of which outstanding as of September 30, 2013, there were warrants to purchase 347,826 shares of common stock at an exercise price of $19.50 per share, 1,260,000 shares of common stock at an exercise price of $10.50 per share, 39,346 shares of common stock at an exercise price of $3.54 per share, 13,673,183 shares of common stock at an exercise price of $1.76 per share, and 263,158 shares of common stock at an exercise price of $1.14 per share; and</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">3,796,065 shares of common stock not subject to stock awards and reserved for issuance under our equity incentive plans and 70,789 shares of common stock reserved for issuance under our employee stock purchase plan.</div>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, the number of shares outstanding immediately after this offering does not include shares of common stock that we may sell pursuant to an At Market Issuance Sales Agreement, or the &#8220;Sales Agreement&#8221;, that we entered into with McNicoll, Lewis &amp; Vlak LLC, or MLV, on February 4, 2011, as amended. Under the Sales Agreement, we may issue and sell shares of our common stock from time to time after the expiration of the 90-day lock-up period described under the section of this prospectus entitled &#8220;Underwriting&#8221; in such amounts as we may determine, subject to certain limitations under applicable securities laws.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="FORM424B5_HTM_RISK"><!--Anchor--></a><a name="RISKFACTORS"><!--Anchor--></a>RISK FACTORS</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160; <font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Any investment in our securities involves a high degree of risk, including the risks described below.&#160;&#160;Before purchasing our common stock, you should carefully consider the risk factors set forth below, as well as all other information contained in this prospectus supplement and the accompanying prospectus and incorporated by reference, including our consolidated financial statements and the related notes 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 SEC, and any free writing prospectus that we have authorized for use in connection with this offering, before deciding whether to invest in our common stock.&#160;&#160;The risks and uncertainties described below are not the only risks and uncertainties we face.&#160;&#160;Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.&#160;&#160;If any of the following risks actually occur, our business, financial condition and results of operations could suffer.&#160;&#160;As a result, the trading price of our stock could decline, perhaps significantly, and you could lose all or part of your investment.&#160;&#160;The risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements.&#160;&#160;See the section entitled &#8220;Forward-Looking Information.&#8221;</font></div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Because our product candidates are still being developed, we will require substantial funds to continue; we cannot be certain that funds will be available, and if they are not available, we may have to take actions that could adversely affect your investment and may not be able to continue operations.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will need to commit substantial funds to continue development of our product candidates, and we may not be able to obtain sufficient funds on acceptable terms, or at all. &#160;If we raise additional funds by issuing equity securities, including by the sale of common stock in this offering, our stockholders will experience dilution. Any debt financing or additional equity that we raise may contain terms that are not favorable to our stockholders or us. If we raise additional funds through collaboration and licensing arrangements with third parties, we may be required to relinquish some rights to our technologies or our product candidates, grant licenses on terms that are not favorable to us or enter into a collaboration arrangement for a product candidate at an earlier stage of development or for a lesser amount than we might otherwise choose.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available on a timely basis, we may:</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">terminate or delay clinical trials for one or more of our product candidates;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">further reduce our headcount and capital or operating expenditures; or</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">curtail our spending on protecting our intellectual property.</td>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We finance our operations primarily through our multiple revenue streams resulting from discovery and development collaborations, biodefense contracts, the licensing of our antibody technologies, and through sales of our common stock.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Based on our cash and cash equivalents of $74.0 million at September 30, 2013, anticipated spending levels, anticipated cash inflows from collaborations, biodefense contracts and licensing transactions, funding availability including under our loan agreements, the proceeds from this offering and other sources of funding that will we believe to be available, we believe we have sufficient cash resources to meet our anticipated net cash needs into 2015. Any significant revenue shortfalls, increases in planned spending on development programs, more rapid progress of development programs than anticipated, or the initiation of new clinical trials, as well as the unavailability of anticipated sources of funding, could shorten this period or otherwise have a material adverse impact on our ability to finance our continued operations. If adequate funds are not available, we will be required to delay, reduce the scope of, or eliminate one or more of our product development programs and further reduce personnel-related costs. Progress or setbacks by potentially competing products also may affect our ability to raise new funding on acceptable terms. As a result, we do not know when or whether:</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">operations will generate meaningful funds;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">additional agreements for product development funding can be reached;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">strategic alliances can be negotiated; or</td>
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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Because all of our product candidates still are being developed, we have sustained losses in the past, and we expect to sustain losses in the future.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have experienced significant losses, and as of September 30, 2013, we had an accumulated deficit of $1,029 million.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">For the three and nine months ended September 30, 2013, we had net losses of approximately $29.6 million, or $0.34 per share of common stock (basic and diluted) and $71.8 million, or $0.85 per share of common stock (basic and diluted), respectively. For the three and nine months ended September 30, 2012, we had net losses of approximately $26.9 million, or $0.39 per share of common stock (basic and diluted) and $73.4 million, or $1.22 per share of common stock (basic and diluted), respectively.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our ability to achieve profitability is dependent in large part on the success of our development programs, obtaining regulatory approval for our product candidates and licensing certain of our preclinical compounds, all of which are uncertain. Our ability to fund our ongoing operations is dependent on the foregoing factors and on our ability to secure additional funds. Because our product candidates are still being developed, we do not know whether we will ever achieve sustained profitability or whether cash flow from future operations will be sufficient to meet our needs.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We are substantially dependent on Servier for the development and commercialization of gevokizumab and for other aspects of our business, and if we are unable to maintain our relationship with Servier, or Servier does not perform under our development and commercialization agreements with Servier, our business would be harmed significantly.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have a number of agreements with Servier that are material to the conduct of our business, including:</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In December 2010, we entered into a license and collaboration agreement with Servier, to jointly develop and commercialize gevokizumab in multiple indications. Under the terms of the agreement, Servier has worldwide rights to cardiovascular disease and diabetes indications and rights outside the United States and Japan to all other indications, including Beh&#231;et&#8217;s uveitis and other inflammatory and oncology indications. In late 2011, we announced Servier agreed to include the NIU Phase 3 trials under the terms of the collaboration agreement for Beh&#231;et&#8217;s uveitis.&#160;&#160;We retain development and commercialization rights for NIU and other inflammatory disease and oncology indications in the United States and Japan and have an option to reacquire rights to cardiovascular disease and diabetes indications from Servier in these territories. Should we exercise this option, we will be required to pay an option fee to Servier and partially reimburse a specified portion of Servier&#8217;s incurred development expenses. The agreement contains mutual customary termination rights relating to matters such as material breach by either party.&#160;&#160;Servier may terminate for safety issues, and we may terminate the agreement, with respect to a particular country or the European Patent Organization (&#8220;EPO&#8221;) member states, for any challenge to our patent rights in that country or any EPO member state, respectively, by Servier.&#160;&#160;Servier also has a unilateral right to terminate the agreement for the European Union (&#8220;EU&#8221;) or for non-EU countries, on a country-by-country basis, or in its entirety, in each case with six months&#8217; notice.</div>
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<div style="TEXT-ALIGN: justify"><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In December 2010, we entered into a loan agreement with Servier (the &#8220;Servier Loan Agreement&#8221;), which provides for an advance of up to &#8364;15.0 million and was funded fully in January 2011 with the proceeds converting to approximately $19.5 million at the January 13, 2011, Euro-to-U.S.-dollar exchange rate of 1.3020. This loan is secured by an interest in our intellectual property rights to all gevokizumab indications worldwide, excluding the United States and Japan. The loan has a final maturity date in 2016; however, after a specified period prior to final maturity, the loan is required to be repaid (1) at Servier&#8217;s option, by applying up to a significant percentage of any milestone or royalty payments owed by Servier under our collaboration agreement and (2) using a significant percentage of any upfront, milestone or royalty payments we receive from any third-party collaboration or development partner for rights to gevokizumab in the United States and/or Japan. In addition, the loan becomes immediately due and payable upon certain customary events of default.&#160;&#160;At September 30, 2013, the &#8364;15.0 million outstanding principal balance under this Servier Loan Agree</font><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">ment would have equaled approximately $20.3 million using the September 30, 2013 Euro-to-U.S.-dollar exchange rate of 1.352.</font></div>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Because Servier is an independent third party, it may be subject to different risks than we are and has significant discretion in, and different criteria for, determining the efforts and resources it will apply related to its agreements with us. Even though we have a collaborative relationship with Servier, our relationship could deteriorate or other circumstances may prevent our relationship with Servier from resulting in successful development of marketable products.&#160;&#160;If we are not able to maintain our working relationship with Servier, or if Servier does not perform under our agreements with Servier, our ability to develop and commercialize gevokizumab would be materially and adversely affected.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We have received negative results from certain of our clinical trials, and we face uncertain results of other clinical trials of our product candidates.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Drug development has inherent risk, and we are required to demonstrate through adequate and well-controlled clinical trials that our product candidates are effective, with a favorable benefit-risk profile for use in their target profiles before we can seek regulatory approvals for their commercial use.&#160;&#160;It is possible we may never receive regulatory approval for any of our product candidates. Even if a product candidate receives regulatory approval, the resulting product may not gain market acceptance among physicians, patients, healthcare payors and the medical community.&#160;&#160;In March 2011, we announced our 421-patient Phase 2b trial of gevokizumab in Type 2 diabetes did not achieve the primary endpoint of reduction in hemoglobin A1c (&#8220;HbA1c&#8221;) after six monthly treatments with gevokizumab compared to placebo. In June 2011, we announced top-line trial results from our six-month 74-patient Phase 2a trial of gevokizumab in Type 2 diabetes, and there were no differences in glycemic control between the drug and placebo groups as measured by HbA1c levels.&#160;</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Many of our product candidates, including gevokizumab, XMet and XOMA 3AB, require significant additional research and development, extensive preclinical studies and clinical trials and regulatory approval prior to any commercial sales. This process is lengthy and expensive, often taking a number of years. As clinical results frequently are susceptible to varying interpretations that may delay, limit or prevent regulatory approvals, the length of time necessary to complete clinical trials and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly. As a result, it is uncertain whether:&#160;</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">our preclinical and clinical studies will be successful;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">we will be successful in generating viable product candidates to targets;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">we will be able to provide necessary additional data;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">results of future clinical trials will justify further development; or</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">we ultimately will achieve regulatory approval for any of these product candidates.&#160;</td>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The timing of the commencement, continuation and completion of clinical trials may be subject to significant delays relating to various causes, including completion of preclinical testing and earlier-stage clinical trials in a timely manner, engaging contract research organizations and other service providers, scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling patients who meet trial eligibility criteria and shortages of available drug supply. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments. Regardless of the initial size or relative complexity of a clinical trial, the costs of such trial may be higher than expected due to increases in duration or size of the trial, changes in the protocol pursuant to which the trial is being conducted, additional or special requirements of one or more of the healthcare centers where the trial is being conducted, or changes in the regulatory requirements applicable to the trial or in the standards or guidelines for approval of the product candidate being tested or for other unforeseen reasons. In addition, we conduct clinical trials in foreign countries, which may subject us to further delays and expenses as a result of increased drug shipment costs, additional regulatory requirements and the engagement of foreign clinical research organizations, as well as expose us to risks associated with foreign currency transactions insofar as we might desire to use U.S. Dollars to make contract payments denominated in the foreign currency where the trial is being conducted.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">All of our product candidates are prone to the risks of failure inherent in drug development. Preclinical studies may not yield results that satisfactorily support the filing of an Investigational New Drug application (&#8220;IND&#8221;) (or a foreign equivalent) with respect to our product candidates. Even if these applications would be or have been filed with respect to our product candidates, the results of preclinical studies do not necessarily predict the results of clinical trials. Similarly, early stage clinical trials in healthy volunteers do not predict the results of later-stage clinical trials, including the safety and efficacy profiles of any particular product candidates. In addition, there can be no assurance the design of our clinical trials is focused on appropriate indications, patient populations, dosing regimens or other variables that will result in obtaining the desired efficacy data to support regulatory approval to commercialize the drug. Moreover, FDA officials or foreign regulatory agency officials may question the integrity of our data or otherwise subject our clinical trials to additional scrutiny when the clinical trials are conducted by principal investigators who serve, or previously served, as scientific advisors or consultants to us and receive cash compensation in connection with such services.&#160; Preclinical and clinical data can also be interpreted in different ways. Accordingly, FDA officials or officials from foreign regulatory authorities could interpret the data differently than we or our collaboration or development partners do, which could delay, limit or prevent regulatory approval.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Administering any of our products or potential products may produce undesirable side effects, also known as adverse effects. Toxicities and adverse effects that we have observed in preclinical studies for some compounds in a particular research and development program may occur in preclinical studies or clinical trials of other compounds from the same program. Such toxicities or adverse effects could delay or prevent the filing of an IND (or a foreign equivalent) with respect to such products or potential products or cause us to cease clinical trials with respect to any drug candidate.&#160;&#160;In clinical trials, administering any of our products or product candidates to humans may produce adverse effects. These adverse effects could interrupt, delay or halt clinical trials of our products and product candidates and could result in the FDA or other regulatory authorities denying approval of our products or product candidates for any or all targeted indications. The FDA, other regulatory authorities, our collaboration or development partners or we may suspend or terminate clinical trials at any time. Even if one or more of our product candidates were approved for sale, the occurrence of even a limited number of toxicities or adverse effects when used in large populations may cause the FDA to impose restrictions on, or stop, the further marketing of such drugs. Indications of potential adverse effects or toxicities that may occur in clinical trials and that we believe are not significant during the course of such clinical trials may actually turn out later to constitute serious adverse effects or toxicities when a drug has been used in large populations or for extended periods of time. Any failure or significant delay in completing preclinical studies or clinical trials for our product candidates, or in receiving and maintaining regulatory approval for the sale of any drugs resulting from our product candidates, may severely harm our reputation and business.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">If our therapeutic product candidates do not receive regulatory approval, neither our third-party collaborators, our contract manufacturers nor we will be able to manufacture and market them.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our product candidates (including gevokizumab, XMetA, XMetD, XMetS, and XOMA 3AB) cannot be manufactured and marketed in the United States or any other countries without required regulatory approvals.&#160;&#160;The U.S. government and governments of other countries extensively regulate many aspects of our product candidates, including:&#160;</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">clinical development and testing;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">promotion and marketing; and</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">importing and exporting.&#160;</td>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In the United States, the FDA regulates pharmaceutical products under the Federal Food, Drug, and Cosmetic Act and other laws, including, in the case of biologics, the Public Health Service Act. At the present time, we believe many of our product candidates (including gevokizumab, XMetA, XMetD, XMetS and XOMA 3AB) will be regulated by the FDA as biologics and some of our product candidates will be regulated by the FDA as drugs. Initiation of clinical trials requires approval by health authorities. Clinical trials involve the administration of the investigational new drug to healthy volunteers or to patients under the supervision of a qualified principal investigator. Clinical trials must be conducted in accordance with FDA and International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use Good Clinical Practices and the European Clinical Trials Directive under protocols that detail the objectives of the study, the parameters to be used to monitor safety and the efficacy criteria to be evaluated. Other national, foreign and local regulations also may apply. The developer of the drug must provide information relating to the characterization and controls of the product before administration to the patients participating in the clinical trials. This requires developing approved assays of the product to test before administration to the patient and during the conduct of the trial. In addition, developers of pharmaceutical products must provide periodic data regarding clinical trials to the FDA and other health authorities, and these health authorities may issue a clinical hold upon a trial if they do not believe, or cannot confirm, that the trial can be conducted without unreasonable risk to the trial participants. We cannot assure you that U.S. and foreign health authorities will not issue a clinical hold with respect to any of our clinical trials in the future.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The results of the preclinical studies and clinical testing, together with chemistry, manufacturing and controls information, are submitted to the FDA and other health authorities in the form of an NDA for a drug, and in the form of a Biologic License Application (&#8220;BLA&#8221;) for a biological product, requesting approval to commence commercial sales. In responding to an NDA or BLA, the FDA or foreign health authorities may grant marketing approvals, request additional information or further research, or deny the application if it determines the application does not satisfy its regulatory approval criteria. Regulatory approval of an NDA, BLA, or supplement never is guaranteed, the approval process can take several years, is extremely expensive and can vary substantially based upon the type, complexity, and novelty of the products involved, as well as the target indications. FDA regulations and policies permit applicants to request accelerated or priority review pathways for products intended to treat certain serious or life-threatening illnesses in certain circumstances.&#160;&#160;If granted by the FDA, these review pathways can provide a shortened timeline to commercialize the product, although the shortened review timeline is often accompanied with additional post-market requirements.&#160;&#160;Although we may pursue the FDA&#8217;s accelerated or priority review programs, we cannot guarantee the FDA will permit us to utilize these pathways or the FDA&#8217;s review of our application will not be delayed.&#160;&#160;Moreover, even if the FDA agrees to an accelerated or priority review of any of our applications, we may not ultimately be able to obtain approval of our application in a timely fashion or at all. The FDA and foreign health authorities have substantial discretion in the drug and biologics approval processes. Despite the time and expense incurred, failure can occur at any stage, and we could encounter problems that cause us to abandon clinical trials or to repeat or perform additional preclinical, clinical or manufacturing-related studies.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Changes in the regulatory approval policy during the development period, changes in, or the enactment of additional regulations or statutes, or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application. State regulations may also affect our proposed products.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The FDA and other regulatory agencies have substantial discretion in both the product approval process and manufacturing facility approval process, and as a result of this discretion and uncertainties about outcomes of testing, we cannot predict at what point, or whether, the FDA or other regulatory agencies will be satisfied with our or our collaborators&#8217; submissions or whether the FDA or other regulatory agencies will raise questions that may be material and delay or preclude product approval or manufacturing facility approval. In light of this discretion and the complexities of the scientific, medical and regulatory environment, our interpretation or understanding of the FDA&#8217;s or other regulatory agencies&#8217; requirements, guidelines or expectations may prove incorrect, which also could delay further or increase the cost of the approval process. As we accumulate additional clinical data, we will submit it to the FDA and other regulatory agencies, as appropriate, and such data may have a material impact on the approval process.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Given that regulatory review is an interactive and continuous process, we maintain a policy of limiting announcements and comments upon the specific details of regulatory review of our product candidates, subject to our obligations under the securities laws, until definitive action is taken.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We rely on third parties to provide services in connection with our product candidate development and manufacturing programs. The inadequate performance by or loss of any of these service providers could affect our product candidate development.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Several third parties provide services in connection with our preclinical and clinical development programs, including <font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">in vitro</font> and <font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">in vivo</font> studies, assay and reagent development, immunohistochemistry, toxicology, pharmacokinetics, clinical trial support, manufacturing and other outsourced activities. If these service providers do not adequately perform the services for which we have contracted or cease to continue operations and we are not able to find a replacement provider quickly or we lose information or items associated with our product candidates, our development programs may be delayed.&#160;&#160;&#160;</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We may not obtain orphan drug exclusivity, or we may not receive the full benefit of orphan drug exclusivity even if we obtain such exclusivity.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The FDA has awarded orphan drug status to gevokizumab for the treatment of non-infectious, intermediate, posterior or pan uveitis, and chronic non-infectious anterior uveitis and Beh&#231;et&#8217;s uveitis. Under the Orphan Drug Act, the first company to receive FDA approval for gevokizumab for the designated orphan drug indication will obtain seven years of marketing exclusivity, during which time the FDA may not approve another company&#8217;s application for gevokizumab for the same orphan indication.&#160;&#160;Even though we have obtained orphan drug designation for certain indications for gevokizumab and even if we obtain orphan drug designation for our future product candidates or other indications, due to the uncertainties associated with developing pharmaceutical products, we may not be the first to obtain marketing approval for any particular orphan indication, or we may not obtain approval for an indication for which we have obtained orphan drug designation. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not protect the product effectively from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Even after FDA approval, a product may be subject to additional testing or significant marketing restrictions, its approval may be withdrawn or it may be removed voluntarily from the market.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Even if we receive regulatory approval for our product candidates, we will be subject to ongoing regulatory oversight and review by the FDA and other regulatory entities.&#160;&#160;The FDA, the European Commission or another regulatory agency may impose, as a condition of the approval, ongoing requirements for post-approval studies or post-approval obligations, including additional research and development and clinical trials, and the FDA, European Commission or other regulatory agency subsequently may withdraw approval based on these additional trials. For example, we initiated commercial operations in January 2012 through the licensing of U.S. commercial rights to Servier&#8217;s ACEON&#174; (perindopril erbumine) and certain U.S. rights to a patent-protected portfolio of fixed dose combination (&#8220;FDC&#8221;) product candidates where perindopril is combined with other active ingredients to treat cardiovascular disease. Although we transferred the U.S. development and commercialization rights to the perindopril franchise to Symplmed Pharmaceuticals, LLC (&#8220;Symplmed&#8221;), we conintue to holdthe ACEON&#174; NDA.&#160; As the holder of the ACEON NDA, , we are subject to post-approval obligations for ACEON, inlcuding that we are required to submit annual reports to the FDA and are responsible for pharmacovigilance activities related to the product. We will be responsible for complying with FDA&#8217;s post-apprroval regulatory requirements until we transfer the ACEON NDA to Symphmed which we intend to do in 2014.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Even for approved products, the FDA, European Commission or other regulatory agency may impose significant restrictions on the indicated uses, conditions for use, labeling, advertising, promotion, marketing and/or production of such product.&#160; In addition, the labeling, packaging, adverse event reporting, storage, advertising, promotion and record-keeping for our products are subject to extensive regulatory requirements.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Furthermore, a marketing approval of a product may be withdrawn by the FDA, the European Commission or another regulatory agency or such a product may be withdrawn voluntarily by the company marketing it based, for example, on subsequently arising safety concerns. In February 2009, the European Medicines Agency (&#8220;EMA&#8221;) announced it had recommended suspension of the marketing authorization of RAPTIVA&#174; in the EU and its Committee for Medicinal Products for Human Use (&#8220;CHMP&#8221;) had concluded the benefits of RAPTIVA no longer outweigh its risks because of safety concerns, including the occurrence of progressive multifocal leukoencephalopathy (&#8220;PML&#8221;) in patients taking the medicine. In the second quarter of 2009, Genentech announced and carried out a phased voluntary withdrawal of RAPTIVA from the U.S. market, based on the association of RAPTIVA with an increased risk of PML.&#160;&#160;We had participated in the development of RAPTIVA.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The FDA, European Commission and other agencies also may impose various civil or criminal sanctions for failure to comply with regulatory requirements, including withdrawal of product approval.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">The financial terms of future collaborative or licensing arrangements could result in dilution of our share value.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Funding from collaboration partners and others has in the past and may in the future involve issuance by us of our shares. We cannot be certain how the purchase price of such shares, the relevant market price or premium, if any, will be determined or when such determinations will be made. Any such issuance could result in dilution in the value of our issued and outstanding shares.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We may not be successful in commercializing our products, which could affect our development efforts.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We began commercializing our first product, ACEON, in January 2012, and we have limited experience in the sales, marketing and distribution of pharmaceutical products. We transferred U.S. development and commercialization rights to ACEON and the perindopril franchise to Symplmed in July 2013. Although Symplmed, under a sublicense agreement, assumes U.S. marketing responsibilities for ACEON (perindopril erbumine), XOMA continues to manage and be reimbursed for sales and distribution within its established commercial infrastructure until the ACEON NDA is transferred to Symplmed. There can be no assurance we will be able to successfully manage the transfer or commercialization activities to Symphmed or maintain the arrangements we have with third-party suppliers, distributors and other service providers that are necessary for us to perform these activities or our efforts will be successful. Transferring, maintaining or expanding these arrangements, or developing our own capabilities, may divert attention and resources from or otherwise negatively affect our development programs.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We are subject to various state and federal healthcare related laws and regulations that may impact the commercialization of our product candidates or&#160;could subject us to significant fines and penalties.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our operations may be directly or indirectly subject to various state and federal healthcare laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act and state and federal privacy and security laws. These laws may impact, among other things, the commercial operations for ACEON and&#160;any of our product candidates that may be approved for commercial sale.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal healthcare program, such as the Medicare and Medicaid programs. Several courts have interpreted the statute&#8217;s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. The Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil sanctions such as fines, penalties, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. </div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The federal False Claims Act prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government. Suits filed under the False Claims Act, known as &#8220;qui tam&#8221; actions, can be brought by any individual on behalf of the government and such individuals, commonly known as &#8220;whistleblowers&#8221;, may share in any amounts paid by the entity to the government in fines or settlement. The filing of qui tam actions has caused a number of pharmaceutical, medical device and other healthcare companies to have to defend a False Claims Act action. When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each separate false claim. Various states also have enacted laws modeled after the federal False Claims Act.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 33.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;The Federal Health Insurance Portability and Accountability Act of 1996 (&#8220;HIPAA&#8221;), created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.&#160; The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.&#160; HIPAA, as amended by the Health Information Technology and Clinical Health Act (&#8220;HITECH&#8221;), and its implementing regulations, also impose certain requirements relating to the privacy, security and transmission of individually identifiable health information.&#160; We take our obligation to maintain our compliance with these various laws and regulations seriously.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 33.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians. &#160;The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, PPACA, among other things, imposed new requirements on manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children&#8217;s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare &amp; Medicaid Services, or CMS, information related to payments or other &#8220;transfers of value&#8221; made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined above) and their immediate family members and payments or other &#8220;transfers of value&#8221; to such physician owners and their immediate family members. Manufacturers were required to begin data collection on August 1, 2013 and will be required to report such data to the government by March 31, 2014 and by the 90<sup style="vertical-align: text-top; line-height: 1; font-size: smaller;">th </sup>calendar day of each year thereafter. Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (or up to an aggregate of $1 million per year for &#8220;knowing failures&#8221;), for all payments, transfers of value or ownership or investment interests not reported in an annual submission.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 33.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;Many states also have adopted laws similar to each of the federal laws described above, some of which apply to healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs. In addition, some states have laws that require pharmaceutical companies to comply with the pharmaceutical industry&#8217;s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources, and to report information related to payments and other transfers of value to physicians and other healthcare providers; <font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts</font>.<font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">.</font></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 33.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;Because of the breadth of these laws, it is possible that some of our business activities could be subject to challenge under one or more of such laws. The PPACA also make several important changes to the federal Anti-Kickback Statute, false claims laws, and health care fraud statute by weakening the intent requirement under the anti-kickback and health care fraud statutes that may make it easier for the government, or whistleblowers to charge such fraud and abuse violations. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. &#160;In addition, the PPACA provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 33.5pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;If we are found to be in violation of any of the laws and regulations described above or other applicable state and federal healthcare laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement programs and the curtailment or restructuring of our operations, any of which could have a material adverse effect on our business and results of operations.</div>
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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Certain of our technologies are in-licensed from third parties, so our capabilities using them are restricted and subject to additional risks.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We license technologies from third parties.&#160; These technologies include but are not limited to phage display technologies licensed to us in connection with our bacterial cell expression technology licensing program and antibody products.&#160; However, our use of these technologies is limited by certain contractual provisions in the licenses relating to them, and although we have obtained numerous licenses, intellectual property rights in the area of phage display are particularly complex.&#160; If the owners of the patent rights underlying the technologies that we license do not properly maintain or enforce those patents, our competitive position and business prospects could be harmed.&#160; Our success will depend in part on the ability of our licensors to obtain, maintain and enforce our in-licensed intellectual property.&#160; Our licensors may not be successful in prosecuting the patent applications to which we have licenses, or our licensors may fail to maintain existing patents.&#160; They may determine not to pursue litigation against other companies that are infringing these patents, or they may pursue such litigation less aggressively than we would.&#160; Our licensors also may seek to terminate our license, which could cause us to lose the right to use the licensed intellectual property and adversely affect our ability to commercialize our technologies, products or services.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We do not know whether there will be, or will continue to be, a viable market for the products in which we have an ownership or royalty interest.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Even if products in which we have an interest receive approval in the future, they may not be accepted in the marketplace. In addition, we or our collaborators or licensees may experience difficulties in launching new products, many of which are novel and based on technologies that are unfamiliar to the healthcare community. We have no assurance healthcare providers and patients will accept such products, if developed. For example, physicians and/or patients may not accept a product for a particular indication because it has been biologically derived (and not discovered and developed by more traditional means) or if no biologically derived products are currently in widespread use in that indication. Similarly, physicians may not accept a product if they believe other products to be more effective or more cost effective or are more comfortable prescribing other products.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Safety concerns also may arise in the course of on-going clinical trials or patient treatment as a result of adverse events or reactions. For example, in February 2009, the EMA announced it had recommended suspension of the marketing authorization of RAPTIVA in the EU and EMD Serono Inc., the company that marketed RAPTIVA in Canada (&#8220;EMD Serono&#8221;) announced that in consultation with Health Canada, the Canadian health authority (&#8220;Health Canada&#8221;), it would suspend marketing of RAPTIVA in Canada. In March 2009, Merck Serono Australia Pty Ltd, the company that marketed RAPTIVA in Australia (&#8220;Merck Serono Australia&#8221;), following a recommendation from the Therapeutic Goods Administration, the Australian health authority (&#8220;TGA&#8221;), announced it was withdrawing RAPTIVA from the Australian market. In the second quarter of 2009, Genentech announced and carried out a phased voluntary withdrawal of RAPTIVA from the U.S. market, based on the association of RAPTIVA with an increased risk of PML, and sales of the product ceased.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Furthermore, government agencies, as well as private organizations involved in healthcare, from time to time publish guidelines or recommendations to healthcare providers and patients. Such guidelines or recommendations can be very influential and may adversely affect product usage directly (for example, by recommending a decreased dosage of a product in conjunction with a concomitant therapy or a government entity withdrawing its recommendation to screen blood donations for certain viruses) or indirectly (for example, by recommending a competitive product over our product). Consequently, we do not know if physicians or patients will adopt or use our products for their approved indications.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Even approved and marketed products are subject to risks relating to changes in the market for such products. Introduction or increased availability of generic versions of products can alter the market acceptance of branded products, such as ACEON. In addition, unforeseen safety issues may arise at any time, regardless of the length of time a product has been on the market.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Our third-party collaborators, licensees, suppliers or contractors may not have adequate manufacturing capacity sufficient to meet market demand.</div>

