XOMA CORPORATION
EMPLOYMENT AGREEMENT
with
XXXX X. XXXXXXXX
Berkeley, California
THIS AGREEMENT is made as of the 29th day of April, 1992 by and between XOMA
CORPORATION, a Delaware Corporation (the "Corporation"), and Xxxx X. Xxxxxxxx,
employee ("Employee").
1. Employment. On the terms and conditions set forth herein, Corporation
hereby employs Employee, and Employee hereby accepts such employment. While
employed hereunder, Employee shall devote all of the Employee's best efforts and
attention to the business and affairs of the Corporation; however, Employee may
continue to be a member of the Board of Directors of Alpha Therapeutics
Corporation, IBA, PMA, and serve on other such boards as Employee and the
Corporation may jointly agree, as well as Employee may continue to act under his
Consultancy Agreement of August 1, 1991 with Ares-Serono, Inc.
2. Compensation. (i) Employee's rate of compensation shall be as set forth
on Exhibit I attached hereto and incorporated herein and shall be payable in
equal, semi-monthly installments on the fifteenth and the last day of each month
unless otherwise agreed by the parties; (ii) Employee shall be reimbursed for
reasonable out-of-pocket expenses incurred by Employee in performing services
for the Corporation upon such terms and conditions as may be established from
time to time by the Corporation.
3. Proprietary Rights. Prior to, or coincidental with, the execution of
this Agreement, Employee has or will execute and deliver to the Corporation an
agreement in form and substance as set forth in Exhibit II attached hereto and
incorporated herein.
4. Conflicts and Non-Competition. Notwithstanding any provisions of the
Agreement, including specifically those set forth in paragraphs 1 and 3
hereinabove, while employed hereunder by Corporation, Employee will not,
directly or indirectly, engage in any other activity involving a conflict of
interest between Employee or any third party and Corporation or in any other
occupation, employment, consultation or other activity in competition with the
business, developments, products, work or activities of the Corporation.
5. Other Provisions. Any Additional Provisions relating to Employee's
employment hereunder are set forth in Exhibit I hereto.
XOMA CORPORATION
EMPLOYMENT AGREEMENT
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
7. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
8. Successors and Assigns. Except as otherwise expressly provided in this
Agreement, the provisions hereof shall inure to the benefit of the successors
and assigns of the Corporation. Employee shall not assign any rights or delegate
any obligations hereunder without the prior written consent of Corporation. The
Corporation may transfer its rights hereunder to any other person or entity.
9. Termination of At-Will Employment. It is understood that Employee's
employment is not for a specified term and that it may be terminated, with or
without cause, and with or without notice, at any time at the will of either
Employee or the CORPORATION irrespective of any statements to the contrary
appearing anywhere in the CORPORATION's publications. It is also understood that
no agreement contrary to the foregoing has been made by or between the
Corporation and Employee.
10. Entire Agreement. The terms of this Agreement, together with those set
forth in Exhibit I hereto and Appendix A thereto, are intended by the parties to
be the final expression of their agreement with respect to the employment of
Employee by the Corporation and may not be contradicted by evidence of any prior
or contemporaneous agreement. The parties further intend that this Agreement
shall constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
11. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Employee and by a
duly authorized representative of the Corporation other than Employee. By an
instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was
or is obligated to comply with or perform, provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right,
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XOMA CORPORATION
EMPLOYMENT AGREEMENT
remedy, or power hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, or power provided herein or by law or in
equity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
XOMA CORPORATION EMPLOYEE
By: /s/Xxxxxx X. Xxxxxxx /s/Xxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx Xxxx X. Xxxxxxxx
Title: Chairman of the Board
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XOMA CORPORATION
EMPLOYMENT AGREEMENT - ADDITIONAL PROVISIONS
EXHIBIT I
EMPLOYEE: XXXX X. XXXXXXXX
1. Rate of Compensation:
The salary of Employee will be $500,000 per year and will be paid to
Employee in equal payments semi-monthly on the 15th and last day of each month.
