FORM OF XOMA LTD. CHANGE OF CONTROL SEVERANCE AGREEMENT
Exhibit
10.2
XOMA
LTD.
This
Change of Control Severance Agreement (the “Agreement”) is made and entered into
effective as of _______, 2006 (the “Effective Date”), by and between ___________
(the “Employee”) and XOMA Ltd., a Bermuda company (the “Company”).
R
E C I
T A L S
A. It
is
expected that the Company may from time to time consider the possibility of
a
Change of Control (as hereinafter defined). The Board of Directors of the
Company (the “Board”) recognizes that such consideration could be a distraction
to the Employee and could cause the Employee to consider alternative employment
opportunities.
B. The
Board
believes that it is in the best interest of the Company and its shareholders
to
provide the Employee with an incentive to continue the Employee’s employment and
to maximize the value of the Company upon a Change of Control for the benefit
of
its shareholders.
C. In
order
to provide the Employee with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of
a
Change of Control, the Board believes that it is imperative to provide the
Employee with certain severance benefits upon the Employee’s termination of
employment following a Change of Control.
D. XOMA
(US)
LLC, a wholly-owned subsidiary of the Company, and the Employee have previously
entered into an employment agreement effective as of _______, 2006 (the
“Existing Agreement”), which provides the Employee with certain severance
benefits upon the Employee’s termination of employment.
E. The
parties intend that this Agreement shall operate in addition to, and not in
replacement of, the Existing Agreement.
AGREEMENT
In
consideration of the mutual covenants herein contained and the continued
employment of the Employee by the Company, the parties agree as
follows:
1. Definition
of Terms.
The
following terms referred to in this Agreement shall have the following
meanings:
(a) “Cause”
shall mean (i) the Employee has been convicted of any crime or offense
constituting a felony under applicable law, including, without limitation,
any
act of dishonesty such as embezzlement, theft or larceny, (ii) the Employee
has acted or refrained from
acting
in
respect of any of the duties and responsibilities which have been assigned
to
her/him in accordance with this Agreement or the Existing Agreement and shall
fail to desist from such action or inaction within thirty (30) days after the
Employee’s receipt of notice from the Company of such action or inaction and the
Board determines that such action or inaction constituted gross negligence
or a
willful act of malfeasance or misfeasance of the Employee in respect of such
duties, or (iii) the Employee has breached any material term of this
Agreement or the Existing Agreement and shall fail to correct such breach within
thirty (30) days after the Employee’s receipt of notice from the Company of such
breach.
(b) “Change
of
Control” shall mean the occurrence of any of the following events:
(i) a
merger,
amalgamation or acquisition in which the Company is not the surviving or
continuing entity, except for a transaction the principal purpose of which
is to
change the jurisdiction of the Company’s organization;
(ii) the
sale,
transfer or other disposition of all or substantially all of the assets of
the
Company;
(iii) any
other
reorganization or business combination in which fifty percent (50%) or more
of
the Company’s outstanding voting securities are transferred to different holders
in a single transaction or series of related transactions;
(iv) any
approval by the shareholders of the Company of a plan of complete liquidation
of
the Company;
(v) any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
total voting power represented by the Company’s then outstanding voting
securities; or
(vi) a
change
in the composition of the Board, as a result of which fewer than a majority
of
the directors are Incumbent Directors. “Incumbent Directors” shall mean
directors who (A) are directors of the Company as of the date hereof, (B)
are elected, or nominated for election, to the Board with the affirmative votes
of the directors of the Company as of the date hereof, or (C) are elected,
or nominated for election, to the Board with the affirmative votes of at least
a
majority of those directors whose election or nomination was not in connection
with any transaction described in subsections (i) through (v) or in
connection with an actual or threatened proxy contest relating to the election
of directors of the Company.
(c) “Change
of
Control Protection Period” shall mean the period commencing one (1) month prior
to the execution of the definitive agreement for a Change of Control and
eighteen (18) months following the closing of a Change of Control.
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(d) “Compensation
Continuation Period” shall mean the period of time commencing with termination
of the Employee’s employment as a result of Involuntary Termination at any time
within a Change of Control Protection Period and ending with the date ______
months following the date of the Employee’s Involuntary
Termination.