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<div style="TEXT-ALIGN: justify"><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</font><font style="FONT-SIZE: 5.14pt" id="TRGRRTFtoHTMLTab">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Upon approval of any of our product candidates or in the event of increased demand for marketed products, we do not know whether the capacity of the manufacturing facilities of our existing or future third-party collaborators, licensees, suppliers or contractors will be available or can be increased to produce sufficient quantities of our products to meet market demand. Also, if we or our third-party collaborators, licensees, suppliers or contractors need additional manufacturing facilities to meet market demand, we cannot predict that we will successfully obtain those facilities because we do not know whether they will be available on acceptable terms. In addition, any manufacturing facilities acquired or used to meet market demand must meet the FDA&#8217;s quality assurance guidelines.</font></div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">In addition to our agreements with Servier, our agreements with other third parties, many of which are significant to our business, expose us to numerous risks.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our financial resources and our marketing experience and expertise are limited.&#160;&#160;Consequently, our ability to develop products successfully depends, to a large extent, upon securing the financial resources and/or marketing capabilities of third parties other than Servier.&#160;&#160;For example:</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In March 2004, we announced we had agreed to collaborate with Chiron Corporation (now Novartis) for the development and commercialization of antibody products for the treatment of cancer. In April 2005, we announced the initiation of clinical testing of the first product candidate out of the collaboration, HCD122, an anti-CD40 antibody, in patients with advanced chronic lymphocytic leukemia. In October 2005, we announced the initiation of the second clinical trial of HCD122 in patients with multiple myeloma. In November 2008, we announced the restructuring of this product development collaboration, which involved six development programs including the ongoing HCD122 and LFA102 programs. In exchange for cash and debt reduction on our existing loan facility with Novartis, Novartis has control over the HCD122 and LFA102 programs, as well as the right to expand the development of these programs into additional indications outside of oncology.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In March 2005, we entered into a contract with the National Institute of Allergy and Infectious Diseases (&#8220;NIAID&#8221;) to produce three monoclonal antibodies designed to protect U.S. citizens against the harmful effects of botulinum neurotoxin used in bioterrorism. In July 2006, we entered into an additional contract with NIAID for the development of an appropriate formulation for human administration of these three antibodies in a single injection. In September 2008, we announced we had been awarded an additional contract with NIAID to support our on-going development of drug candidates toward clinical trials in the treatment of botulism poisoning. In October 2011, we announced we had been awarded an additional contract with NIAID to develop broad-spectrum antitoxins for the treatment of human botulism poisoning.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In December 2011, we entered into a loan agreement with GECC (the &#8220;GECC Loan Agreement&#8221;), under which GECC agreed to make a term loan in an aggregate principal amount of $10 million to XOMA (US) LLC, our wholly owned subsidiary, and upon execution of the GECC Loan Agreement, GECC funded the term loan. The term loan is guaranteed by us and our two other principal subsidiaries, XOMA Ireland Limited and XOMA Technology Ltd. As security for our obligations under the GECC Loan Agreement, we, XOMA (US) LLC, XOMA Ireland Limited and XOMA Technology Ltd. each granted a security interest pursuant to a guaranty, pledge and security agreement in substantially all of our existing and after-acquired assets, excluding our intellectual property assets (such as those relating to our gevokizumab and anti-botulism products). We were required to repay the principal amount of the Term Loan over a period of 42 installments of principal and accrued interest, but we amended the GECC Loan Agreement on September 27, 2012, as described below.&#160;&#160;The GECC Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including restrictions on the ability to incur indebtedness, grant liens, make investments, dispose of assets, enter into transactions with affiliates and amend existing material agreements, in each case subject to various exceptions. In addition, the GECC Loan Agreement contains customary events of default that entitle GECC to cause any or all of the indebtedness under the GECC Loan Agreement to become immediately due and payable. The events of default include any event of default under a material agreement or certain other indebtedness. We may prepay the term loan in full voluntarily, but not in part, and any voluntary and certain mandatory prepayments are subject to a prepayment premium of 3% in the first year of the loan, 2% in the second year and 1% thereafter, with certain exceptions. We also will be required to pay the final payment fee in connection with any voluntary or mandatory prepayment. Pursuant to the GECC Loan Agreement, we issued to GECC unregistered stock purchase warrants, which entitle GECC to purchase up to an aggregate of 263,158 unregistered shares of XOMA common stock at an exercise price equal to $1.14 per share, are exercisable immediately and expire on December 30, 2016.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">O</font>n September 27, 2012, we entered into an amendment to the GECC Loan Agreement providing for an additional term loan in the amount of $4.6 million and an interest-only monthly repayment period with respect to the aggregate loan obligation of $12.5 million outstanding following the effective date of the amendment through March 1, 2013, at a stated interest rate of 10.9% per annum. Thereafter, we are obligated to make monthly principal payments of $0.3 million, plus accrued interest, at a stated interest rate of 10.9% per annum, over a 27-month period commencing on April 1, 2013, and through June 15, 2015, at which time the remaining outstanding principal amount of $3.1 million, plus accrued interest, shall be due.&#160;&#160;A final payment fee in the amount of $0.9 million is payable on the date upon which the outstanding principal amount is required to be repaid in full. Any mandatory or voluntary prepayment of the $12.5 million will accelerate the due date of the final payment fee and trigger a prepayment penalty equal to 3% of the outstanding principal amount being prepaid if prepaid on or before September 27, 2013, 2% if prepaid on or before September 27, 2014, and 1% if prepaid after September 27, 2014, but prior to the maturity date.&#160;&#160;In connection with the amendment, on September 27, 2012, we issued GE a warrant to purchase up to 39,346 shares of our common stock, which warrant is exercisable immediately, has a five-year term and has an exercise price of $3.54 per share.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have licensed our bacterial cell expression technology, an enabling technology used to discover and screen, as well as develop and manufacture, recombinant antibodies and other proteins for commercial purposes, to over 60 companies.&#160;As of November 5, 2013, we were aware of two antibody products manufactured using this technology that have received FDA approval, Genentech&#8217;s LUCENTIS&#174; (ranibizumab injection) for treatment of neovascular wet age-related macular degeneration and UCB&#8217;s CIMZIA&#174; (certolizumab pegol) for treatment of Crohn&#8217;s disease and rheumatoid arthritis.&#160;In the third quarter of 2009, we sold our LUCENTIS royalty interest to Genentech.&#160;In the third quarter of 2010, we sold our CIMZIA royalty interest.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">On July 24, 2012, Servier and we entered into an agreement with Boehringer Ingelheim to transfer XOMA's technology and processes for the manufacture of gevokizumab to Boehringer lngelheim for Boehringer Ingelheim's implementation and validation in preparation for the commercial manufacture of gevokizumab.&#160;&#160;Upon the successful completion of the transfer and the establishment of biological comparability, including validation of the XOMA processes as implemented by Boehringer Ingelheim, we intend Boehringer Ingelheim will produce gevokizumab for XOMA's commercial use at its facility in Biberach, Germany.&#160;&#160;Servier and we retain all rights to the development and commercialization of gevokizumab.&#160;&#160;Transferring of our technology to Boehringer Ingelheim exposes us to numerous risks, including the possibility that Boehringer Ingelheim may not perform under the agreement as anticipated, and that we will need to successfully conduct a comparability trial demonstrating to the FDA&#8217;s satisfaction the similarity between XOMA-manufactured and Boehringer Ingelheim-manufactured product.</div>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Because our collaborators, licensees, suppliers and contractors are independent third parties, they may be subject to different risks than we are and have significant discretion in, and different criteria for, determining the efforts and resources they will apply related to their agreements with us. If these collaborators, licensees, suppliers and contractors do not successfully perform the functions for which they are responsible, we may not have the capabilities, resources or rights to do so on our own.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We do not know whether we, our collaborators or licensees will successfully develop and market any of the products that are or may become the subject of any of our collaboration or licensing arrangements. In some cases these arrangements provide for funding solely by our collaborators or licensees, and in other cases, all of the funding for certain projects and a significant portion of the funding for other projects is to be provided by our collaborator or licensee, and we provide the balance of the funding. Even when we have a collaborative relationship, other circumstances may prevent it from resulting in successful development of marketable products. In addition, third-party arrangements such as ours also increase uncertainties in the related decision-making processes and resulting progress under the arrangements, as we and our collaborators or licensees may reach different conclusions, or support different paths forward, based on the same information, particularly when large amounts of technical data are involved. Furthermore, our contracts with NIAID contain numerous standard terms and conditions provided for in the applicable Federal acquisition regulations and customary in many government contracts, some of which could allow the U.S. government to exercise certain rights under the technology developed under these contracts. Uncertainty exists as to whether we will be able to comply with these terms and conditions in a timely manner, if at all. In addition, we are uncertain as to the extent of NIAID&#8217;s demands and the flexibility that will be granted to us in meeting those demands.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Although we continue to evaluate additional strategic alliances and potential partnerships, we do not know whether or when any such alliances or partnerships will be entered into.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Products and technologies of other companies may render some or all of our products and product candidates noncompetitive or obsolete.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Developments by others may render our products, product candidates, or technologies obsolete or uncompetitive.&#160;&#160;Technologies developed and utilized by the biotechnology and pharmaceutical industries are changing continuously and substantially. Competition in antibody-based technologies is intense and is expected to increase in the future as a number of established biotechnology firms and large chemical and pharmaceutical companies advance in these fields. Many of these competitors may be able to develop products and processes competitive with or superior to our own for many reasons, including that they may have:</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">larger research and development and marketing staffs;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">entered into arrangements with, or acquired, biotechnology companies to enhance their capabilities; or</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">extensive experience in preclinical testing and human clinical trials.&#160;</td>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">These factors may enable others to develop products and processes competitive with or superior to our own or those of our collaborators. In addition, a significant amount of research in biotechnology is being carried out in universities and other non-profit research organizations. These entities are becoming increasingly interested in the commercial value of their work and may become more aggressive in seeking patent protection and licensing arrangements. Furthermore, many companies and universities tend not to announce or disclose important discoveries or development programs until their patent position is secure or, for other reasons, later; as a result, we may not be able to track development of competitive products, particularly at the early stages. Positive or negative developments in connection with a potentially competing product may have an adverse impact on our ability to raise additional funding on acceptable terms. For example, if another product is perceived to have a competitive advantage, or another product&#8217;s failure is perceived to increase the likelihood that our product will fail, then investors may choose not to invest in us on terms we would accept or at all.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The examples below pertain to competitive events in the market that we review quarterly yet are not intended to be representative of all existing competitive events.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We, in collaboration with Servier, are developing gevokizumab, <font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">a potent monoclonal antibody with unique allosteric modulating properties that binds strongly to interleukin-1 beta (IL-1 beta), a pro-inflammatory cytokine.&#160; In binding to IL-1 beta, gevokizumab inhibits the activation of the IL-1 receptor, thereby modulating the cellular signaling events that produce inflammation</font>. Other companies are developing other products based on the same or similar therapeutic targets as gevokizumab, and these products may prove more effective than gevokizumab. We are aware that:</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Novartis markets and is developing Ilaris (canakinumab, ACZ885), a fully human monoclonal antibody that selectively binds to and neutralizes IL-1 beta. Since 2009, canakinumab has been approved in over 50 countries for the treatment of children and adults suffering from Cryopyrin-Associated Periodic Syndrome (&#8220;CAPS&#8221;). Novartis has filed for regulatory approval of canakinumab in the United States and Europe for the treatment of acute attacks in gouty arthritis. On March 1, 2013, Novartis announced that they received EU approval for Ilaris in patients suffering acute gouty arthritis attacks which cannot gain relief from current treatments. It is administered as a single 150 mg subcutaneous injection. In May 2013, Novartis received FDA approval, and in September 2013 Novartis received EU approval, to treat active systemic juvenile idiopathic arthritis. Novartis also is pursuing other diseases in which IL-1 beta may play a prominent role, such as systemic secondary prevention of cardiovascular events.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Eli Lilly and Company (&#8220;Lilly&#8221;) is developing a monoclonal antibody to IL-1 beta in Phase 1 studies for the treatment of cardiovascular disease. In June 2011, Lilly reported results from a Phase 2 study of LY2189102 in 106 patients with Type 2 diabetes, showing a significant (p&lt;0.05), early reduction in C reactive protein (&#8220;CRP&#8221;), moderate reduction in HbA1c and anti-inflammatory effects. We do not know whether LY2189102 remains in development.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In 2008, Swedish Orphan Biovitrum obtained from Amgen the global exclusive rights to Kineret&#174; (anakinra) for rheumatoid arthritis as currently indicated in its label. In November 2009, the agreement regarding Swedish Orphan Biovitrum&#8217;s Kineret license was expanded to include certain orphan indications.&#160;&#160;Kineret is an IL-1 receptor antagonist (IL-1ra) that has been evaluated in multiple IL-1-mediated diseases, including indications we are considering for gevokizumab. In addition to other on-going studies, a proof-of-concept clinical trial in the United Kingdom investigating Kineret in patients with a certain type of myocardial infarction, or heart attack, has been completed. In August 2010, Biovitrum announced the FDA had granted orphan drug designation to Kineret for the treatment of CAPS, and in January 2013 they obtained FDA approval for NOMID, a severe form of CAPS.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In February 2008, Regeneron Pharmaceuticals, Inc. (&#8220;Regeneron&#8221;), announced it had received marketing approval from the FDA for ARCALYST&#174; (rilonacept) Injection for Subcutaneous Use, an interleukin-1 blocker or IL-1 Trap, for the treatment of CAPS, including Familial Cold Auto-inflammatory Syndrome and Muckle-Wells Syndrome in adults and children 12 and older. In September 2009, Regeneron announced rilonacept was approved in the EU for CAPS. In June 2010 and February 2011, Regeneron announced positive results of two Phase 3 clinical trials of rilonacept in gout. In November 2011, Regeneron announced the FDA had accepted for review Regeneron&#8217;s supplemental BLA for ARCALYST for the prevention and treatment of gout. A meeting of an FDA advisory panel to review this supplemental BLA was held in May 2012 with a recommendation against approval of the new use in gout. In July 2012, the FDA issued a Complete Response Letter that states the FDA cannot approve the application in its current form and has requested additional clinical data, as well as additional CMC information related to a proposed new dosage form. Regeneron is reviewing the complete response letter from the FDA and will determine appropriate next steps.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Amgen has been developing AMG 108, a fully human monoclonal antibody that targets inhibition of the action of IL-1.&#160;&#160;In April 2008, Amgen discussed results from a Phase 2 study in rheumatoid arthritis. AMG 108 showed statistically significant improvement in the signs and symptoms of rheumatoid arthritis and was well tolerated. In January 2011, MedImmune, the worldwide biologics unit for AstraZeneca PLC, announced Amgen granted it rights to develop AMG 108 worldwide except in Japan.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In June 2009, Cytos Biotechnology AG announced the initiation of an ascending dose Phase 1/2a study of CYT013-IL1bQb, a therapeutic vaccine targeting IL-1 beta, in Type 2 diabetes. In 2010, this study was extended to include two additional groups of patients.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The following companies have completed or are conducting or planning Phase 3 clinical trials of the following products for the treatment of noninfectious intermediate, posterior or pan-uveitis: AbbVie - HUMIRA&#174; (adalimumab); Lux Biosciences, Inc. &#8211; LUVENIQ&#174; (voclosporin); Novartis - Myfortic&#174; (mycophenalate sodium), Santen Pharmaceutical Co., Ltd. &#8211; Sirolimus&#174; (rapamycin), and pSivida Corp. &#8211; Fluacinolone Acetonide Insert.</div>
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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">XOMA 3AB</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: 'Times New Roman', Times, Serif; FONT-SIZE: 10pt">We also are developing XOMA 3AB, a combination, or cocktail, of antibodies designed to neutralize the most potent of botulinum toxins. Other companies are developing other products targeting botulism poisoning, and these products may prove more effective than XOMA 3AB. We are aware:</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Cangene Corporation has a contract with the U.S. Department of Health &amp; Human Services, expected to be worth $423.0 million, to manufacture and supply an equine heptavalent botulism anti-toxin; and</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Emergent BioSolutions, Inc., is currently in development of a botulism immunoglobulin candidate that may compete with our anti-botulinum neurotoxin monoclonal antibodies.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;<font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Manufacturing risks and inefficiencies may affect adversely our ability to manufacture products for ourselves or others.</font></div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">To the extent we continue to provide manufacturing services for our own benefit or to third parties, we are subject to manufacturing risks. Additionally, unanticipated fluctuations in customer requirements have led and may continue to lead to manufacturing inefficiencies, which if significant could lead to an impairment on our long-lived assets or restructuring activities. We must utilize our manufacturing operations in compliance with regulatory requirements, in sufficient quantities and on a timely basis, while maintaining acceptable product quality and manufacturing costs. Additional resources and changes in our manufacturing processes may be required for each new product, product modification or customer or to meet changing regulatory or third-party requirements, and this work may not be completed successfully or efficiently.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Manufacturing and quality problems may arise in the future to the extent we continue to perform these manufacturing activities for our own benefit or for third parties. Consequently, our development goals or milestones may not be achieved in a timely manner or at a commercially reasonable cost, or at all. In addition, to the extent we continue to make investments to improve our manufacturing operations, our efforts may not yield the improvements that we expect.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Failure of our products to meet current Good Manufacturing Practices standards may subject us to delays in regulatory approval and penalties for noncompliance.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our contract manufacturers are required to produce ACEON and our clinical product candidates under current Good Manufacturing Practices (&#8220;cGMP&#8221;) to meet acceptable standards for use in our clinical trials and for commercial sale, as applicable. If such standards change, the ability of contract manufacturers to produce our product candidates and ACEON on the schedule we require for our clinical trials or to meet commercial requirements may be affected. In addition, contract manufacturers may not perform their obligations under their agreements with us or may discontinue their business before the time required by us to successfully produce clinical and commercial supplies of our product candidates and ACEON.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We and our contract manufacturers are subject to pre-approval inspections and periodic unannounced inspections by the FDA and corresponding state and foreign authorities to ensure strict compliance with cGMP and other applicable government regulations and corresponding foreign standards. We do not have control over a third-party manufacturer&#8217;s compliance with these regulations and standards. Any difficulties or delays in our contractors&#8217; manufacturing and supply of our product candidates and ACEON or any failure of our contractors to maintain compliance with the applicable regulations and standards could increase our costs, cause us to lose revenue, make us postpone or cancel clinical trials, prevent or delay regulatory approval by the FDA and corresponding state and foreign authorities, prevent the import and/or export of our product candidates and ACEON, or cause any of our product candidates that may be approved for commercial sale and ACEON to be recalled or withdrawn.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Because many of the companies with which we do business also are in the biotechnology sector, the volatility of that sector can affect us indirectly as well as directly.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">As a biotechnology company that collaborates with other biotechnology companies, the same factors that affect us directly also can adversely impact us indirectly by affecting the ability of our collaborators, partners and others with which we do business to meet their obligations to us and reduce our ability to realize the value of the consideration provided to us by these other companies.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">For example, in connection with our licensing transactions relating to our bacterial cell expression technology, we have in the past and may in the future agree to accept equity securities of the licensee in payment of license fees. The future value of these or any other shares we receive is subject both to market risks affecting our ability to realize the value of these shares and more generally to the business and other risks to which the issuer of these shares may be subject.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">As we do more business internationally, we will be subject to additional political, economic and regulatory uncertainties.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may not be able to operate successfully in any foreign market. We believe that because the pharmaceutical industry is global in nature, international activities will be a significant part of our future business activities and when and if we are able to generate income, a substantial portion of that income will be derived from product sales and other activities outside the United States. Foreign regulatory agencies often establish standards different from those in the United States, and an inability to obtain foreign regulatory approvals on a timely basis could put us at a competitive disadvantage or make it uneconomical to proceed with a product or product candidate&#8217;s development. International operations and sales may be limited or disrupted by:</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">withholding and other taxation; and</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">difficulties in staffing and managing international operations.&#160;</td>
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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We are subject to foreign currency exchange rate risks.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We are subject to foreign currency exchange rate risks because substantially all of our revenues and operating expenses are paid in U.S. Dollars, but we pay interest and principal obligations with respect to our loan from Servier in Euros. To the extent the U.S. Dollar declines in value against the Euro, the effective cost of servicing our Euro-denominated debt will be higher. Changes in the exchange rate result in foreign currency gains or losses. Although we have managed some of our exposure to changes in foreign currency exchange rates by entering into foreign exchange option contracts, there can be no assurance foreign currency fluctuations will not have a material adverse effect on our business, financial condition, liquidity or results of operations. In addition, our foreign exchange option contracts are re-valued at each financial reporting period, which also may result in gains or losses from time to time.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">If we and our partners are unable to protect our intellectual property, in particular our patent protection for our principal products, product candidates and processes, and prevent its use by third parties, our ability to compete in the market will be harmed, and we may not realize our profit potential.</div>

