ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

As previously announced, on May 15, 2009 XOMA Ltd. (the "Company") entered into a definitive agreement with two institutional investors to sell 11,764,706 units, with each unit consisting of one of the Company's common shares and a warrant to purchase 0.50 of a common share, for gross proceeds of approximately $10 million, before deducting placement agent fees and estimated offering expenses, in a "registered direct" offering. The investor has agreed to purchase the units at a purchase price of $0.85 per unit. The warrants, which represent the right to acquire an aggregate of up to 5,882,353 common shares, will be exercisable at any time on or after the closing and prior to the fifth anniversary of the closing of the transaction at an exercise price of $1.02 per share. Canaccord Adams Inc. and Wedbush Morgan Securities, Inc. acted as placement agents for the offering. The terms of the offering are summarized in the Company's press release dated May 15, 2009, a copy of which is attached as Exhibit 99.1 and incorporated by reference herein. This summary of the terms is qualified in its entirety by the text of the Securities Purchase Agreement, Form of Warrant and the Engagement Letter, copies of which are attached as Exhibits 10.1, 10.2 and 10.3.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits. Exhibit Number Description 10.1 Securities Purchase Agreement dated May 15, 2009 10.2 Form of Warrant 10.3 Engagement Letter dated May 15, 2009 99.1 Press Release dated May 15, 2009.

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