All performance reviews of Employee will be by the Board of Directors of the
Company.
2. Employee Benefits:
Employee will be entitled to all XOMA employee benefits, which shall
include:
(a) Xoma's standard insurance benefits;
(b) In addition to the foregoing:
i. Life Insurance. Xoma will provide Employee with supplemental
life insurance for the amount that an annual premium of $18,000
provides.
ii. Tax and Financial Planning. Xoma will provide to Employee
annually for the Employee's retention of attorneys, accountants and/or
financial consultants of Employee's own choosing for the Employee's
personal tax and financial planning, at an annual cost to Xoma not to
exceed $7,000.
3. Relocation:
It will be necessary for Employee to relocate to the greater Berkeley,
California area, and the Corporation will provide reimbursement for all
necessary and reasonable costs including but not limited to the actual cost of
the movement of Employee's goods, packing, insuring and so forth; real estate
brokers and related fees; and costs of Employee for acquiring a mortgage on a
new principal residence. All of these costs will be grossed up for federal and
state income tax purposes. For this purpose, "grossed up" means that in the case
of a reimbursed expense that is taxable to Employee and is not deductible for
one or both of federal and state income tax purposes, Employee will be paid an
amount which, after taxes on such amount, will equal the amount of the
non-deductible reimbursable expenses. Appropriate temporary housing, if
required, will be provided to Employee at no additional out-of-
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pocket expense for a period of up to six (6) months after commencement of
employment. The relocation benefits shall be in effect for a period of one year
after the commencement of employment.
4. Vacation:
Employee will be granted an annual vacation in the amount of four (4)
weeks, with full pay commencing for the first year of employment; that is,
Employee shall be entitled to take four (4) weeks vacation during the first year
of employment.
5. Stock Option:
As an inducement to Employee to enter into the employment of the
Corporation, an option has been granted to Employee in accordance with the
now-in-force option plan in the amount of 500,000 shares of the common stock of
the Corporation. Such option shall be in accordance with such option plan, and
shall be in accordance with the currently existing form of Stock Option
Agreement under the Xoma Corporation 1981 Stock Option Plan, as amended, a copy
of which is attached hereto as Appendix A.
6. Additional Capacities, President and Chief Executive Officer:
Employee is required to assume the responsibilities of President and Chief
Executive Officer and member of the Board of Directors of the Corporation with
all the rights and privileges typically associated with this type of role. As
the President and Chief Executive Officer, Employee will report to the Board of
Directors of the Corporation. As such President and Chief Executive Officer,
Employee will be responsible for conducting the day-to-day affairs of the
Corporation, interpreting and applying the policies and direction of the Board
of Directors, making and applying supplemental applications and guidelines,
building and controlling the operations of the Corporation, executing the
corporate strategy, and practicing diligent management. Commensurate with the
by-laws of the Corporation and policies of the Board of Directors, Employee will
have sufficient authority to accomplish all of the above-mentioned
responsibilities.
Employee shall use his best efforts in directing the business of the
Corporation with the objective of providing maximum profit and return on
invested capital and assuring the development, manufacture and marketing of only
safe and efficacious products; establishing current and long-range objectives,
plans and policies subject to the approval of the Board of Directors; and
representing the Corporation with its major governmental authorities that have
any control over the Corporation or its products, its major customers, the
financial community and the public.
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7. Business Expense Reimbursement, and Perquisites:
During the term of his employment hereunder, Employee shall be entitled to
receive proper reimbursement for all reasonable out-of-pocket expenses incurred
by him (in accordance with the policies and procedures established by the
Corporation for its senior executive officers) in performing services hereunder,
provided Employee properly accounts therefor. Employee shall have the privilege
at his option to fly commercially on a class of service chosen by Employee.