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<div style="TEXT-ALIGN: justify"><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</font><font style="FONT-SIZE: 5.14pt" id="TRGRRTFtoHTMLTab">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We rely on patent protection, as well as a combination of copyright, trade secret, and trademark laws to protect our proprietary technology and prevent others from duplicating our products or product candidates. However, these means may afford only limited protection and may not:</font></div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">prevent our competitors from gaining access to our proprietary information and technology; or</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">permit us to gain or maintain a competitive advantage.&#160;</td>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Because of the length of time and the expense associated with bringing new products to the marketplace, we and our collaboration and development partners hold and are in the process of applying for a number of patents in the United States and abroad to protect our product candidates and important processes and also have obtained or have the right to obtain exclusive licenses to certain patents and applications filed by others. However, the mere issuance of a patent is not conclusive as to its validity or its enforceability. The U.S. Federal Courts or equivalent national courts or patent offices elsewhere may invalidate our patents or find them unenforceable. In addition, the laws of foreign countries may not protect our intellectual property rights effectively or to the same extent as the laws of the United States. If our intellectual property rights are not protected adequately, we may not be able to commercialize our technologies, products, or services, and our competitors could commercialize our technologies, which could result in a decrease in our sales and market share that would harm our business and operating results. Specifically, the patent position of biotechnology companies generally is highly uncertain and involves complex legal and factual questions. The legal standards governing the validity of biotechnology patents are in transition, and current defenses as to issued biotechnology patents may not be adequate in the future. Accordingly, there is uncertainty as to:&#160;</div>