(e) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(f) “Involuntary
Termination” shall mean (i) the failure of a successor or an acquiring
company to offer the Employee the position held by Employee on the date of
this
Agreement (or, if higher, a subsequent position of the Employee) with the
successor or acquiring company following a Change of Control; (ii) without
the Employee’s express written consent, a substantial reduction, without good
business reasons, of the rights, privileges and perquisites available to the
Employee immediately prior to such reduction; (iii) without the Employee’s
express written consent, a material diminution in the authority,
responsibilities, duties or reporting lines held or possessed by the Employee
prior to the Change of Control; (iv) without the Employee’s express written
consent, a reduction by the Company of the Employee’s base salary or target
bonus as in effect immediately prior to such reduction; (v) without the
Employee’s express written consent, a material reduction by the Company in the
kind or level of employee benefits to which the Employee is entitled immediately
prior to such reduction with the result that the Employee’s overall benefits
package is significantly reduced; (vi) without the Employee’s express
written consent, the relocation of the regular offices of the Employee to a
facility or a location more than thirty (30) miles further from the Employee’s
current location (unless such new facility or location is closer to the
Employee’s residence); (vii) any purported termination of the Employee by
the Company which is not effected for Cause or for which the grounds relied
upon
are not valid; or (viii) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section 7
below.
2. Term
of
Agreement.
This
Agreement shall terminate upon the date that all obligations of the parties
hereto under this Agreement have been satisfied or, if earlier, on the date,
prior to a Change of Control Protection Period, the Employee is no longer
employed by the Company.
3. At-Will
Employment.
The
Company and the Employee acknowledge that the Employee’s employment is and shall
continue to be at-will, as defined under applicable law. If the Employee’s
employment terminates for any reason, the Employee shall not be entitled to
any
payments, benefits, damages, awards or compensation other than as provided
by
this Agreement or the Existing Agreement or as may otherwise be established
under the Company’s then existing employee benefit plans or policies at the time
of termination.
4. Change
of Control and Severance Benefits.
(a) Option
Acceleration and Extended Exercise Period.
If the
Employee’s employment with the Company terminates as a result of an Involuntary
Termination at any time within a Change of Control Protection Period, then
the
exercisability of all options granted to the Employee by the Company (including
any such options granted or assumed by the sur-
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viving
or
continuing entity of the Change of Control) and still outstanding (the
“Options”) shall automatically be accelerated so that all the Options may be
exercised immediately upon such Involuntary Termination for any or all of the
shares subject thereto and the post-termination exercise period shall be
extended to sixty (60) months or the remainder of the maximum term of the
Options (or such shorter period of time to avoid the application of Section
409A
of the Code). The Options shall continue to be subject to all other terms and
conditions of the Company’s share option plans and the applicable option
agreements between the Employee and the Company.
(b) Outplacement
Program.
If the
Employee’s employment with the Company terminates as a result of an Involuntary
Termination at any time within a Change of Control Protection Period, the
Employee will immediately become entitled to participate in a twelve (12) month
executive outplacement program provided by an executive outplacement service,
at
the Company’s expense not to exceed fifteen thousand dollars
($15,000).
(c) Termination
Following a Change of Control.
(i) Cash
Severance Payment Upon Involuntary Termination.
If the
Employee’s employment with the Company terminates as a result of an Involuntary
Termination at any time within a Change of Control Protection Period, then
the
Employee shall be entitled to receive a severance payment equal to the sum
of
(A) an amount equal to ____ times the Employee’s annual base salary as in effect
immediately prior to the Involuntary Termination, plus (B) an amount equal
to
____ times Employee’s target bonus as in effect for the fiscal year in which the
Involuntary Termination occurs. Such severance payments shall be in lieu of
any
other severance payment to which the Employee shall be entitled as a result
of
such termination pursuant to this Agreement, any employment agreement with
or
offer letter from the Company or any of its affiliates or the Company’s or any
of its affiliate’s then existing severance plans and policies. The severance
payment described in Section 4(c)(i)(A) shall be paid in monthly installments
over ______ months, beginning within thirty (30) days of the termination,
provided, however, if the Employee is employed with another employer at any
time
within ______ months following the termination, then, to the extent permitted
under Section 409A of the Code and the final rules and regulations promulgated
thereunder, any remaining unpaid installment payments shall be paid in a lump
sum within 30 days of the receipt by the Company of written notice and
confirmation of such new employment. The severance payment described in Section
4(c)(i)(B) shall be paid in a lump sum within thirty (30) days of the
termination.
(ii) Provision
of Group Health and Certain Other Benefits.