Employee will be required at Corporation expense to take an annual physical
examination by a physician of his own choice acceptable to the Corporation, and
a report of any material health problems shall be rendered to the Board.
8. Early Termination Obligation of the Corporation:
While this Employment Agreement provides for termination of at-will
employment of the Employee, as part of the inducement and offer to Employee to
enter into employment with the Corporation, should the Corporation terminate the
services of Employee as an Employee of the Corporation for any reason other than
for "Due Cause" (as that term is defined hereinbelow), the Corporation shall pay
Employee's base level salary in effect at the time of any such termination for
one year thereafter. Such termination other than for Due Cause shall include
termination by the Employee for "Good Reason" (as that therm is defined
hereinbelow), in which event the Corporation shall be obligated to pay such
one-year salary.
9. Consequence of Termination of Employment:
9.1 Death. In the event of the death of the Employee during the term of
this Agreement, his salary shall cease at the end of the month in which death
occurs and all unpaid amounts, shall be paid to the Employee's designated
beneficiary, or in the absence of such designation to the estate or other legal
representative of the Employee at the time of death. Other death benefits will
be determined in accordance with the terms of the Corporation's benefit programs
and plans.
9.2 Disability. In the event of the Employee's permanent disability, the
Employee shall be entitled to his salary for a period of one (1) year after such
disability commences and other benefits as determined in accordance with the
terms of the Corporation's benefit programs and plans.
Notwithstanding anything in this Agreement to the contrary, the Corporation
is hereby given the option to terminate the Employee's employment in the event
that the Employee shall, during the term hereof, become permanently disabled as
the term permanently disabled is hereinafter defined. Such option shall be
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exercised by the Corporation giving notice to Employee by certified mail of the
Corporation's intention to terminate his employment due to permanent disability
on the last day of the month during which such notice is mailed.
For purposes of this Agreement, Employee shall be deemed to have become
permanently disabled, if, during the term hereof, because of physical or mental
disability he becomes unable or shall have been unable to perform his duties
hereunder (a) for 120 consecutive days, or (b) for 180 days (irrespective of
whether such days are consecutive) occurring during any period of 365
consecutive days.
During a period in which the one-year salary payments are being made
pursuant to the first paragraph of this Section 9.2, the Employee will undergo
reasonable periodic medical examinations to confirm the continuation of his
disability. Such medical examinations will be conducted by a medical doctor
chosen by the parties. If the parties cannot agree on such a doctor, they each
shall select a medical doctor and the two doctors shall select a third medical
doctor for this purpose. In the event that the Corporation has terminated
Employee because of permanent disability notwithstanding a determination by a
medical doctor, chosen as described in the preceding sentence, that Employee is
no longer subject to a permanent disability as defined in this Section 9.2,
Employee will continue to be entitled to receive the one-year salary payments as
herein set forth, provided that, following such determination, he makes a
continuing reasonable effort to find employment at such time commensurate with
his abilities, experience, and background.
9.3 Termination by the Corporation for Due Cause. Nothing herein shall
prevent the Corporation from terminating Employee's employment for Due Cause.
Employee shall continue to receive salary for the period ending with the date of
such termination as provided in this Section 9.3. Any rights and benefits he may
have in respect of any other compensation or employee benefit plans or programs
of the Corporation shall be determined in accordance with the terms of such
other compensation arrangements or such other plans or programs.
The term "Due Cause", as used herein, shall mean that (a) the Employee has
committed a willful, serious act, such as embezzlement, against the Corporation
intending to enrich himself at the expense of the Corporation or (b) the
Employee, in carrying out his duties hereunder, has been guilty of willful,
gross negligence (including competition as defined in Section 13, resulting in
either case in material harm to the Corporation (this provision shall not apply
to any particular instance which is merely the result of any good faith error in
judgment), (c) the willful and continued failure by Employee to substantially
perform his duties with the Corporation (other than any such failure
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resulting from Employee's incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to Employee by the Board which
specifically identifies the manner in which the Board believes that Employee has
not substantially performed his duties, or (d) the willful engaging by Employee
in gross misconduct materially and demonstrably injurious to the Corporation.