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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether any pending or future patent applications held by us will result in an issued patent, or that if patents are issued to us, that such patents will provide meaningful protection against competitors or competitive technologies;</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether competitors will be able to design around our patents or develop and obtain patent protection for technologies, designs or methods that are more effective than those covered by our patents and patent applications; or</td>
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<td style="TEXT-ALIGN: justify; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the extent to which our product candidates could infringe on the intellectual property rights of others, which may lead to costly litigation, result in the payment of substantial damages or royalties, and/or prevent us from using technology that is essential to our business.&#160;</td>
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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have established a portfolio of patents, both United States and foreign, related to our bacterial cell expression technology, including claims to secretion signal sequences, compositions and methods for expression and secretion of recombinant proteins from bacteria, including immunoglobulin gene products. Most of the more important European patents in our bacterial cell expression patent portfolio expired in July 2008 or earlier.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If certain patents issued to others are upheld or if certain patent applications filed by others issue and are upheld, we may require licenses from others to develop and commercialize certain potential products or we may become involved in litigation to determine the proprietary rights of others. These licenses, if required, may not be available on acceptable terms, and any such litigation may be costly and may have other adverse effects on our business, such as inhibiting our ability to compete in the marketplace and absorbing significant management time.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Due to the uncertainties regarding biotechnology patents, we also have relied and will continue to rely upon trade secrets, know-how and continuing technological advancement to develop and maintain our competitive position. All of our employees have signed confidentiality agreements under which they have agreed not to use or disclose any of our proprietary information. Research and development contracts and relationships between us and our scientific consultants and potential customers provide access to aspects of our know-how that are protected generally under confidentiality agreements. These confidentiality agreements may be breached or may not be enforced by a court. To the extent proprietary information is divulged to competitors or to the public generally, such disclosure may affect our ability to develop or commercialize our products adversely by giving others a competitive advantage or by undermining our patent position.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Litigation regarding intellectual property can be costly and expose us to risks of counterclaims against us.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may be required to engage in litigation or other proceedings to protect our intellectual property. The cost to us of this litigation, even if resolved in our favor, could be substantial. Such litigation also could divert management&#8217;s attention and resources. In addition, if this litigation is resolved against us, our patents may be declared invalid, and we could be held liable for significant damages. In addition, we may be subject to a claim that we are infringing another party&#8217;s patent. If such claim is resolved against us, we or our collaborators may be enjoined from developing, manufacturing, selling or importing products, processes or services unless we obtain a license from the other party.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Such license may not be available on reasonable terms, thus preventing us from&#160;developing, manufacturing, selling or importing&#160;these products, processes or services and adversely affecting our revenue.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We may be unable to price our products effectively or obtain coverage or&#160;adequate reimbursement for sales of our products, which would prevent our products from becoming profitable.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If we or our third-party collaborators or licensees succeed in bringing our product candidates to the market, they may not be considered cost effective, and coverage and&#160;reimbursement may not be available or may not be sufficient to allow us to sell our products on a competitive basis. In both the United States and elsewhere, sales of medical products and treatments are dependent, in part, on the availability of coverage and&#160;reimbursement from third-party payors, such as government and private insurance plans. Third-party payors are increasingly challenging the prices charged for pharmaceutical products and services. Our business is affected by the efforts of government and third-party payors to contain or reduce the cost of healthcare through various means. In the United States, there have been and will continue to be a number of federal and state proposals to implement government controls on pricing.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, the emphasis on managed care in the United States has increased and will continue to increase the pressure on the pricing of pharmaceutical products. We cannot predict whether any legislative or regulatory proposals will be adopted or the effect these proposals or managed care efforts may have on our business.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Healthcare reform measures and other statutory or regulatory changes could adversely affect our business.</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could impact our business<a name="SendMailTemp"><!--Anchor--></a>. In March 2010, the U.S. Congress enacted and President Obama signed into law the PPACA, which includes a number of healthcare reform provisions that are expected to significantly impact the pharmaceutical industry.&#160; The PPACA, among other things, imposes a non-deductible annual fee on pharmaceutical manufacturers or importers who sell &#8220;branded prescription drugs&#8221;; increases the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1%; requires collection of rebates for drugs paid by Medicaid managed care organizations; addresses new methodologies by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and for drugs that are line extension products; and requires manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer&#8217;s outpatient drugs to be covered under Medicare Part D.&#160; While the law may increase the number of patients who have insurance coverage for our products or product candidates, its cost containment measures also could adversely affect coverage and reimbursement for our existing or potential products; however, the full effects of this law cannot be known until these provisions are implemented and the relevant Federal and state agencies issue applicable regulations or guidance.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Other legislative changes have been proposed and adopted since the PPACA was enacted. On August&#160;2, 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve its targeted deficit reduction of at least $1.2&#160;trillion for the years 2013 through 2021, triggering the legislation&#8217;s automatic reductions to several government programs. These reductions include aggregate reductions to Medicare payments to providers of up to 2%&#160;per fiscal year, which went into effect on April 1, 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures, a decrease in the share price of our common stock, limit our ability to raise capital or to obtain strategic collaborations or licenses or successfully commercialize our products.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The pharmaceutical and biotechnology industries are subject to extensive regulation, and from time to time, legislative bodies and governmental agencies consider changes to such regulations that could have significant impact on industry participants. For example, in light of certain highly publicized safety issues regarding certain drugs that had received marketing approval, the U.S. Congress has considered various proposals regarding drug safety, including some that would require additional safety studies and monitoring and could make drug development more costly. We are unable to predict what additional legislation or regulation, if any, relating to safety or other aspects of drug development may be enacted in the future or what effect such legislation or regulation would have on our business.</div>
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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;<font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We are exposed to an increased risk of product liability claims.</font></div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The testing, marketing and sales of medical products entails an inherent risk of allegations of product liability. We were party to a number of product liability claims filed against Genentech Inc., and even though Genentech agreed to indemnify us in connection with these matters and these matters have been settled, there can be no assurance other products liability lawsuits will not result in liability to us or that our insurance or contractual arrangements will provide us with adequate protection against such liabilities.&#160;&#160;In the event of one or more large, unforeseen awards of damages against us, our product liability insurance may not provide adequate coverage. A significant product liability claim for which we were not covered by insurance or indemnified by a third party would have to be paid from cash or other assets, which could have an adverse effect on our business and the value of our common stock. To the extent we have sufficient insurance coverage, such a claim would result in higher subsequent insurance rates. In addition, product liability claims can have various other ramifications, including loss of future sales opportunities, increased costs associated with replacing products, a negative impact on our goodwill and reputation, and divert our management&#8217;s attention from our business, each of which could also adversely affect our business and operating results.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">The loss of key personnel, including our Chief Executive Officer, could delay or prevent achieving our objectives.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our research, product development and business efforts could be affected adversely by the loss of one or more key members of our scientific or management staff, particularly our executive officers: John Varian, our Chief Executive Officer; Patrick J. Scannon, M.D., Ph.D., our Executive Vice President and Chief Scientific Officer; Fred Kurland, our Vice President, Finance, Chief Financial Officer and Secretary; and Paul D. Rubin, M.D., our Senior Vice President, Research and Development and Chief Medical Officer.&#160;&#160;We currently do not have key person insurance on any of our employees.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Our ability to use our net operating loss carry-forwards and other tax attributes will be substantially limited by Section 382 of the U.S. Internal Revenue Code.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Section 382 of the U.S. Internal Revenue Code of 1986, as amended, generally limits the ability of a corporation that undergoes an &#8220;ownership change&#8221; to utilize its net operating loss carry-forwards (&#8220;NOLs&#8221;) and certain other tax attributes against any taxable income in taxable periods after the ownership change. The amount of taxable income in each taxable year after the ownership change that may be offset by pre-change NOLs and certain other pre-change tax attributes is generally equal to the product of (a) the fair market value of the corporation&#8217;s outstanding shares (or, in the case of a foreign corporation, the fair market value of items treated as connected with the conduct of a trade or business in the United States) immediately prior to the ownership change and (b) the long-term tax exempt rate (i.e., a rate of interest established by the U.S. Internal Revenue Service (&#8220;IRS&#8221;) that fluctuates from month to month). In general, an &#8220;ownership change&#8221; occurs whenever the percentage of the shares of a corporation owned, directly or indirectly, by &#8220;5-percent shareholders&#8221; (within the meaning of Section 382 of the Internal Revenue Code) increases by more than 50 percentage points over the lowest percentage of the shares of such corporation owned, directly or indirectly, by such &#8220;5-percent shareholders&#8221; at any time over the preceding three years.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Based on an analysis under Section 382 of the Internal Revenue Code (which subjects the amount of pre-change NOLs and certain other pre-change tax attributes that can be utilized to an annual limitation), the Company experienced ownership changes in 2009 and 2012 which substantially limit the future use of our pre-change NOLs and certain other pre-change tax attributes per year. &#160;As of September 30, 2013, the Company has excluded the NOLs and R&amp;D credits that will expire as a result of the annual limitations. To the extent that the Company does not utilize its carry-forwards within the applicable statutory carry-forward periods, either because of Section 382 limitations or the lack of sufficient taxable income, the carry-forwards will also expire unused.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We may not realize the expected benefits of our initiatives to reduce costs across our operations, and we may incur significant charges or write-downs as part of these efforts.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have pursued and may continue to pursue a number of initiatives to reduce costs of our operations. In January 2012, we implemented a workforce reduction of approximately 34% to improve our cost structure. This workforce reduction resulted primarily from our decisions to utilize a contract manufacturing organization for Phase 3 and commercial antibody production and to eliminate internal research functions that are non-differentiating or that can be obtained cost effectively by contract service providers.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may not realize some or all of the expected benefits of our current and future initiatives to reduce costs. In addition to restructuring or other charges, we may experience disruptions in our operations as a result of these initiatives.</div>

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<div style="TEXT-ALIGN: justify; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;<font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Because we are a relatively small biopharmaceutical company with limited resources, we may not be able to attract and retain qualified personnel.</font></div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our success in developing marketable products and achieving a competitive position will depend, in part, on our ability to attract and retain qualified scientific and management personnel, particularly in areas requiring specific technical, scientific or medical expertise. We had approximately&#160;170 employees as of&#160;November 5, 2013. We may require additional experienced executive, accounting, research and development, legal, administrative and other personnel from time to time in the future. There is intense competition for the services of these personnel, especially in California. Moreover, we expect that the high cost of living in the San Francisco Bay Area, where our headquarters and manufacturing facilities are located, may impair our ability to attract and retain employees in the future. If we do not succeed in attracting new personnel and retaining and motivating existing personnel, our operations may suffer and we may be unable to implement our current initiatives or grow effectively.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Global credit and financial market conditions may reduce our ability to access and maintain capital for our operations.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Traditionally, we have funded a large portion of our research and development expenditures through raising capital in the equity markets. Recent events, including failures and bankruptcies among large commercial and investment banks, have led to considerable declines and uncertainties in these and other capital markets and have led to new regulatory and other restrictions that may have broad effect on the nature of these markets. These circumstances could severely restrict the ability to raise new capital by companies such as us in the future.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Volatility in the financial markets also has created liquidity problems in investments previously thought to bear a minimal risk.&#160;&#160;For example, money market fund investors, including us, have in the past been unable to retrieve the full amount of funds, even in highly rated liquid money market accounts, upon maturity. Although as of September 30, 2013, we have received the full amount of proceeds from money market fund investments, an inability to retrieve funds from money market fund investments as they mature in the future could have a material and adverse impact on our business, results of operations and cash flows.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. While we are not aware of any downgrades, material losses, or other significant deterioration in the fair value of our cash equivalents since September 30, 2013, no assurance can be given that further deterioration in conditions of the global credit and financial markets would not impact our current portfolio of cash equivalents negatively or our ability to meet our financing objectives.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Our business and operations would suffer in the event of system failures.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Despite the implementation of security measures, our internal computer systems and those of our current and any future collaborators, licensees, suppliers, contractors and consultants are vulnerable to damage from cyber&#8722;attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. We could experience failures in our information systems and computer servers, which could be the result of a cyber&#8722;attack and could result in an interruption of our normal business operations and require substantial expenditure of financial and administrative resources to remedy. System failures, accidents or security breaches can cause interruptions in our operations and can result in a material disruption of our development programs, commercialization activities and other business operations. The loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Similarly, we rely on third parties to supply components for and manufacture our product and product candidates, conduct clinical trials of our product candidates and warehouse and distribute ACEON, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the development of gevokizumab or any of our other product candidates and the commercialization of ACEON could be delayed or otherwise adversely affected.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Calamities, power shortages or power interruptions at our Berkeley headquarters and manufacturing facility could disrupt our business and adversely affect our operations.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our principal operations are located in Northern California, including our corporate headquarters and manufacturing facility in Berkeley, California. This location is in an area of seismic activity near active earthquake faults. Any earthquake, terrorist attack, fire, power shortage or other calamity affecting our facilities may disrupt our business and could have material adverse effect on our business and results of operations.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We have a significant stockholder, which may limit other stockholders&#8217; ability to influence corporate matters and may give rise to conflicts of interest.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Entities controlled by Felix J. Baker and Julian C. Baker beneficially own approximately&#160;&#160;&#160;&#160;&#160;&#160; % of our outstanding common stock upon completion of this offering, which includes warrants to purchase approximately 7.6 million shares of XOMA&#8217;s common stock at an exercise price of $1.76 per share. On July 19, 2012, our Board of Directors elected Kelvin Neu, M.D., to serve on our Board of Directors. Dr. Neu is a Managing Director at Baker Bros. Advisors, LLC, an entity controlled by Felix J. Baker and Julian C. Baker. Accordingly, these entities may exert significant influence over us and any action requiring the approval of the holders of our stock, including the election of directors and approval of significant corporate transactions. Furthermore, conflicts of interest could arise in the future between us, on the one hand, and these entities, on the other hand, concerning potential competitive business activities, business opportunities, the issuance of additional securities and other matters.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Our organizational documents contain provisions that may prevent transactions that could be beneficial to our stockholders and may insulate our management from removal.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our charter and by-laws:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">require certain procedures to be followed and time periods to be met for any stockholder to propose matters to be considered at annual meetings of stockholders, including nominating directors for election at those meetings; and</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top"><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">authorize our Board of Directors to issue up to 1,000,000 shares of preferred stock without stockholder approval and to set the rights, preferences and other designations, including voting rights, of those shares as the Board of Directors may determine</font><font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">.</font></td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law (the &#8220;DGCL&#8221;), that may prohibit large stockholders, in particular those owning 15% or more of our outstanding common stock, from merging or combining with us.</div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">These provisions of our organizational documents and the DGCL, alone or in combination with each other, may discourage transactions involving actual or potential changes of control, including transactions that otherwise could involve payment of a premium over prevailing market prices to holders of common stock, could limit the ability of stockholders to approve transactions that they may deem to be in their best interests, and could make it considerably more difficult for a potential acquirer to replace management.</div>

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<div style="TEXT-ALIGN: left; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">You will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase and may also experience further dilution.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Since the price per share of our common stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. Based on the&#160;public offering price of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;per share,&#160;if you purchase common stock in this offering, you will suffer immediate and substantial dilution of $&#160;&#160;&#160;&#160;&#160;&#160;&#160;per share in the net tangible book value of the common stock. See &#8220;Dilution&#8221; below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">To the extent that outstanding options or warrants are exercised or restricted stock units vest, you will experience further dilution. As of September 30, 2013, there were 7,506,341 stock options outstanding, with a weighted average exercise price of $8.23 per share, 2,371,573 restricted stock units outstanding, and warrants outstanding to purchase 347,826 shares of common stock at an exercise price of $19.50 per share, 1,260,000 shares of common stock at an exercise price of $10.50 per share, 39,346 shares of common stock at an exercise price of $3.54 per share, 13,673,183 shares of common stock at an exercise price of $1.76 per share, and 263,158 shares of common stock at an exercise price of $1.14 per share.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.</div>

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<div style="TEXT-ALIGN: left; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">We may issue additional equity securities and thereby materially and adversely affect the price of our common stock.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We are authorized to issue, without stockholder approval, 1,000,000 shares of preferred stock, of which none were issued and outstanding as of the date of this offering, which may give other stockholders dividend, conversion, voting, and liquidation rights, among other rights, which may be superior to the rights of holders of our common stock. In April 2011, the 2,959 Series B convertible preference shares previously issued to Genentech were converted by Genentech into 254,560 shares of common stock. In addition, we are authorized to issue, generally without stockholder approval, up to 138,666,666 shares of common stock, of which&#160;92,701,155 were issued and outstanding as of September 30, 2013. If we issue additional equity securities, the price of our common stock may be materially and adversely affected.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">On February 4, 2011, we entered into an At Market Issuance Sales Agreement (the &#8220;2011 ATM Agreement&#8221;) with McNicoll, Lewis &amp; Vlak LLC (now known as MLV &amp; Co. LLC, &#8220;MLV&#8221;), under which we may sell shares of our common stock from time to time through the MLV, as our agent for the offer and sale of the shares, in an aggregate amount not to exceed the amount that can be sold under our Registration Statement on Form S-3 (File No. 333-172197) filed with the SEC on February 11, 2011 and amended on March 10, 2011, June 3, 2011 and January 3, 2012, which was most recently declared effective by the SEC on January 17, 2012. MLV may sell the shares by any method permitted by law deemed to be an &#8220;at the market&#8221; offering as defined in Rule 415 of the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;), including without limitation sales made directly on The NASDAQ Global Market, on any other existing trading market for our common stock or to or through a market maker. MLV may also sell the shares in privately negotiated transactions, subject to our prior approval. From the inception of the 2011 ATM Agreement through August 16, 2013, we sold a total of 7,572,327 shares of common stock under this agreement for aggregate gross proceeds of $14.6 million.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><a name="eolPage8"><!--Anchor--></a>On March 9, 2012, we completed an underwritten public offering of 29,669,154 shares of our common stock, and accompanying warrants to purchase one half of a share of common stock for each share purchased, at a public offering price of $1.32 per share. Total gross proceeds from the offering were approximately $39.2 million, before deducting under writing discounts and commissions and estimated offering expenses totaling approximately $3.0 million. The warrants, which represented the right to acquire an aggregate of up to 14,834,577 shares of common stock, are immediately exercisable and have a five-year term and an exercise price of $1.76 per share. As of September 30, 2013, 13,673,183 of these warrants were outstanding.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, funding from collaboration partners and others has in the past and may in the future involve issuance by us of our shares of common stock. We cannot be certain how the purchase price of such shares, the relevant market price or premium, if any, will be determined or when such determinations will be made. Any such issuance could result in dilution in the value of our issued and outstanding shares.</div>