In
addition, during a period of ______ months following the termination of
Employee’s employment as a result of an Involuntary Termination at any time
within a Change of Control Protection Period, (A) the Company shall make
available and pay for the full cost of the coverage (plus an additional amount
to pay for the taxes on such payments, if any, plus any taxes on such additional
amount) of the Employee and Employee’s spouse
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and
eligible dependents under any group health plans of the Company on the date
of
such termination of employment at the same level of health (i.e., medical,
vision and dental) coverage and benefits as in effect for the Employee or such
covered dependents on the date immediately preceding the date of the Employee’s
termination; provided,
however,
that
(1) the Employee and Employee’s spouse and eligible dependents each
constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of
the Internal Revenue Code of 1986, as amended; and (2) the Employee elects
continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to
COBRA; and (B) if Employee is, at the time of such termination, an eligible
participant in the Company’s mortgage differential program, the Company shall
continue to make mortgage assistance payments to Employee pursuant to such
program as in effect at the time of such termination. Notwithstanding the
foregoing, the payments by the Company for such group health coverage and/or
mortgage assistance, as applicable, shall cease prior to the expiration of
the
______ month period in this Section 4(c)(ii) upon the employment of the
Employment by another employer. Furthermore, if, at the time of the termination
of Employee’s employment as a result of an Involuntary Termination at any time
within a Change of Control Protection Period, Employee is the obligor of a
“forgivable” loan (i.e., a loan which by its terms is to be considered forgiven
by the Company and paid by the obligor in circumstances other than actual
repayment) from the Company, then, notwithstanding any provisions of such loan
to the contrary, such loan shall remain outstanding, and the forgiveness thereof
shall continue, for a period of ______ months following such termination in
accordance with the terms of such loan in effect at the time of such
termination; provided,
however, that
at
the end of such period of ______ months, the outstanding balance of such loan
shall be immediately due and payable, together with any accrued and unpaid
interest thereon.
(iii) Section
409A of the Code.
Notwithstanding the foregoing clauses (i) and (ii), to the extent any of the
severance payments, mortgage assistance payments or loan forgiveness referred
to
therein, or any taxes payable on the health benefits referred to therein, would
be deemed made in connection with a “separation from service” within the meaning
of the term in Section 409A(a)(2)(A)(i) of the Code to a “specified employee”
within the meaning of the term in Section 409A(a)(2)(B(i) of the Code, and
not
exempt from the requirements of Section 409A of the Code, then such payments
or
forgiveness, as the case may be, shall be postponed until six (6) months
following the Employee’s termination from employment as required by Section 409A
of the Code, provided,
however,
if prior
to the expiration of such six-month period, the Employee dies or becomes
“disabled” within the meaning of the term in Section 409A(a)(2)(c) of the Code,
or suffers an “unforeseeable emergency” within the meaning of the term in
Section 409A(a)(2)(B)(ii), or there has occurred a subsequent “change in the
ownership or effective control” of the Company or in the “ownership of a
substantial portion of the assets” of the Company within the meaning of such
phrases in Section 409A(a)(2)(A)(v) of the Code, then such payments or
forgiveness, as the case may be, shall commence prior to expiration of the
six
month pe-
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riod
according to the original payment schedule for such payments to the extent
permitted by Section 409A of the Code. Thus, for example, if the provision
in
the preceding sentence applies, the first six (6) monthly installments of the
severance payments provided for in clause (i) above shall be paid immediately
following the six (6) month period in a lump sum and the seventh (7th) through
______ installments shall be paid according to their original schedule provided
that the Employee does not die, become “disabled,” or suffer an “unforeseeable
emergency,” and there has not occurred a “change in the ownership or effective
control” of the Company or in the “ownership of a substantial portion of the
assets” of the Company during such six-month period.
(iv) Voluntary
Resignation or Termination for Cause.
If the
Employee’s employment with the Company terminates as a result of the Employee’s
voluntary resignation which is not an Involuntary Termination or if the Employee
is terminated for Cause at any time after a Change of Control, then the Employee
shall not be entitled to receive severance or other benefits hereunder, but
may
be eligible for those benefits (if any) as may then be established under the
Company’s then existing severance and benefits plans and policies at the time of
such termination.
(d) Disability
or Death.
If the
Employee’s employment with the Company terminates due to the Employee’s death or
disability following a Change of Control, then the Employee shall not be
entitled to receive severance or other benefits hereunder, except for those
(if
any) as may be then established under the Company’s then existing severance and
benefits plans and policies at the time of such disability or death. In the
event of the Employee’s death or disability after the termination of the
Employee’s employment with the Company as a result of an Involuntary Termination
within a Change of Control Protection Period, the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees shall be entitled to receive severance or other benefits
hereunder.
(e) Accrued
Wages and Vacation; Expenses.
Without
regard to the reason for, or the timing of, the Employee’s termination of
employment (and without duplication of any similar benefits under any employment
agreement with the Company or any of its affiliates): (i) the Company shall
pay the Employee any unpaid base salary due for periods prior to the date of
termination; (ii) the Company shall pay the Employee all of the Employee’s
accrued and unused vacation through the date of termination; and
(iii) following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and necessarily
incurred by the Employee in connection with the business of the Company prior
to
the date of termination. These payments shall be made promptly upon termination
and within the period of time mandated by law.