For purposes of this paragraph, no act, or failure to act, on Employee's part
shall be considered "willful" unless done, or omitted to be done, by Employee,
not in good faith and without reasonable belief that Employee's action or
omission was in the best interest of the Corporation.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated for Due Cause unless and until there shall have been delivered to him
a copy of a resolution duly adopted by the affirmative vote of a majority of the
entire membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to Employee and an opportunity for Employee,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board Employee was guilty of conduct set forth above
and specifying the particulars thereof in detail.
9.4 Termination by Corporation Other than for Due Cause. The foregoing
notwithstanding, the Corporation may terminate the Employee's employment for
whatever reason it deems appropriate, provided, however, that in the event such
termination is not due to permanent disability as provided in Section 9.2, or
based on Due Cause as provided in Section 9.3, the Employee will continue to
receive his salary as provided in Section 8 for the term of one year from the
date of such termination. During the period of salary continuation hereunder the
Employee will be entitled to continued benefit coverage and benefit credits as
provided in Section 6 hereof or the economic equivalent. Any such benefit
coverage, or economic equivalent thereto, will be offset by comparable coverage
provided to the Employee in connection with any subsequent employment.
9.5 Termination by the Employee for Good Reason. Employee may terminate his
employment under this Agreement for Good Reason in which event the Corporation
shall still have the same obligations to Employee under this Agreement as
provided for in Section 9.4.
9.5.1 "Good Reason" shall mean:
(a) Without Employee's express written consent, the assignment
to Employee of any duties inconsistent with his positions, duties,
responsibilities and status with the Corporation immediately prior to a
Change in Control, as hereinafter defined, or a change in his reporting
responsibilities, title or offices as in effect immediately
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prior to a change in control, or any removal of Employee from or any
failure to re-elect him to any of such positions, except in connection
with the termination of his employment for Due Cause, Disability or
Retirement or as a result of his death or by Employee other than for
Good Reason;
(b) A reduction in Employee's base salary or benefits or a
breach of the Corporation's obligations undertaken in this Agreement;
(c) In the event of the occurrence of a Change in Control,
this Agreement may be terminated by Employee only upon the occurrence
thereafter of one or more of the following events:
i. Any termination by the Corporation of the
Employment of Employee within three (3) years after a Change
in Control and prior to the date upon which Employee shall
have attained age 65, which termination shall be for any
reason other than for Due Cause or as a result of the death of
Employee or by reason of Employee's disability and the actual
receipt of disability benefits as provided in Section 9.2
hereof; or
ii. Termination by Employee of his employment with
the Corporation within three (3) years after a Change in
Control and upon the occurrence of any of the following
events:
(A) Failure to elect or re-elect Employee,
or removal of Employee, as a director of the
Corporation (or any successor thereto), if Employee
shall have been a director of the Corporation
immediately prior to the Change in Control, or the
office of the Corporation which Employee held
immediately prior to a Change in Control;
(B) A significant adverse change in the
nature or scope of the authorities, powers,
functions, responsibilities or duties attached to the
position with the Corporation which Employee had
immediately prior to the Change in Control, a
reduction in the aggregate of Employee's Base Pay and
Incentive Pay received from the Corporation, or the
termination of Employee's rights to any Employee
Benefit to which he was entitled immediately prior to
the Change in Control or a reduction in scope or
value thereof without the prior written consent of
Employee, any of which is not remedied within ten
(10) calendar days after receipt by the Corporation
of written notice from
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Employee of such change, reduction or termination,
as the case may be;
(C) A determination by Employee made in good
faith that as a result of a Change in Control and a
change in circumstances thereafter significantly
affecting his position, he has been rendered
substantially unable to carry out, or has been
substantially hindered in the performance of, any of
the authorities, powers, functions, responsibilities
or duties attached to his position immediately prior
to the Change in Control, which situation is not
remedied within ten (10) calendar days after receipt
by the Corporation of written notice from Employee of
such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of the Corporation or
transfer of all or a significant portion of its
business and/or assets unless the successor or
successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Corporation under this Agreement; or
(E) The Corporation shall relocate its
principal executive offices or require Employee to
have as his principal location of work any location
which is in excess of 100 miles from the location
thereof immediately prior to the Termination Date or
to travel away from his office in the course of
discharging his responsibilities or duties hereunder
more than thirty (30) consecutive calendar days or an
aggregate of more than sixty (60) calendar days in
any consecutive 365-calendar day period without in
either case his prior consent.