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<div style="TEXT-ALIGN: justify; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Our share price may be volatile and there may not be an active trading market for our common stock.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">There can be no assurance that the market price of our common stock will not decline below its present market price or that there will be an active trading market for our common stock. The market prices of biotechnology companies have been and are likely to continue to be highly volatile. Fluctuations in our operating results and general market conditions for biotechnology stocks could have a significant impact on the volatility of our common stock price. We have experienced significant volatility in the price of our common stock. From January 1, 2013 through December 11, 2013, the share price of our common stock has ranged from a high of $6<font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">.28 to a low of $2.43. </font>Factors contributing to such volatility include, but are not limited to:</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">our funding requirements and the terms of our financing arrangements;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">technological innovations or new indications for our therapeutic products and product candidates;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">introduction of new products or technologies by us or our competitors;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">sales and estimated or forecasted sales of products for which we receive royalties, if any;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">government regulations;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#183;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">developments in patent or other proprietary rights;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#183;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">the number of shares issued and outstanding;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">the number of shares trading on an average trading day;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#183;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">announcements regarding other participants in the biotechnology and pharmaceutical industries; and</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#183;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">market speculation regarding any of the foregoing.</div>
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<div style="TEXT-ALIGN: left; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Management will have broad discretion in determining how to use the proceeds of this offering.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have not determined the amounts we plan to spend on any of the areas listed in &#8220;Use of Proceeds&#8221; below or the timing of such expenditures. Accordingly, the amount and timing of our actual expenditures will depend on numerous factors, including the progress of our research and development activities and clinical trials and the amount of cash&#160; &#160;generated by our operations.&#160;&#160;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 stockholders may not agree. Pending application of the net proceeds as described in &#8220;Use of Proceeds&#8221;, we intend to invest the net proceeds of the offering in short-term, interest-bearing securities, investment grade securities, certificates of deposit or direct or guaranteed obligations of the U.S. government. These investments may not yield a favorable return to our stockholders.</div>

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<div style="TEXT-ALIGN: left; FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">A substantial number of shares of our common stock may be sold in this offering, which could cause the price of our common stock to decline.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In this offering we will sell&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares, or approximately &#160;&#160;&#160;&#160;&#160;% of our outstanding common stock as of September 30, 2013.&#160;&#160;This sale and any future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the price of our common stock. We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those shares of common stock for sale will have on the market price of our common stock.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="FORM424B5_HTM_FORWARD"><!--Anchor--></a><a name="FORWARD-LOOKING"><!--Anchor--></a>FORWARD-LOOKING INFORMATION</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Certain statements contained in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference therein, related to the anticipated size of clinical trials, the anticipated timing of initiation of clinical trials, the expected availability of clinical trial results, the sufficiency of our cash resources, the estimated costs of clinical trials and the amounts of certain revenues and certain costs in comparison to prior years, or that otherwise relate to future periods, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;). The words &#8220;believe,&#8221; &#8220;may,&#8221; &#8220;estimate,&#8221; &#8220;continue,&#8221; &#8220;anticipate,&#8221; &#8220;intend,&#8221; &#8220;expect,&#8221; &#8220;predict,&#8221; &#8220;potential&#8221; and similar expressions are intended to identify forward-looking statements.&#160;&#160;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: our product candidates are still being developed, and we will require substantial funds to continue development which may not be available; we have sustained losses in the past and we expect to sustain losses in the future; we are substantially dependent on Servier for the development and commercialization of gevokizumab and for other aspects of our business; we have received negative results from certain of our clinical trials, and the pace of certain ongoing trials has not always been what was initially anticipated, and we face uncertain results of other clinical trials of our product candidates; if our therapeutic product candidates do not receive regulatory approval, neither our third-party collaborators, our contract manufacturers nor we will be able to manufacture and market them; we may not obtain orphan drug exclusivity or we may not receive the full benefit of orphan drug exclusivity even if we obtain such exclusivity; even once approved, a product may be subject to additional testing or significant marketing restrictions, its approval may be withdrawn or it may be voluntarily taken off the market; we may not be successful in commercializing our products, which could also affect our development efforts; we are subject to various state and federal healthcare related laws and regulations that may impact the commercialization of ACEON or our product candidates and could subject us to significant fines and penalties; and certain of our technologies are in-licensed from third parties, so our capabilities using them are restricted and subject to additional risks.&#160;&#160;These and other risks, including those related to current economic and financial market conditions, are described in more detail in &#8220;Risk Factors&#8221; above and the additional risk factors contained in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="FORM424B5_HTM_USEOF"><!--Anchor--></a><a name="USEOFPROCEEDS"><!--Anchor--></a>USE OF PROCEEDS</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We estimate the net proceeds from&#160; this offering will be approximately $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160;(or $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; if the underwriters exercise in full their option to purchase additional shares),&#160;after deducting underwriting discounts and commissions and our estimated offering expenses.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We currently intend to use the net proceeds from this offering for continued development, preclinical testing and clinical studies related to gevokizumab and our XMet platform. We intend to use the remainder of the net proceeds for general research and development, business development and other corporate purposes as determined by our management.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">While we have estimated the particular uses for the net proceeds of this offering, the amount and timing of our actual expenditures will depend on numerous factors, including the progress of our research and development activities and clinical trials and the amount of cash generated by our operations.&#160;</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">As a result, our management will retain broad discretion in the allocation and use of the net proceeds of this offering, and investors will be relying on the judgment of our management with regard to the use of these net proceeds. Pending application of the net proceeds for the specified purposes as described above, we expect to invest the net proceeds in short-term, interest-bearing securities, investment grade securities, certificates of deposit or direct or guaranteed obligations of the U.S. government.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="DILUTION"><!--Anchor--></a>DILUTION</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our net tangible book value as of September 30, 2013, was approximately $(13.5) million, or $(0.15) per share of common stock. Net tangible book value per share is determined by dividing our total tangible assets, less total liabilities, by the number of our shares of common stock outstanding as of September 30, 2013. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of common stock in this offering and the net tangible book value per share of our common stock immediately after this offering.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">After giving effect to the sale of&#160; &#160; &#160;&#160; &#160;shares of common stock in this offering at the&#160;public offering price of $&#160; &#160; &#160; &#160;per share,&#160;and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2013, would have been approximately $&#160; &#160; &#160; million, or $&#160; &#160; &#160; per share. This represents an immediate increase in net tangible book value of $&#160; &#160; &#160; &#160;&#160; per share to existing stockholders and immediate dilution in net tangible book value of $&#160; &#160; &#160; &#160; &#160;per share to new investors purchasing our shares of common stock in this offering. The following table illustrates this dilution on a per share basis:</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Public offering price per share</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="BACKGROUND-COLOR: #cceeff; VERTICAL-ALIGN: bottom" valign="bottom" colspan="2">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"></div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #cceeff; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Net tangible book value per share as of September 30, 2013</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">(0.15</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">)</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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</tr>

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<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 76%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Increase per share attributable to investors participating in this offering</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
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<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
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</tr>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 76%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">As adjusted net tangible book value per share after this offering</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 76%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Dilution per share to investors participating in this offering</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">$</div>
</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The foregoing table does not take into account further dilution to new investors that could occur upon the exercise of outstanding options and warrants having a per share exercise price less than the per share offering price to the public in this offering or upon the vesting of outstanding restricted stock units.</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The above discussion and table are based on 92,701,155 shares of common stock outstanding as of September 30, 2013, and exclude:</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div>
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 36pt">&#160;</td>
<td style="WIDTH: 18pt; VERTICAL-ALIGN: top; align: right">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#61623;</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">shares of common stock issuable upon the exercise of stock options outstanding, of which there were 7,506,341 outstanding as of September 30, 2013, with a weighted average exercise price of $8.23 per share&#61499;</div>
</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div>
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 36pt">&#160;</td>
<td style="WIDTH: 18pt; VERTICAL-ALIGN: top; align: right">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#61623;</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">shares of common stock issuable upon the vesting of outstanding restricted stock units, of which there were 2,371,573 outstanding as of September 30, 2013&#61499;</div>
</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div>
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 36pt">&#160;</td>
<td style="WIDTH: 18pt; VERTICAL-ALIGN: top; align: right">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#61623;</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">shares of common stock issuable upon the exercise of our outstanding warrants, of which there were warrants outstanding as of September 30, 2013, to purchase 347,826 shares of common stock at an exercise price of $19.50 per share, 1,260,000 shares of common stock at an exercise price of $10.50 per share, 39,346 shares of common stock at an exercise price of $3.54 per share, 13,673,183 shares of common stock at an exercise price of $1.76 per share, and 263,158 shares of common stock at an exercise price of $1.14 per share; and</div>
</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div>
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 36pt">&#160;</td>
<td style="WIDTH: 18pt; VERTICAL-ALIGN: top; align: right">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#61623;</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">3,796,065 shares of common stock not subject to stock awards and reserved for issuance under our equity incentive plans and 70,789 shares of common stock reserved for issuance under our employee stock purchase plan&#61486;</div>
</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, the number of shares outstanding immediately after this offering does not include shares of common stock that we may sell pursuant to the Sales Agreement. Under the Sales Agreement, we may issue and sell shares of our common stock from time to time after the expiration of the 90-day lock-up period described under the section of this prospectus entitled &#8220;Underwriting&#8221; in such amounts as we may determine, subject to certain limitations under applicable securities laws.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: 'Times New Roman', Times, Serif; FONT-SIZE: 8pt" id="DSPFPageNumberArea">S-26</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a style="FONT-STYLE: italic; FONT-SIZE: 8pt" href="#TABLEOFCONTENTS">Table of Contents</a><a name="FORM424B5_HTM_ABOUT"><!--Anchor--></a></div>
</div>
</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="FORM424B5_HTM_UNDERWRITING"><!--Anchor--></a><a name="UNDERWRITING"><!--Anchor--></a>UNDERWRITING</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus supplement, we have agreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC and Jefferies LLC are acting as a representatives, the following respective numbers of shares of common stock:</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 9pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

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<td style="WIDTH: 88%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; TEXT-INDENT: -7.2pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 7.2pt; FONT-SIZE: 10pt"><u>Underwriter</u></div>
</td>
<td style="WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: #000000 2px solid; VERTICAL-ALIGN: bottom" colspan="2">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 1.8pt">Number</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 1.8pt">of Shares</div>
</td>
<td style="WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 88%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; TEXT-INDENT: -7.2pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 7.2pt; FONT-SIZE: 10pt">Credit Suisse Securities (USA) LLC</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 8.94%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 88%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; TEXT-INDENT: -7.2pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 7.2pt; FONT-SIZE: 10pt">Jefferies LLC</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div>&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom">
<div>&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 8.94%; VERTICAL-ALIGN: bottom">
<div>&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div>&#160;</div>
</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 88%; VERTICAL-ALIGN: bottom">Cowen&#160;and Company, LLC</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 8.94%; VERTICAL-ALIGN: bottom"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom"></td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 88%; VERTICAL-ALIGN: bottom">Piper Jaffray &amp; Co.</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom"></td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom"></td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 8.94%; VERTICAL-ALIGN: bottom"></td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom"></td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 88%; VERTICAL-ALIGN: bottom">
<div>RBC Capital Markets, LLC</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 8.94%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 88%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; TEXT-INDENT: -7.2pt; FONT-FAMILY: ''Times New Roman'', Times, serif; MARGIN-LEFT: 14.4pt; FONT-SIZE: 10pt">Total</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BORDER-BOTTOM: #000000 4px double; BACKGROUND-COLOR: #ffffff; WIDTH: 8.94%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: right; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1.16%; VERTICAL-ALIGN: bottom">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">&#160;</div>
</td>
</tr>
</table>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 18pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock in the offering if any are purchased, other than those shares covered by the option described below.&#160;&#160;The underwriting agreement also provides that if an underwriter defaults the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We have granted to the underwriters a 30-day option to purchase on a pro rata basis up to&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional shares at the initial public offering price less the underwriting discounts and commissions.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel including the validity of the shares, and subject to other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer&#8217;s certificates and legal opinions. The offering of the shares by the underwriters is also subject to the underwriters&#8217; right to reject any order in whole or in part.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus supplement and to selling group members at that price less a selling concession of up to $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; per share.&#160;&#160;After the initial public offering the representatives may change the public offering price&#160; and concession.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;<a name="FIS_UNIDENTIFIED_TABLE_5"><!--Anchor--></a></div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The following table summarizes the per share and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters&#8217; option to purchase up to&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;additional shares:</div>

<div><br>
</div>

<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" cellspacing="0" cellpadding="0">
<tr>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">
<div>&#160;</div>
</td>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 2px solid; VERTICAL-ALIGN: bottom" valign="bottom" colspan="6">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 5.8pt">Per Share</div>
</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 2px solid; VERTICAL-ALIGN: bottom" valign="bottom" colspan="6">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 5.8pt">Total</div>
</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">
<div>&#160;</div>
</td>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 2px solid; WHITE-SPACE: nowrap; VERTICAL-ALIGN: bottom" colspan="2">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 1.8pt">Without</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 1.8pt">Option Exercised</div>
</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="BORDER-BOTTOM: #000000 2px solid; WHITE-SPACE: nowrap; VERTICAL-ALIGN: bottom" colspan="2">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 1.8pt">With</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 1.8pt">Option Exercised in </div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We estimate our out of pocket expenses for this offering (not including any underwriting discounts and commissions) will be approximately $0.2 million.&#160; We have also agreed to pay Piper Jaffray &amp; Co. a fee of approximately $0.25 million&#160;for financial advisory services.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We&#160; have agreed we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of the underwriters for a period of 90 days after the date of this prospectus supplement. The restrictions described in this paragraph do not apply in certain circumstances, including&#160;&#160;awards by us to purchase, or issuance by us of, shares of common stock pursuant to employee benefit plans existing on,&#160;&#160;upon the exercise, conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this prospectus supplement, or in connection with certain issuances by us&#160;&#160;as consideration in connection with any collaborations, acquisitions or strategic transactions. However, in the event that either (1) during the last 17 days of the &#8220;lock-up&#8221; period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the &#8216;lock-up&#8217; period, we announce that we will release earnings results during the 16-day period beginning on the last day of the &#8216;lock-up&#8217; period, then in either case the expiration of the &#8216;lock-up&#8221; will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless the underwriters waive, in writing, such an extension.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our executive officers and directors have agreed they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC for a period of 90 days after the date of this prospectus supplement.&#160;&#160;The restrictions described in this paragraph do not apply to, subject to certain conditions, transfers of shares (i) as a <font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">bona fide</font> gift or gifts or pledge, (ii) to an immediate family member of such person or to a trust, the beneficiaries of which are exclusively such person and one or more immediate family members, (iii) with the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC, (iv) in connection with the exercise of any equity award granted to them that expires or is otherwise required to be exercised during the 90 day period to discharge tax obligations resulting from such exercise, (v) to us to discharge tax withholding obligations resulting from the vesting or release of equity awards, or (vi) pursuant to any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1 under the Exchange Act that was established prior to the date of this offering.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We <font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</font> have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our common stock is listed on The NASDAQ Global Market under the symbol &#8220;XOMA.&#8221;</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions, penalty bids and passive market making in accordance with Regulation M under the Exchange Act.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position.&#160;&#160;The short position may be either a covered short position or a naked short position.&#160;&#160;In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the option.&#160;&#160;In a naked short position, the number of shares involved is greater than the number of shares in the option.&#160;&#160;The underwriters may close out any covered short position by either exercising their option and/or purchasing shares in the open market.</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.&#160;&#160;In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option.&#160;&#160;If the underwriters sell more shares than could be covered by the option, a naked short position, the position can only be closed out by buying shares in the open market.&#160;&#160;A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">In passive market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made.</div>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock.&#160;&#160;As a result the price of our common stock may be higher than the price that might otherwise exist in the open market.&#160;&#160;These transactions may be effected on The NASDAQ Global Market or otherwise and, if commenced, may be discontinued at any time.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus supplement and accompanying prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute this prospectus supplement and accompanying prospectus electronically.&#160;&#160;The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">From time to time in the ordinary course of their respective businesses, certain of the underwriters and their affiliates have performed and may in the future perform investment banking, commercial banking, dealer and advisory services for us or our affiliates for which they have received or will receive customary fees and expenses.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Notice to Prospective Investors in the European Economic Area</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each, a &#8220;Relevant Member State&#8221;), an offer to the public of any shares that are the subject of the offering contemplated by this prospectus supplement (the &#8220;Shares&#8221;) may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">to any legal entity that is a qualified investor as defined in the Prospectus Directive;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">(b)</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representative for any such offer; or</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">(c)</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">in any other circumstances falling within Article 3(2) of the Prospectus Directive,</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">provided that no such offer of Shares shall require the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">For the purposes of this provision, the expression an &#8220;offer to the public&#8221; in relation to any Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase any Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression &#8220;Prospectus Directive&#8221; means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression &#8220;2010 PD Amending Directive&#8221; means Directive 2010/73/EU.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Notice to Prospective Investors in the United Kingdom</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Each underwriter has severally represented and agreed that:</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act, or the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.</div>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Certain legal matters with respect to the legality of the issuance of the shares of common stock offered by us will be passed upon for us by Cooley LLP, Palo Alto, California. The underwriters are being represented by Latham &amp; Watkins LLP, Menlo Park, California in connection with this offering.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Ernst &amp; 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, 2012, and the effectiveness of our internal control over financial reporting as of December 31, 2012, as set forth in their reports, which are incorporated by reference in this prospectus supplement and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst &amp; Young LLP&#8217;s reports, given on their authority as experts in accounting and auditing.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We are subject to the reporting requirements of the Exchange Act and file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy these reports, proxy statements and other information at the SEC&#8217;s public reference facilities at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference facilities. SEC filings are also available at the SEC&#8217;s website at http://www.sec.gov. Our common stock is listed on The NASDAQ Global Market, and you can read and inspect our filings at the offices of The NASDAQ Stock Market at 1735 K Street, Washington, D.C. 20006.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus supplement and the accompanying prospectus are only part of a registration statement on Form S-3 that we have filed with the SEC under the Securities Act and therefore omit certain information contained in the registration statement. We have also filed exhibits and schedules with the registration statement that are excluded from this prospectus supplement and the accompanying prospectus, and you should refer to the applicable exhibit or schedule for a complete description of any statement referring to any contract or other document. You may inspect a copy of the registration statement, including the exhibits and schedules, without charge, at the public reference room or obtain a copy from the SEC upon payment of the fees prescribed by the SEC.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We also maintain a website at http://www.xoma.com, through which you can access our SEC filings. The information set forth on our website is not part of this prospectus supplement.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;The SEC allows us to &#8220;incorporate by reference&#8221; 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. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus, and information that we file later with the SEC will automatically update and supersede this information. 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):&#160;</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">our annual report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 12, 2013, including the information specifically incorporated by reference therein from our definitive proxy statement on Schedule 14A, filed on April 11, 2013;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">our quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 30, 2013filed with the SEC on May 8, 2013, August 7, 2013 and November 7, 2013, respectively;</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">our current reports on Form 8-K, filed with the SEC on March 21, 2013 and August 21, 2013; and</div>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; MARGIN-RIGHT: 0.8pt">the description of our capital stock included under the caption &#8220;Description of Capital Stock&#8221; in the prospectus dated December 16, 2011, which was filed on December 19, 2011, and is part of our registration statement on Form S-4/A filed on December 13, 2011 (registration no. 333-177165), including any amendment or report for the purpose of updating such description.</div>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 supplement and the accompanying prospectus or in a later filed document that is incorporated or deemed to be incorporated herein by reference modifies or replaces such information.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 after the date of this prospectus supplement and prior to the termination of the offering of the securities made by this prospectus supplement and the accompanying prospectus. Information in such future filings updates and supplements the information provided in this prospectus supplement and the accompanying 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 45pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will provide, upon written or oral request, without charge to each person, including any beneficial owner, to whom a copy of this prospectus supplement and the accompanying prospectus is delivered, a copy of any or all of the information incorporated herein by reference (exclusive of exhibits to such documents unless such exhibits are specifically incorporated by reference herein). You may request in writing or orally a copy of these filings, at no cost, by writing or telephoning us at the following address:</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">XOMA Corporation</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">2910 Seventh Street</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Berkeley, California 94710</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">(510) 204-7200</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">PROSPECTUS</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">$150,000,000</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Common Stock</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Preferred Stock</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Debt Securities</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may, from time to time, offer to sell up to $150,000,000 of any combination of our common stock, preferred stock, debt securities or warrants described in this prospectus, either individually or in combination with other securities, at prices and on terms described in one or more supplements to this prospectus. We may also offer common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon the exercise of warrants. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus describes some of the general terms that may apply to an offering of our securities. The specific terms and any other information relating to a specific offering will be set forth in a post-effective amendment to the registration statement of which this prospectus is a part, in a supplement to this prospectus, or in a free writing prospectus or may be set forth in one or more documents incorporated by reference in this prospectus. You should read this prospectus, the information incorporated by reference in this prospectus and any applicable prospectus supplement or free writing prospectus carefully before you invest.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Securities may be sold by us to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional information on the methods of sale, you should refer to the section entitled &#8220;Plan of Distribution&#8221; in this prospectus and in the applicable prospectus supplement. 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 discounts or commissions 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our common stock is listed on the NASDAQ Global Market under the symbol &#8220;XOMA&#8221; On September 9, 2013, the last reported sale price of our common stock on the NASDAQ Global Market was $4.94 per share.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Investing in our securities involves a high degree of risk. See &#8220;Risk Factors&#8221; on page&#160;5 of this prospectus and as updated in our future filings made with the Securities and Exchange Commission that are incorporated by reference into this prospectus.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">This prospectus may not be used to offer or sell any securities unless accompanied by a prospectus supplement.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">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.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The date of this prospectus is September 20, 2013</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">You should rely only on the information contained in or incorporated by reference into this prospectus or any applicable prospectus supplement or free writing prospectus. We have not authorized anyone to provide you with different information. We are not making an offer to sell or seeking an offer to buy securities under this prospectus or any applicable prospectus supplement or free writing prospectus in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus, any applicable prospectus supplement or free writing prospectus and the documents incorporated by reference herein and therein are accurate only as of their respective dates, regardless of the time of delivery of this prospectus or any sale of a security.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="AboutthisProspectus" name="AboutthisProspectus"></a>About this Prospectus</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC, using a &#8220;shelf&#8221; registration process. Under this shelf registration statement, we may sell from time to time in one or more offerings up to a total dollar amount of $150,000,000 of common stock and preferred stock, various series of debt securities and/or warrants to purchase any of such securities, either individually or in combination with other securities as described in this prospectus. Each time we sell any type or series of securities under this prospectus, we will provide a prospectus supplement that will contain more specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. We may also add, update or change in a prospectus supplement or free writing prospectus any of the information contained in this prospectus or in documents we have incorporated by reference into this prospectus. This prospectus, together with any applicable prospectus supplement or free writing prospectus and the documents incorporated by reference into this prospectus, include all material information relating to this offering. You should carefully read both this prospectus and any applicable prospectus supplement and any related free writing prospectus together with the additional information described under &#8220;Where You Can Find More Information&#8221; before buying securities in this offering.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Unless otherwise specified or required by context, references in this prospectus to &#8220;XOMA,&#8221; &#8220;the Company,&#8221; &#8220;we,&#8221; &#8220;us&#8221; and &#8220;our&#8221; refer to XOMA Corporation, a Delaware corporation and its consolidated subsidiaries, if any, unless otherwise specified.</div>