5. Conditional
Nature of Severance Payments.
(a) Non-Compete.
The
Employee shall not, to the detriment of the Company or any of its affiliates,
disclose or reveal to any unauthorized person any trade secret or other
confidential information relating to the Company or its affiliates or to any
businesses oper-
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ated
by
them, and the Employee confirms that such information constitutes the exclusive
property of the Company. The Employee shall not otherwise act or conduct
her/himself to the material detriment of the Company or its affiliates, or
in a
manner which is inimical or contrary to the interests thereof, and, for a period
of twenty-four (24) months following the termination of Employee’s employment as
a result of an Involuntary Termination at any time within a Change of Control
Protection Period, shall not, directly or indirectly, engage in or render any
service (whether to a person, firm or business) in direct competition with
the
Company; provided,
however,
that the
Employee’s ownership of less than five percent (5%) of the outstanding stock of
a corporation shall not itself be deemed to constitute such competition. The
Employee recognizes that the possible restrictions on her/his activities which
may occur as a result of her/his performance of her/his obligations under this
Section 5(a) are required for the reasonable protection of the Company and
its
investments. For purposes hereof, “in direct competition” means engaged in the
research, development and/or production of biological materials intended for
use
as therapeutic, prophylactic or diagnostic products in one or more of the same
indications, and that utilize one or more of the same scientific bases (e.g.,
in
the case of a therapeutic antibody, targets the same signal initiating pathway),
as a product or product candidate the research, development and/or production
of
which is an active part of the Company’s business plan at the time of Employee’s
termination.
(b) Non-Disparagement.
The
Employee and the Company agree to refrain from any defamation, libel or slander
of the other and its respective officers, directors, employees, representatives,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations and assigns or tortious interference
with
the contracts and relationships of the other and its respective officers,
directors, employees, representatives, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, predecessor and successor corporations
and
assigns.
(c) Understanding
of Covenants.
The
Employee represents that the Employee (i) is familiar with the foregoing
covenants not to compete and not to disparage, and (ii) is fully aware of
the Employee’s obligations hereunder, including, without limitation, the
reasonableness of the length of time, scope and geographic coverage of the
covenant not to compete.
6. Golden
Parachute Excise Tax.
In the
event that the benefits provided for in this Agreement or otherwise payable
to
the Employee constitute “parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)
that are subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then the Employee shall receive (i) a one-time payment from
the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and
(ii) an additional one-time payment from the Company sufficient to pay the
additional excise tax and federal, state and local income and employment taxes
arising from the Excise Tax Gross-Up made by the Company to the Employee
pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company
and the Employee otherwise agree in writing, the
determination of the Employee’s excise tax liability and the amount required to
be paid under this Section 6 shall
be
made in writing in good faith by the accounting firm serving as the Company’s
inde-
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pendent
public accountants immediately prior to the Change of Control (the
“Accountants”). In
the
event that the Excise Tax incurred by the Employee is determined by the Internal
Revenue Service to be greater or lesser than the amount so determined by the
Accountants, the Company and the Employee agree to promptly make such additional
payment, including interest and any tax penalties, to the other party as the
Accountants reasonably determine is appropriate. For
purposes of making the calculations required by this Section 6, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on interpretations concerning the application
of
the Code
for which
there is a “substantial authority” tax reporting position.
The
Company and the Employee shall furnish to the Accountants such information
and
documents as the Accountants may reasonably request in order to make a
determination under this Section 6. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 6.
7. Successors.
(a) Company’s
Successors.
Any
successor to the Company (whether direct or indirect and whether by purchase,
lease, merger, amalgamation, consolidation, liquidation or otherwise) to all
or
substantially all of the Company’s business and/or assets shall assume the
Company’s obligations under this Agreement and agree expressly to perform the
Company’s obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee’s
Successors.
Without
the written consent of the Company, the Employee shall not assign or transfer
this Agreement or any right or obligation under this Agreement to any other
person or entity. Notwithstanding the foregoing, the terms of this Agreement
and
all rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
8. Notices.
(a) General.
Notices
and all other communications contemplated by this Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of the Employee, mailed notices shall be addressed
to the Employee at the home address that the Employee most recently communicated
to the Company in writing. In the case of the Company, mailed notices shall
be
addressed to its corporate headquarters, and all notices shall be directed
to
the attention of its Secretary.
(b) Notice
of Termination.