(d) Subsequent to a change in control of the Corporation, the
failure by the Corporation to obtain the assumption of the obligation
to perform this Agreement by any successor; or:
(e) Subsequent to a change in control of the Corporation, any
purported termination of Employee's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of
Section 9.7 hereof.
9.5.2 Change in Control. For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time
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during the term (as that term is hereafter defined), any of the following events
shall occur:
i. The Corporation is merged, or consolidated, or reorganized
into or with another corporation or other legal person, and as a result
of such merger, consolidation or reorganization less than 51% of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in
the aggregate by the holders of voting securities of the Corporation
immediately prior to such transaction;
ii. The Corporation sells all or substantially all of its
assets to any other corporation or other legal person and thereafter,
less than 51% of the combined voting power of the then-outstanding
voting securities of the acquiring or consolidated entity, which are
held in the aggregate by the holders of voting securities of the
Corporation immediately prior to such sale;
iii. There is a report filed after the date of this Agreement
on Schedule 13 D or Schedule 14 D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the Securities Exchange Act of
1934 (the "Exchange Act") disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13 d-3 or any successor rule or regulation
promulgated under the Exchange Act) representing 25% or more of the
combined voting power of the then-outstanding voting securities of the
Corporation;
iv. The Corporation shall file a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Item 1 of Form 8-K thereunder or Item
5(f) of Schedule 14 A thereunder (or any successor schedule, form or
report or item therein) that the change in control of the Corporation
has or may have occurred or will or may occur in the future pursuant to
any then-existing contract or transaction; or
v. During any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of the
Corporation cease for any reason to constitute at least a majority
thereof unless the election or the nomination for election by the
Corporation's shareholders of each director of the Corporation first
elected during such period was approved by a vote of at least
two-thirds of the directors of the Corporation then still in office who
were directors of the Corporation at the beginning of such period.
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9.6 Termination by Employee by Voluntary Resignation. Employee may
terminate this Agreement upon ninety (90) days notice to the Corporation, in
which event the Corporation shall be obligated to pay him his total remuneration
and other benefits up to the date of termination only.
9.7 Notice of Termination. Any Notice of Termination by the Corporation
pursuant to Section 9.4 or by Employee pursuant to Section 9.5 or 9.6 shall be
communicated by written Notice of Termination to the other party hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the provision so
indicated.
9.8 Date of Termination. "Date of Termination" shall mean:
(a) If Employee's employment is terminated pursuant to Section 9.5 or
9.6, the date specified in the Notice of Termination, and
(b) if Employee's employment is terminated for any other reason, the
date on which a Notice of Termination is given;
10. Legal Expenses:
In the event that Employee incurs legal expenses in contesting any
provision of this Agreement and such contest results in a determination that the
Corporation has breached any of its obligations hereunder, Employee shall be
reimbursed by the Corporation for such legal expenses.
Agreed:
XOMA CORPORATION EMPLOYEE
By: /s/Xxxxxx X. Xxxxxxx /s/Xxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx Xxxx X. Xxxxxxxx
Title: Chairman of the Board
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