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<div style="TEXT-ALIGN: left; FONT-STYLE: italic; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The following summary highlights information contained elsewhere in this prospectus or incorporated by reference herein and does not contain all the information that may be important to purchasers of our securities. Prospective purchasers of our securities should review this entire prospectus carefully, including the risks of investing discussed under &#8220;Risk Factors&#8221; on page <font style="FONT-FAMILY: 'Times New Roman', Times, serif">5</font>, the financial statements and related notes, and the information to which we refer you and the information incorporated into this prospectus by reference, for a complete understanding of our business and this offering.</div>

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<div style="TEXT-ALIGN: left; FONT-STYLE: italic; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus and the information incorporated herein by reference include trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus, any applicable prospectus supplement or any related free writing prospectus are the property of their respective owners.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">XOMA CORPORATION</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Overview</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">XOMA discovers and develops innovative antibody-based therapeutics. Our lead drug candidate, gevokizumab, is a potent, fully humanized monoclonal antibody with unique allosteric modulating properties that binds to the inflammatory cytokine interleukin-1 beta (&#8220;IL-1 beta&#8221;). We believe, by targeting IL-1 beta, gevokizumab has the potential to address the underlying inflammatory causes of a wide range of diseases that have been identified as unmet medical needs.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Together with our development partner, Servier, France's leading independent pharmaceutical company, we initiated three Phase 3 clinical trials evaluating gevokizumab for the treatment of non-infectious uveitis (&#8220;NIU&#8221;) <font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">involving the intermediate and/or posterior segment of the eye</font> and Beh&#231;et&#8217;s uveitis, a severe subset of NIU. XOMA is responsible for all of the clinical study sites in the United States, and Servier is responsible for all of the clinical study sites outside of the United States. These studies are known as the EYEGUARD&#8482; program, which includes EYEGUARD-A (patients with acute NIU), EYEGUARD-B (patients with Beh&#231;et&#8217;s uveitis), and EYEGUARD-C (patients with NIU controlled with corticosteroids, with or without immunosuppressive medications). &#160;As of September 1, 2013, we have over 60 of the targeted 70 clinical sites up and running in the U.S. where we are working to accelerate enrollment, and we are working closely with SERVIER to identify ways to expedite the site activation process outside the U.S. We anticipate disclosing the top-line results of the EYEGUARD studies in 2014.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our next gevokizumab Phase 3 indication will be selected based upon the results from our Phase 2 studies in moderate-to severe-inflammatory acne and erosive osteoarthritis of the hand (&#8220;EOA&#8221;). We reported encouraging top-line results from the moderate-to-severe inflammatory acne study in January 2013, and top-line results from the EOA study in patients with elevated C-reactive protein (&#8220;CRP&#8221;), a biomarker for inflammation, are expected in October 2013. We anticipate selecting the next Phase 3 indication by the end of 2013.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We also have clinical studies assessing gevokizumab&#8217;s potential to treat several rare diseases. In June 2013, we launched a pilot study in inflammatory pyoderma gangrenosum (&#8220;PG&#8221;), one of the multiple diseases classified as neutrophilic dermatoses. Two additional studies are being conducted in collaboration with the United States National Institutes of Health (&#8220;NIH&#8221;). In March 2013, we announced that a gevokizumab study in patients with non-infectious anterior scleritis had opened for enrollment at the National Eye Institute (&#8220;NEI&#8221;), and in August 2013, we announced that a gevokizumab clinical study in patients with inflammatory autoimmune inner ear disease (&#8220;AIED&#8221;), will be run by the North Shore-Long Island Jewish Health System in collaboration with the National Institute on Deafness and Other Communication Disorders.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Separately, Servier instituted its own active development program for gevokizumab beyond the NIU and Beh&#231;et&#8217;s uveitis Phase 3 program. In 2012, Servier initiated a gevokizumab Phase 2 study in patients with acute coronary syndrome, a cardiovascular disease. Servier also began testing gevokizumab in a variety of small clinical studies, including polymyositis/dermatomyositis and Schnitzler syndrome. Servier indicated these are the first studies in an extensive multi-indication exploratory program it expects to be conducting.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We entered into a license and collaboration agreement with Servier in December 2010 to jointly develop and commercialize gevokizumab in multiple indications. Under the terms of that agreement, Servier has worldwide rights to gevokizumab for cardiovascular disease and diabetes indications and rights outside the United States and Japan to all other indications. We retain development and commercialization rights in the United States and Japan to all indications except cardiovascular disease and diabetes and have an option to reacquire rights to these indications from Servier in these territories, and we intend to commercialize almost all of these other indications in the United States. &#160;Additionally, we continue to develop our proprietary preclinical pipeline, primarily focusing on the development of allosteric modulating monoclonal antibodies.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Risks Associated with our Business</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our business is subject to numerous risks, as described under the heading &#8220;Risk Factors&#8221; contained in the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the documents that are incorporated by reference into this prospectus.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We were incorporated in Delaware in 1981 and became a Bermuda exempted company in December 1998. &#160;Effective December 31, 2011, we changed our jurisdiction of incorporation from Bermuda to Delaware and changed our name from XOMA Ltd. to XOMA Corporation.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our principal executive offices are located at 2910 Seventh Street, Berkeley, California 94710, and we maintain a registered office located at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. &#160;Our telephone number at our principal executive offices is (510) 204-7200. &#160;Our website address is www.xoma.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus, and you should not consider it part of this prospectus or part of any prospectus supplement. Our website address is included in this document as an inactive textual reference only.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="TheSecuritiesWeMayOffer" name="TheSecuritiesWeMayOffer"></a>The Securities We May Offer</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may offer shares of our common stock and preferred stock, various series of debt securities and/or warrants to purchase any of such securities, either individually or in combination with other 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 at the time of any 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 under this prospectus, 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:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">rates and times of payment of interest or dividends;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">redemption, conversion, exercise, exchange or sinking fund terms;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">conversion or exchange prices or rates and, if applicable, any provisions for changes to or adjustments in the conversion or exchange prices or rates and in the securities or other property receivable upon conversion or exchange; and</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">a discussion of material United States federal income tax considerations, if any.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update or change information contained in this prospectus or in documents we have incorporated by reference. However, no prospectus supplement or free writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness of the registration statement of which this prospectus is a part.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">This prospectus may not be used to offer or sell securities unless it is accompanied by a prospectus supplement.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may sell the securities directly to investors or to or through agents, underwriters or dealers. We, and our agents, underwriters or dealers reserve the right to accept or reject all or part of any proposed purchase of securities. If we do offer securities to or through agents, underwriters or dealers, we will include in the applicable prospectus supplement:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the net proceeds to us.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Common Stock. &#160; &#160;</font>We may issue shares of our common stock from time to time. Common stockholders are entitled to one vote per share for the election of directors and on all other matters that require common stockholder approval. Holders of our common stock are entitled to share in an equal amount per share in any dividends declared by our board of directors on the common stock and paid out of legally available assets. Subject to any preferential rights of any outstanding preferred stock, in the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in the assets remaining after payment of liabilities and the liquidation preferences of any outstanding preferred stock. Our common stock does not carry any preemptive rights enabling a holder to subscribe for, or receive shares of, any class of our common stock or any other securities convertible into shares of any class of our common stock, or any redemption rights.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Preferred Stock. &#160; &#160;</font>We may issue shares of our preferred stock from time to time, in one or more series. Our board of directors will determine the designations, voting powers, preferences and rights of the preferred stock, as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, preemptive rights, terms of redemption or repurchase, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series. Convertible preferred stock will be convertible into our common stock or exchangeable for other securities. Conversion may be mandatory or at your option and would be at prescribed conversion rates.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If we sell any series of preferred stock under this prospectus, we will fix the designations, voting powers, preferences and rights of such series of preferred stock, as well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to that series. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock that we are offering before the issuance of the related series of preferred stock. We urge you to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series of preferred stock being offered, as well as the complete certificate of designation that contains the terms of the applicable series of preferred stock.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Debt Securities. &#160; &#160;</font>We may issue 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 stock or other securities. Conversion may be mandatory or at your option and would be at prescribed conversion rates.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Any debt securities issued under this prospectus will be issued under one or more documents called indentures, which are contracts between us and a 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 applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) 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 the 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 that we file with the SEC.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Warrants. &#160; &#160;</font>We may issue warrants for the purchase of common stock, preferred stock and/or debt securities in one or more series. We may issue warrants independently or together with common stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities. In this prospectus, we have summarized certain general features of the warrants. We urge you, however, to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series of warrants being offered, as well as any warrant agreements and warrant certificates that contain the terms of the warrants. We will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, any forms of warrant agreements and forms of warrant certificates containing the terms of the warrants being offered, and any supplemental warrant agreements and forms of warrant certificates containing the terms of the warrants being offered.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Any warrants issued under this prospectus may be evidenced by warrant certificates. Warrants also may be issued under an applicable warrant agreement that we enter into with a warrant agent. We will indicate the name and address of the warrant agent, if applicable, in the prospectus supplement relating to the particular series of warrants being offered.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="RiskFactors" name="RiskFactors"></a><a name="RiskFactors2"><!--Anchor--></a>Risk Factors</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Investing in our securities involves a high degree of risk. &#160;Before deciding whether to invest in our securities, you should consider carefully the risks and uncertainties described under the heading &#8220;Risk Factors&#8221; contained in the applicable prospectus supplement and any related free writing prospectus, and discussed under the section entitled &#8220;Risk Factors&#8221; contained in our most recent Annual Report on Form 10-K and in our most recent Quarterly Report on Form 10-Q, as well as any amendments thereto reflected in subsequent filings with the SEC, which are incorporated by reference into this prospectus in their entirety, together with other information in this prospectus, the documents incorporated by reference and any free writing prospectus that we may authorize for use in connection with this offering. The risks described in these documents are not the only ones we face, but those that we consider to be material. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment. Please also read carefully the section below entitled &#8220;Forward-Looking Statements.&#8221;</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="Forward-LookingStatements" name="Forward-LookingStatements"></a>Forward-Looking Statements</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus, including the documents that we incorporate by reference herein, contains, and any applicable prospectus supplement or free writing prospectus including the documents we incorporate by reference therein may contain, forward-looking statements, including statements related to the anticipated size of clinical trials, the anticipated timing of initiation of clinical trials, the expected availability of clinical trial results, the sufficiency of our cash resources, the estimated costs of clinical trials and the amounts of certain revenues and certain costs in comparison to prior years, or that otherwise relate to future periods. 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: our product candidates are still being developed, and we will require substantial funds to continue development which may not be available; we have sustained losses in the past and we expect to sustain losses in the future; we are substantially dependent on Servier for the development and commercialization of gevokizumab and for other aspects of our business; we have received negative results from certain of our clinical trials, and the pace of certain ongoing trials has not always been what was initially anticipated, and we face uncertain results of other clinical trials of our product candidates; if our therapeutic product candidates do not receive regulatory approval, neither our third-party collaborators, our contract manufacturers nor we will be able to manufacture and market them; we may not obtain orphan drug exclusivity or we may not receive the full benefit of orphan drug exclusivity even if we obtain such exclusivity; even once approved, a product may be subject to additional testing or significant marketing restrictions, its approval may be withdrawn or it may be voluntarily taken off the market; we may not be successful in commercializing our products, which could also affect our development efforts; we are subject to various state and federal healthcare related laws and regulations that may impact the commercialization of ACEON or our product candidates and could subject us to significant fines and penalties; and certain of our technologies are in-licensed from third parties, so our capabilities using them are restricted and subject to additional risks. <font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Discussions containing these forward-looking statements may be found, among other places, in the Sections entitled &#8220;Business,&#8221; &#8220;Risk Factors&#8221; and &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; incorporated by reference from our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, as well as any amendments thereto, filed with the SEC</font>. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward&#8209;looking statements. The risks and uncertainties include, among others, those referenced in &#8220;Risk Factors&#8221; above and in any applicable prospectus supplement or free writing prospectus and any documents incorporated by reference herein or therein.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Forward&#8209;looking statements include all statements that are not historical facts. In some cases, you can identify forward&#8209;looking statements by terms such as &#8220;may,&#8221; &#8220;will,&#8221; &#8220;should,&#8221; &#8220;could,&#8221; &#8220;would,&#8221; &#8220;expects,&#8221; &#8220;plans,&#8221; &#8220;anticipates,&#8221; &#8220;believes,&#8221; &#8220;estimates,&#8221; &#8220;projects,&#8221; &#8220;predicts,&#8221; &#8220;potential,&#8221; or the negative of those terms, and similar expressions and comparable terminology intended to identify forward&#8209;looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward&#8209;looking statements. These forward&#8209;looking statements represent our estimates and assumptions only as of the date of this prospectus and, except as required by law, we undertake no obligation to update or revise publicly any forward&#8209;looking statements, whether as a result of new information, future events or otherwise after the date of this prospectus.<a id="SelectedFinancialData_091254" name="SelectedFinancialData_091254"></a></div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="FinancialRatios" name="FinancialRatios"></a>Financial Ratios</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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:</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Six Months </div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Ended June 30, </div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2013</div>
</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BORDER-BOTTOM: #000000 2px solid; VERTICAL-ALIGN: bottom" valign="bottom" colspan="19" nowrap="nowrap">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Year Ended December 31,</div>
</td>
<td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2px; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>

<tr style="HEIGHT: 18px">
<td style="WIDTH: 28%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: right; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: right; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2012</div>
</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: right; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2011</div>
</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: right; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2010</div>
</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: right; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2009</div>
</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom"></td>
<td style="TEXT-ALIGN: right; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2008</div>
</td>
<td style="TEXT-ALIGN: left; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
</tr>

<tr style="HEIGHT: 13px">
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 28%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Ratio of earnings to fixed charges (1)</div>
</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">N/A (2)</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">N/A (2)</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">N/A (2)</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">N/A (2)</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap"></td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">1.9</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #cceeff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">
<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">N/A (2)</div>
</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #cceeff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>
</td>
</tr>

<tr>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 28%; VERTICAL-ALIGN: bottom" valign="bottom">
<div>&#160;</div>
</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
<td style="BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: right; BACKGROUND-COLOR: #ffffff; WIDTH: 9%; VERTICAL-ALIGN: bottom" valign="bottom">&#160;</td>
<td style="TEXT-ALIGN: left; BACKGROUND-COLOR: #ffffff; WIDTH: 1%; VERTICAL-ALIGN: bottom" valign="bottom" nowrap="nowrap">&#160;</td>
</tr>
</table>

<div>&#160;</div>

<div>
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 27pt; VERTICAL-ALIGN: top; align: right">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">(1)</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">For these purposes, earnings are defined as income before income taxes and fixed charges, and fixed charges include interest expense and the portion of rental expense which is deemed to represent interest.</div>
</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left"><font style="FONT-SIZE: 5.14pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><br>
</div>

<div>
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr style="VERTICAL-ALIGN: top">
<td style="WIDTH: 27pt; VERTICAL-ALIGN: top; align: right">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">(2)</div>
</td>
<td style="WIDTH: auto; VERTICAL-ALIGN: top; align: left">
<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Earnings were insufficient to cover fixed charges by $42.1 million for the six months ended June 30, 2013 and $71.1 million, $32.7 million, $68.7 million, and $45.6 million for the years ended December 31, 2012, 2011, 2010 and 2008, respectively.</div>
</td>
</tr>
</table>
</div>

<div><br>
</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="UseofProceeds" name="UseofProceeds"></a><a name="UseofProceeds2"><!--Anchor--></a>Use of Proceeds</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Except as described in any applicable prospectus supplement or in any free writing prospectuses we have authorized for use in connection with a specific offering, we currently intend to use the net proceeds from the sale of the securities offered by us hereunder, if any, for working capital and general corporate purposes, including research and development expenses and capital expenditures.</div>

<div style="TEXT-ALIGN: justify"><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The amounts and timing of our use of the net proceeds from this offering will depend on a number of factors, such as the timing and progress of our research and development efforts, the timing and progress of any partnering and commercialization efforts, technological advances and the competitive environment for our products. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of the securities offered by us hereunder. Accordingly, our management will have broad discretion in the timing and application of these proceeds. Pending application of the net proceeds as described above, we intend to temporarily invest the proceeds in short-term, interest-bearing instruments.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: 'Times New Roman', Times, Serif; FONT-SIZE: 8pt" id="DSPFPageNumberArea">6</div>

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<div style="WIDTH: 100%" id="DSPFPageHeader"><a style="FONT-STYLE: italic; FONT-SIZE: 8pt; FONT-WEIGHT: normal" href="#TABLEOFCONTENTS">Table of Contents</a></div>
</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="DescriptionofCapitalStock" name="DescriptionofCapitalStock"></a>Description of Capital Stock</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">As of the date of this prospectus, our certificate of incorporation, as amended, authorizes us to issue 138,666,666 shares of common stock, par value $0.0075 per share, and 1,000,000 shares of preferred stock, par value $0.05 per share. As of September 9, 2013, 92,423,652 shares of common stock were outstanding and no shares of preferred stock were outstanding.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The following summary describes the material terms of our capital stock. The description of capital stock is qualified by reference to our certificate of incorporation and our bylaws.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Common Stock</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Dividends and distributions.</font> &#160; &#160; The holders of our common stock have the right to receive dividends and distributions, whether payable in cash or otherwise, as may be declared from time to time by our board of directors, from legally available funds. &#160;We have not paid cash dividends on the common stock. &#160;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. &#160;The payment of any future cash dividends on the common stock is necessarily dependent upon our earnings and financial needs, along with applicable legal and contractual restrictions.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Voting rights</font>. &#160; &#160;Each holder of our common stock is generally entitled to one vote for each share of common stock owned of record on all matters submitted to a vote of our stockholders. &#160;Except as otherwise required by law, holders of common stock (as well as holders of any preferred stock entitled to vote with the common stockholders) will generally vote together as a single class on all matters presented to the stockholders for their vote or approval, including the election of directors. &#160;Any matter brought before the stockholders for a vote, other than the election of directors, will generally be decided by a majority of the votes cast on the matter, unless the matter is one in which an express provision of the Delaware General Corporation Law, or the DGCL, the certificate of incorporation, the bylaws, the rules or regulations of any stock exchange applicable to us, applicable law or pursuant to any regulation applicable to us or our securities requires a different vote, in which case the express provision will govern and control the decision of the matter. &#160;Directors will be elected by a plurality of the votes cast and entitled to vote generally on the election of directors. &#160;There are no cumulative voting rights with respect to the election of directors or any other matters.</div>

<div style="TEXT-ALIGN: justify"><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">No preemptive or similar rights</font>. &#160; &#160;Holders of our common stock have no redemption rights, conversion rights or preemptive rights to purchase or subscribe for our securities.</div>

<div style="TEXT-ALIGN: justify"><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Right to receive liquidation distributions</font>. &#160; &#160;In the event of our liquidation, dissolution or winding-up, holders of our common stock will be entitled to share equally in the assets available for distribution after payment of all creditors and the liquidation preferences of our preferred stock (if any).</div>

<div style="TEXT-ALIGN: justify"><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Restrictions on transfer</font>. &#160; &#160;Neither our certificate of incorporation nor our bylaws contain any restrictions on the transfer of our common stock. &#160;However, in the case of any transfer of shares, there may be restrictions imposed by applicable securities laws or by the terms of restricted share award grants.</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Other Provisions</font>. &#160; &#160;There are no redemption provisions or sinking fund provisions applicable to our common stock.</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The rights of the holders of our common stock are subject to, and may be adversely affected by, the rights of holders of shares of any preferred stock that we may designate and issue in the future.</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Preferred Stock</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">General. &#160;</font> Under our certificate of incorporation, our board of directors is authorized by resolution to divide the preferred stock into series and, with respect to each series, to determine the designations and the powers, preferences and rights, and the qualifications, limitations and restrictions thereof, including the dividend rights, conversion or exchange rights, voting rights, redemption rights and terms, liquidation preferences, sinking fund provisions and the number of shares constituting the series. &#160;Our board of directors can, without stockholder approval but subject to the terms of the certificate of incorporation and to any resolution of the stockholders approved by at least 75% of all issued shares entitled to vote in respect thereof, issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock and which could have certain anti-takeover effects. &#160;Before we may issue any series of preferred stock, our board of directors will be required to adopt resolutions creating and designating such series of preferred stock.</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The following summary of terms of our preferred stock is not complete. &#160;You should refer to the provisions of our certificate of incorporation and bylaws and the resolutions containing the terms of each class or series of the preferred stock which have been or will be filed with the SEC at or prior to the time of issuance of such class or series of preferred stock and described in the applicable prospectus supplement. &#160;The applicable prospectus supplement may also state that any of the terms set forth herein are inapplicable to such series of preferred stock, 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.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: 'Times New Roman', Times, Serif; FONT-SIZE: 8pt" id="DSPFPageNumberArea">7</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The Series A Preferred Stock. &#160;</font> We have designated 210,000 shares of our preferred stock as Series A Preferred Stock. There are no shares of Series A Preferred Stock issued and outstanding. Pursuant to the rights of the Series A Preferred Stock, subject to the rights of holders of any shares of any series of preferred stock ranking prior and superior, the holders of Series A Preferred Stock 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 Preferred Stock, in an amount per share equal to the greater of (a) U.S.$1.00 or (b) 66 2/3 times the aggregate per share amount of all cash dividends, plus 66 2/3 times the aggregate per share amount of all non-cash dividends or other distributions, other than a dividend payable in common stock, declared on the common stock since the immediately preceding dividend payment date, or, with respect to the first dividend payment date, since the first issuance of Series A Preferred Stock.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition to any other voting rights required by law, holders of Series A Preferred Stock have the right to vote on all matters submitted to a vote of our stockholders with each share of Series A Preferred Stock entitled to 66 2/3 votes. Except as otherwise provided by law, holders of Series A Preferred Stock and holders of common stock generally vote together as one class on all matters submitted to a vote of our stockholders.<a id="eolPage16" name="eolPage16"></a></div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Unless otherwise provided in the rights attaching to a subsequently designated series of our preferred stock, the shares of Series A Preferred Stock rank junior to any other series of preferred stock subsequently issued as to the payment of dividends and distribution of assets on liquidation, dissolution or winding-up and rank senior to the common stock. Upon any liquidation, dissolution or winding-up of us, no distributions shall be made to holders of shares ranking junior to the Series A Preferred Stock unless, prior thereto, the holders of Series A Preferred Stock 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 66 2/3 times the aggregate amount to be distributed per share to holders of common stock or to the holders of shares ranking on parity with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If we enter into any consolidation, amalgamation, merger, combination or other transaction in which shares of common stock are exchanged for or changed into cash, other securities and/or any other property, then any shares of Series A Preferred Stock issued and outstanding shall at the same time be similarly exchanged or changed in an amount per share equal to 66 2/3 times the aggregate amount of cash, securities and/or other property, as the case may be, into which or for which each share of common stock is changed or exchanged.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The Series A Preferred Stock is not redeemable.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Preferred Stock</font>. &#160;We will fix the designations, voting powers, preferences and rights of the preferred stock of each series we issue under this prospectus, as well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to that series. We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock we are offering. We will describe in the applicable prospectus supplement the terms of the series of preferred stock being offered, including, to the extent applicable:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the title and stated value;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the number of shares we are offering;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the liquidation preference per share;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the purchase price;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the dividend rate, period and payment date and method of calculation for dividends;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the procedures for any auction and remarketing;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the provisions for a sinking fund;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any listing of the preferred stock on any securities exchange or market;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether the preferred stock will be convertible into our common stock, and, if applicable, the conversion price, or how it will be calculated, and the conversion period;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated, and the exchange period;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">voting rights of the preferred stock;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">preemptive rights;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">restrictions on transfer, sale or other assignment;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether interests in the preferred stock will be represented by depositary shares;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">a discussion of material United States federal income tax considerations applicable to the preferred stock;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any limitations on the issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If we issue shares of preferred stock under this prospectus, the shares will be fully paid and non-assessable.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The issuance of preferred stock could adversely affect the voting power of holders of common stock and reduce the likelihood that common stockholders will receive dividend payments and payments upon liquidation. The issuance could have the effect of decreasing the market price of the common stock. The issuance of preferred stock also could have the effect of delaying, deterring or preventing a change in control of us.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In September 2012, we issued warrants to purchase 39,346 shares of our common stock to General Electric Capital Corporation in connection with a loan amendment, which are immediately exercisable at an exercise price of $3.54 per share, and have a five year term. As of June 30, 2013, all of these warrants were outstanding.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In March 2012, we issued warrants to purchase 14,834,577 shares of our common stock in connection with an underwritten offering, which are immediately exercisable at an exercise price of $1.76 per share and have a five-year term. &#160;As of June 30, 2013, 13,920,530 of these warrants were outstanding.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In December of 2011, we issued warrants in connection with a debt financing, which entitle the holder to purchase up to an aggregate of 263,158 unregistered shares of our common stock at an exercise price equal to $1.14 per share, are immediately exercisable and will expire on December 30, 2016. &#160;In February of 2010, we issued warrants to purchase 1,260,000 shares of our common stock in connection with an underwritten offering, which are exercisable beginning six months and one day after issuance and have a five-year term and an exercise price of $10.50 per share. &#160;In June of 2009, we issued warrants to certain institutional investors as part of a registered direct offering, which represent the right to acquire an aggregate of up to 347,826 shares of common stock over a five year period beginning December 11, 2009, at an exercise price of $19.50 per share. As of June 30, 2013, all of the warrants issued in December of 2011, February of 2010 and June of 2009 were outstanding.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Anti-Takeover Effects of Our Charter Documents and Some Provisions of Delaware Law</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Certificate of incorporation and bylaws. &#160;</font> Our certificate of incorporation authorizes our board of directors to issue up to 1,000,000 shares of preferred stock without stockholder approval and to set the rights, preferences and other designations, including voting rights, of those shares as the board of directors may determine. &#160;In addition, our bylaws require certain procedures to be followed and time periods to be met for any stockholder to propose matters to be considered at annual meetings of stockholders, including nominating directors for election at those meetings. Our bylaws also provide that our board of directors is able to elect a director to fill a vacancy created by the expansion of the board of directors or due to the resignation or departure of an existing board member. &#160;<font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Provisions of Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company through a tender offer, a proxy contest or other means more difficult and could make the removal of incumbent officers and directors more difficult. We expect these provisions to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with our board of directors. We believe that the benefits provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals. We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement of its terms.</font></div>

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<div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Section 203 of the Delaware General Corporation Law</font>. &#160;We are subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a &#8220;business combination&#8221; with an &#8220;interested stockholder&#8221; for a period of three years following the date the person became an interested stockholder, unless:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">&#160;<font style="FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers, and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or</font></td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66% of the outstanding voting stock which is not owned by the interested stockholder.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Generally, a &#8220;business combination&#8221; includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An &#8220;interested stockholder&#8221; is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation&#8217;s outstanding voting securities. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Transfer Agent and Registrar</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The transfer agent and registrar for our common stock is Wells Fargo Shareowner Services.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Listing on the NASDAQ Global Market</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Our common stock is listed on the NASDAQ Global Market under the symbol &#8220;XOMA.&#8221;</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="DescriptionofDebtSecuriti" name="DescriptionofDebtSecuriti"></a>Description of Debt Securities</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may issue debt securities from time to time, in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. While the terms we have summarized below will apply generally to any debt securities that 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 offered under a prospectus supplement may differ from the terms described below. Unless the context requires otherwise, whenever we refer to the indenture, we also are referring to any supplemental indentures that specify the terms of a particular series of debt securities.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will issue the debt securities under the indenture that we will enter into with the trustee named in the indenture. &#160;The indenture will be qualified under the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act. &#160;We have filed the form of indenture as an exhibit to the registration statement of which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of the 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 that we file with the SEC.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The following summary of material provisions of the debt securities and the indenture is subject to, and qualified in its entirety by reference to, all of the provisions of the indenture applicable to a particular series of debt securities. &#160;We urge you to read the applicable prospectus supplements and any related free writing prospectuses related to the debt securities that we may offer under this prospectus, as well as the complete indenture that contains the terms of the debt securities.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">General</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The indenture does not limit the amount of debt securities that we may issue. It provides that we may issue debt securities up to the principal amount that we may authorize and may be in any currency or currency unit that we may designate. Except for the limitations on consolidation, merger and sale of all or substantially all of our assets contained in the indenture, the terms of the indenture do not contain any covenants or other provisions designed to give holders of any debt securities protection against changes in our operations, financial condition or transactions involving us.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may issue the debt securities issued under the indenture as &#8220;discount securities,&#8221; which means they may be sold at a discount below their stated principal amount. These debt securities, as well as other debt securities that are not issued at a discount, may be issued with &#8220;original issue discount,&#8221; or OID, for U.S. federal income tax purposes because of interest payment and other characteristics or terms of the debt securities. Material U.S. federal income tax considerations applicable to debt securities issued with OID will be described in more detail in any applicable prospectus supplement.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered, including:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the title of the series of debt securities;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any limit upon the aggregate principal amount that may be issued;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the maturity date or dates;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the form of the debt securities of the series;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the applicability of any guarantees;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination thereof, and the terms of any subordination;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if the price (expressed as a percentage of the aggregate principal amount thereof) at which such debt &#160;securities will be issued is a price other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof, or if applicable, the portion of the principal amount of such debt securities that is convertible into another security or the method by which any such portion shall be determined;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the interest rate or rates, 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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">our right, if any, to defer payment of interest and the maximum length of any such deferral period;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if applicable, the date or dates after which, or the period or periods during which, and the price or prices 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 redemption provisions;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the date or dates, if any, on which, and the price or prices at which we are obligated, pursuant to any mandatory sinking fund or analogous fund provisions or otherwise, to redeem, or at the holder&#8217;s option to purchase, the series of debt securities and the currency or currency unit in which the debt securities are payable;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple thereof;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any and all terms, if applicable, relating to any auction or remarketing of the debt securities of that series and any security for our obligations with respect to such debt securities and any other terms which may be advisable in connection with the marketing of debt securities of that series;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether the debt securities of the series shall be issued in whole or in part in the form of a global security or securities; the terms and conditions, if any, upon which such global security or securities may be exchanged in whole or in part for other individual securities; and the depositary for such global security or securities;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if applicable, the provisions relating to conversion or exchange of any debt securities of the series and the terms and conditions upon which such debt securities will be so convertible or exchangeable, including the conversion or exchange price, as applicable, or how it will be calculated and may be adjusted, any mandatory or optional (at our option or the holders&#8217; option) conversion or exchange features, the applicable conversion or exchange period and the manner of settlement for any conversion or exchange;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if other than the full principal amount thereof, the portion of the principal amount of debt securities of the series which shall be payable upon declaration of acceleration of the maturity thereof;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">additions to or changes in the covenants applicable to the particular debt securities being issued, including, among others, the consolidation, merger or sale covenant;</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">additions to or changes in the Events of Default with respect to the securities and any change in the right of the trustee or the holders to declare the principal, premium, if any, and interest, if any, with respect to such securities to be due and payable;</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">additions to or changes in or deletions of the provisions relating to covenant defeasance and legal defeasance;</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">additions to or changes in the provisions relating to satisfaction and discharge of the indenture;</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">additions to or changes in the provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether interest will be payable in cash or additional debt securities at our or the holders&#8217; option and the terms and conditions upon which the election may be made;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the terms and conditions, if any, upon which we will pay amounts in addition to the stated interest, premium, if any and principal amounts of the debt securities of the series to any holder that is not a &#8220;United States person&#8221; for federal tax purposes;</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any restrictions on transfer, sale or assignment of the debt securities of the series; and</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, any other additions or changes in the provisions of the indenture, and any terms that may be required by us or advisable under applicable laws or regulations.</td>
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</table>
</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Conversion or Exchange Rights</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 stock or our other securities. &#160;We will include provisions as to settlement upon conversion or exchange and 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 shares of our common stock or our other securities that the holders of the series of debt securities receive would be subject to adjustment.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Consolidation, Merger or Sale</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indenture will not contain any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of our assets as an entirety or substantially as an entirety. &#160;However, any successor to or acquirer of such assets (other than a subsidiary of ours) must assume all of our obligations under the indenture or the debt securities, as appropriate.</div>

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<div style="WIDTH: 100%" id="DSPFPageHeader"><a style="FONT-STYLE: italic; FONT-SIZE: 8pt; FONT-WEIGHT: normal" href="#TABLEOFCONTENTS">Table of Contents</a></div>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Events of Default Under the Indenture</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events of default under the indenture with respect to any series of debt securities that we may issue:</div>

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<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if we fail to pay any installment of interest on any series of debt securities, as and when the same shall become due and payable, and such default continues for a period of 90 days; provided, however, that a valid extension of an interest payment period by us in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of interest for this purpose;</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if we fail to pay the principal of, or premium, if any, on any series of debt securities as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking or analogous fund established with respect to such series; provided, however, that a valid extension of the maturity of such debt securities in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of principal or premium, if any;</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if we fail to observe or perform any other covenant or agreement contained in the debt securities or the indenture, other than a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive written notice of such failure, requiring the same to be remedied and stating that such is a notice of default thereunder, from the trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable series; and</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<tr>
<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if specified events of bankruptcy, insolvency or reorganization occur.</td>
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</table>
</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 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 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. &#160;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 trustee or any holder.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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. &#160;Any waiver shall cure the default or event of default.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Subject to the terms of the indenture, if an event of default under an indenture shall occur and be continuing, the 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 trustee reasonable indemnity. &#160;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 trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the direction so given by the holder is not in conflict with any law or the applicable indenture; and</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">subject to its duties under the Trust Indenture Act, the 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.</td>
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<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">A holder of the debt securities of any series will have the right to institute a proceeding under the indenture or to appoint a receiver or trustee, or to seek other remedies only if:</div>

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<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the holder has given written notice to the trustee of a continuing event of default with respect to that series;</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request;</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">such holders have offered to the trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred by the trustee in compliance with the request; and</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the 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.</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="WIDTH: 100%" id="DSPFPageHeader"><a style="FONT-STYLE: italic; FONT-SIZE: 8pt; FONT-WEIGHT: normal" href="#TABLEOFCONTENTS">Table of Contents</a></div>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will periodically file statements with the trustee regarding our compliance with specified covenants in the indenture.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Modification of Indenture; Waiver</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We and the trustee may change an indenture without the consent of any holders with respect to specific matters:</div>

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<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to cure any ambiguity, defect or inconsistency in the indenture or in the debt securities of any series;</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
<tr>
<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to comply with the provisions described above under &#8220;Description of Debt Securities&#8212;Consolidation, Merger or Sale;&#8221;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to provide for uncertificated debt securities in addition to or in place of certificated debt securities;</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to add to our covenants, restrictions, conditions or provisions such new covenants, restrictions, conditions or provisions for the benefit of the holders of all or any series of debt securities, 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 surrender any right or power conferred upon us in the indenture;</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to make any change that does not adversely affect the interests of any holder of debt securities of any series in any material respect;</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided above under &#8220;Description of Debt Securities&#8212;General&#8221; 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;</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to evidence and provide for the acceptance of appointment under any indenture by a successor trustee; or</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act.</td>
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<div><br>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In addition, under the indenture, the rights of holders of a series of debt securities may be changed by us and the 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. &#160;However, unless we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, we and the trustee may make the following changes only with the consent of each holder of any outstanding debt securities affected:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">extending the fixed maturity of any debt securities of any series;</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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 series of any debt securities; or</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">reducing the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification or waiver.</td>
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<div><br>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Discharge</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">provide for payment;</td>
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<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">register the transfer or exchange of debt securities of the series;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">replace stolen, lost or mutilated debt securities of the series;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">pay principal of and premium and interest on any debt securities of the series;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">maintain paying agencies;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">hold monies for payment in trust;</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">recover excess money held by the trustee;</td>
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</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">compensate and indemnify the trustee; and</td>
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</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
<table style="WIDTH: 100%; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-SIZE: 10pt" class="DSPFListTable" cellspacing="0" cellpadding="0">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">appoint any successor trustee.</td>
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</div>

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<div id="DSPFPageFooter"></div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: 'Times New Roman', Times, Serif; FONT-SIZE: 8pt" id="DSPFPageNumberArea">14</div>

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<div style="WIDTH: 100%" id="DSPFPageHeader"><a style="FONT-STYLE: italic; FONT-SIZE: 8pt; FONT-WEIGHT: normal" href="#TABLEOFCONTENTS">Table of Contents</a></div>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">In order to exercise our rights to be discharged, we must deposit with the 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.</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Form, Exchange and Transfer</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will issue the debt securities of each series only in fully registered form without coupons and, unless we provide otherwise in the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. &#160;The indenture provides 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 DTC, or another depositary named by us and identified in a prospectus supplement with respect to that series. To the extent the debt securities of a series are issued in global form and as book-entry, a description of terms relating will be set forth in the applicable prospectus supplement.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">At the option of the holder, subject to the terms of the indenture 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.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Subject to the terms of the indenture 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 impose no service charge for any registration of transfer or exchange, but we may require payment of any taxes or other governmental charges.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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. &#160;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.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If we elect to redeem the debt securities of any series, we will not be required to:</div>

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<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">issue, register the transfer of, 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</td>
</tr>
</table>
</div>

<div style="TEXT-ALIGN: left">&#160;</div>

<div style="TEXT-ALIGN: left">
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<td style="WIDTH: 36pt"></td>
<td style="WIDTH: 18pt; FONT-FAMILY: Symbol, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; align: right">&#183;</td>
<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">register the transfer of 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.</td>
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</table>
</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Information Concerning the Trustee</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The 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. &#160;Upon an event of default under an indenture, the 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. &#160;Subject to this provision, the trustee is under no obligation to exercise any of the powers given it by the indenture 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.</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Payment and Paying Agents</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 the applicable prospectus supplement, we will designate the corporate trust office of the trustee 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">All money we pay to a paying agent or the 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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Governing Law</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The indenture 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 is applicable.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="DescriptionofWarrants" name="DescriptionofWarrants"></a>Description of Warrants</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may issue warrants for the purchase of common stock, preferred stock and/or debt securities in one or more series. We may issue warrants independently or together with common stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities. 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. The terms of any warrants offered under a prospectus supplement may differ from the terms described below.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Warrants issued under this prospectus may be issued under warrant agreements which we will enter into with a warrant agent to be selected by us. We use the term &#8220;warrant agreement&#8221; to refer to any of these warrant agreements. We use the term &#8220;warrant agent&#8221; to refer to the warrant agent under any of these warrant agreements. The warrant agent will act solely as an agent of ours in connection with the warrants and will not act as an agent for the holders or beneficial owners of the warrants.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 or free writing prospectus related to the warrants that we sell under this prospectus, as well as the complete warrant agreements that contain the terms of the warrants.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">General</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We will describe in the applicable prospectus supplement the terms of the series of warrants being offered, including, to the extent applicable:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the offering price and aggregate number of warrants offered;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the currency for which the warrants may be purchased;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the date on and after which the warrants and the related securities will be separately transferable;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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, and currency in which, this principal amount of debt securities may be purchased upon such exercise;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, 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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the terms of any rights to redeem or call the warrants;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the dates on which the right to exercise the warrants will commence and expire;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the manner in which the warrant agreements and warrants may be modified;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">a discussion of material United States federal income tax consequences of holding or exercising the warrants;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the terms of the securities issuable upon exercise of the warrants; and</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any other specific terms, preferences, rights or limitations of or restrictions on the warrants.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Before exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any.</td>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Exercise of Warrants</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 the specified 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Holders of the warrants may exercise the warrants by delivering the warrant or warrant certificate representing the warrants to be exercised together with specified information, and paying the required amount to the warrant agent, if applicable, in immediately available funds, as provided in the applicable prospectus supplement. We will set forth on the reverse side of any warrant certificate and in the applicable prospectus supplement the information that the holder of the warrant will be required to deliver to any warrant agent.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Upon receipt of the required payment and any warrant certificate properly completed and duly executed at the corporate trust office of any 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 a 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 as all or part of the exercise price for warrants.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Governing Law</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Unless we provide otherwise in the applicable prospectus supplement, the warrants and warrant agreements will be governed by and construed in accordance with the laws of the State of New York.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Enforceability of Rights by Holders of Warrants</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Any 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 any 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.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="LegalOwnershipofSecuritie" name="LegalOwnershipofSecuritie"></a>Legal Ownership of Securities</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 &#8220;holders&#8221; 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 &#8220;indirect holders&#8221; 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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Book-Entry Holders</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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&#8217;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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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&#8217;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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Street Name Holders</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 &#8220;street name.&#8221; 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Legal Holders</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Special Considerations for Indirect Holders</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">how it handles securities payments and notices;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">whether it imposes fees or charges;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">how it would handle a request for the holders&#8217; consent, if ever required;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if the securities are in book-entry form, how the depositary&#8217;s rules and procedures will affect these matters.</td>
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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Global Securities</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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, DTC will be the depositary for all securities issued in book-entry form.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 &#8220;Special Situations When a Global Security Will Be Terminated.&#8221; 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Special Considerations for Global Securities</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The rights of an indirect holder relating to a global security will be governed by the account rules of the investor&#8217;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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">If securities are issued only in the form of a global security, an investor should be aware of the following:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">an investor will be an indirect holder and must look to his or her own bank, broker or other financial institution for payments on the securities and protection of his or her legal rights relating to the securities, as we describe above;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the depositary&#8217;s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor&#8217;s interest in a global security;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">we and any applicable trustee have no responsibility for any aspect of the depositary&#8217;s actions or for its records of ownership interests in a global security, nor do we or any applicable trustee supervise the depositary in any way;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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 bank, broker or other financial institution may require you to do so as well; and</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">financial institutions that participate in the depositary&#8217;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.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Special Situations When a Global Security Will Be Terminated</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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, brokers or other financial institutions 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Unless we provide otherwise in the applicable prospectus supplement, the global security will terminate when the following special situations occur:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">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;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if we notify any applicable trustee that we wish to terminate that global security; or</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">if an event of default has occurred with regard to securities represented by that global security and has not been cured or waived.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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 applicable 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.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="PlanofDistribution" name="PlanofDistribution"></a>Plan of Distribution</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may sell our securities covered by this prospectus in any of three ways (or in any combination):</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">to or through underwriters or dealers;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">directly to one or more purchasers; or</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">through agents.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may distribute the securities:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">from time to time in one or more transactions at a fixed price or prices, which may be changed from time to time;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">at market prices prevailing at the time of sale;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">at prices related to the prevailing market prices; or</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">at negotiated prices.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Each time we offer and sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe the method of distribution and set forth the terms of the offering, including:</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the name or names of any underwriters, dealers or agents;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the amounts of securities underwritten or purchased by each of them;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the purchase price of securities and the proceeds we will receive from the sale;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any over-allotment options under which underwriters may purchase additional securities from us;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any underwriting discounts or commissions or agency fees and other items constituting underwriters&#8217; or agents&#8217; compensation;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the public offering price of the securities;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any discounts, commissions or concessions allowed or reallowed or paid to dealers; and</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">any securities exchange or market on which the securities may be listed.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. We may determine the price or other terms of the securities offered under this prospectus by use of an electronic auction. We will describe how any auction will determine the price or any other terms, how potential investors may participate in the auction and the nature of the obligations of the underwriter, dealer or agent in the applicable prospectus supplement.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Underwriters or dealers may offer and sell the offered securities from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. If underwriters or dealers are used in the sale of any securities, the securities will be acquired by the underwriters or dealers for their own account and may be resold from time to time in one or more transactions described above. The securities may be either offered to the public through underwriting syndicates represented by managing underwriters, or directly by underwriters or dealers. Generally, the underwriters&#8217; or dealers&#8217; obligations to purchase the securities will be subject to certain conditions precedent. The underwriters or dealers will be obligated to purchase all of the securities if they purchase any of the securities, unless otherwise specified in the prospectus supplement. We may use underwriters with whom we have a material relationship. We will describe the nature of any such relationship in the prospectus supplement, naming the underwriter.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We may sell the securities through agents from time to time. The prospectus supplement will name any agent involved in the offer or sale of the securities and any commissions we pay to them. Generally, any agent will be acting on a best efforts basis for the period of its appointment. We may authorize underwriters, dealers or agents to solicit offers by certain purchasers to purchase the 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. The contracts will be subject only to those conditions set forth in the prospectus supplement, and the prospectus supplement will set forth any commissions we pay for solicitation of these contracts.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Agents, dealers and underwriters may be entitled to indemnification by us against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the agents, dealers or underwriters may be required to make in respect thereof. Agents, dealers and underwriters may be customers of, engage in transactions with, or perform services for us in the ordinary course of business.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">All securities we may offer, other than common stock, 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt"><a id="OLE_LINK1" name="OLE_LINK1"></a><a id="OLE_LINK2" name="OLE_LINK2"></a>Any underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934, as amended. Overallotment involves sales in excess of the offering size, which create a short position. This short sales position may involve either &#8220;covered&#8221; short sales or &#8220;naked&#8221; short sales. Covered short sales are short sales made in an amount not greater than the underwriters&#8217; over-allotment option to purchase additional securities in this offering described above. The underwriters may close out any covered short position either by exercising their over-allotment option or by purchasing securities in the open market. To determine how they will close the covered short position, the underwriters will consider, among other things, the price of securities available for purchase in the open market, as compared to the price at which they may purchase securities through the over-allotment option. Naked short sales are short sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing securities in the open market. A naked short position is more likely to be created if the underwriters are concerned that, in the open market after pricing, there may be downward pressure on the price of the securities that could adversely affect investors who purchase securities in this offering. Stabilizing transactions permit bids to purchase the underlying security for the purpose of fixing the price of the security so long as the stabilizing bids do not exceed a specified maximum. 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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Any underwriters who are qualified market makers on the NASDAQ Global Market may engage in passive market making transactions in our common stock, preferred stock, warrants and debt securities, as applicable, 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&#8217;s bid, however, the passive market maker&#8217;s bid must then be lowered when certain purchase limits are exceeded.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">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.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Similar to other purchase transactions, an underwriter&#8217;s purchase to cover the syndicate short sales or to stabilize the market price of our securities may have the effect of raising or maintaining the market price of our securities or preventing or mitigating a decline in the market price of our securities. As a result, the price of our securities may be higher than the price that might otherwise exist in the open market. The imposition of a penalty bid might also have an effect on the price of the securities if it discourages resales of the securities.</div>

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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the securities. If such transactions are commenced, they may be discontinued without notice at any time.</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="LegalMatters" name="LegalMatters"></a><a name="LegalMatters2"><!--Anchor--></a>Legal Matters</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The validity of the securities being offered hereby will be passed upon for us by Cooley LLP, Palo Alto, California.</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="Experts" name="Experts"></a><a name="Experts2"><!--Anchor--></a>Experts</div>

<div><br>
</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Ernst &amp; 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, 2012, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst &amp; Young LLP&#8217;s report, given on their authority as experts in accounting and auditing.</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="WhereYouCanFindMoreInform" name="WhereYouCanFindMoreInform"></a><a name="WhereYouCanFindMoreInfor2"><!--Anchor--></a>Where You Can Find More Information</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC at the SEC&#8217;s public reference room at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1.800.SEC.0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public at the SEC&#8217;s website at http://www.sec.gov.</div>

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<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a id="IncorporationofCertainInf" name="IncorporationofCertainInf"></a><a name="IncorporationofCertainIn2"><!--Anchor--></a>Incorporation of Certain Information by Reference</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 34.55pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">The SEC allows us to &#8220;incorporate by reference&#8221; the information we file with it, which means that we can disclose important information to you by referring you to those documents instead of having to repeat the information in this prospectus. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings (including those made after the date of the initial filing of the registration statement of which this prospectus is a part and prior to the effectiveness of such registration statement) we will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the termination of the offering of the shares covered by this prospectus (other than information furnished under Item 2.02 or Item 7.01 of Form 8-K):</div>

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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">our annual report on Form 10-K for the year ended December 31, 2012, filed with the SEC on March 12, 2013, including the information specifically incorporated by reference therein from our definitive proxy statement on Schedule 14A, filed on April 11, 2013;</td>
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<td style="TEXT-ALIGN: left; WIDTH: auto; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: top">the description of our capital stock included under the caption &#8220;Description of Capital Stock&#8221; in the prospectus dated December 16, 2011, which was filed on December 19, 2011, and is part of our registration statement on Form S-4/A filed on December 13, 2011 (registration no. 333-177165), including any amendment or report for the purpose of updating such description.</td>
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<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt">You can request a copy of these filings, at no cost, by writing or telephoning us at the following address or telephone number:</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt">&#160;</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">XOMA Corporation</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">2910 Seventh Street</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Berkeley, California 94710</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">(510) 204-7200</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">Attn: Chief Financial Officer</div>

<div style="TEXT-ALIGN: center; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">&#160;</div>

<div style="TEXT-ALIGN: left; TEXT-INDENT: 36.7pt; FONT-FAMILY: ''Times New Roman'', Times, serif; FONT-SIZE: 10pt">This prospectus is part of a registration statement we filed with the SEC. That registration statement and the exhibits filed along with the registration statement contain more information about us and the shares in this offering. Because information about documents referred to in this prospectus is not always complete, you should read the full documents which are filed as exhibits to the registration statement. You may read and copy the full registration statement and its exhibits at the SEC&#8217;s public reference rooms or its website.</div>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