Any
termination by the Company for Cause or by the Employee as a result of a
voluntary resignation or an Involuntary Termination shall be communicated by
a
notice of termination to the other party hereto given in accordance with this
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Section
8.
Such notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated.
The
failure by the Employee to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right
of
the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing the Employee’s rights hereunder.
9. Execution
of Release Agreement Upon Termination.
As a
condition of entering into this Agreement and receiving the benefits under
Section 4, the Employee agrees to execute and not revoke a release of
claims agreement substantially in the form attached hereto as Exhibit A
upon the
termination of the Employee’s employment with the Company. Such release shall
not, however, apply to the rights and claims of the Employee under this
Agreement, any indemnification agreement between the Employee and the Company
(or its successor or acquirer), the bye-laws of the Company (or its successor
or
acquirer), the share award agreements between the Employee and the Company
(or
its successor or acquirer), or any employee benefit plan of which the Employee
is a participant and under which all benefits due under such plan have not
yet
been paid or provided.
10. Arbitration.
(a) Any
dispute or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof, shall be settled by binding arbitration to be held
in
San Francisco or Alameda County, California, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the “Rules”). The cost of the arbitration shall be
borne in full by the Company (or its successor or acquirer) but each of the
Employee and the Company (or its successor or acquirer) shall bear his, her
or
its own legal fees and other cost in such arbitration subject to a possible
award of attorneys fees and costs by the arbitrator as provided in the
arbitration ruling. The arbitrator may grant injunctions or other relief in
such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court having
jurisdiction.
(b) The
arbitrator(s) shall apply California law to the merits of any dispute or claim,
without reference to conflicts of law rules. The arbitration proceedings shall
be governed by federal arbitration law and by the Rules, without reference
to
state arbitration law. The Employee hereby consents to the personal jurisdiction
of the state and federal courts located in California for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.
(c) The
Employee understands that nothing in this Section 10 modifies the Employee’s
at-will employment status. Either the Employee or the Company can terminate
the
employment relationship at any time, with or without cause.
(d) THE
EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
THE
EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO,
OR
IN
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CONNECTION
WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION TO THE EXTENT PERMITTED
BY
LAW, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF THE EMPLOYEE’S
RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING
TO
ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED
TO,
THE FOLLOWING CLAIMS:
(i) ANY
AND
ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH
EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH
EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS;
NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.
(ii) ANY
AND
ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING,
BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS
ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS
WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA
FAIR
EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et
seq;
(iii) ANY
AND
ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT
OR EMPLOYMENT DISCRIMINATION.
11. Miscellaneous
Provisions.
(a) Mitigation.
The
Employee shall not be required to mitigate the amount of any payment
contemplated by this Agreement, nor shall any such payment be reduced by any
earnings that the Employee may receive from any other source. However, the
Employee shall not be entitled to receive the health coverage and benefits
contemplated by this Agreement in the event that the Employee receives similar
health coverage and benefits as a result of new employment during the
Compensation Continuation Period.
(b) Waiver.
No
provision of this Agreement may be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and signed by the
Employee and by an authorized officer of the Company (other than the Employee).
No waiver by either party of any breach of, or of compliance with, any condition
or provision of this Agreement by the other party shall be considered a waiver
of any other condition or provision or of the same condition or provision at
another time.
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(c) Integration.
This
Agreement represents the entire agreement and understanding between the parties
with respect to the subject matter herein but shall not supersede any employment
agreement between the Company or any of its affiliates and the Employee, any
indemnification agreement between the Employee and the Company (or its successor
or acquirer), the share award agreements between the Employee and the Company
(or its successor or acquirer), or any employee benefit plan of which the
Employee is a participant and under which all benefits due under such plan
have
not yet been paid or provided.
(d) Choice
of Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the internal substantive laws, but not the conflicts of law
rules, of the State of California.
(e) Severability.
The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(f) Tax
Withholdings.
All
payments made pursuant to this Agreement shall be subject to withholding of
applicable income and employment taxes.
(g) Compliance
with Section 409A of the Code.
Any
payments under this Agreement which would be subject to Section 409A of the
Code
shall be administered in compliance with the requirements of Section 409A of
the
Code.
(h) Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together will constitute one and the same
instrument.
-11-
IN
WITNESS
WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above
written.
COMPANY:
XOMA
LTD.
By:
_____________________________________________
Name
[Independent
Director or CEO]
EMPLOYEE:
_________________________________________________
Name
EXHIBIT
A
FORM
RELEASE OF CLAIMS AGREEMENT
This
Release of Claims Agreement (this “Agreement”) is made and entered into by and
between XOMA Ltd. (the “Company”) and ________ (the “Employee”).
WHEREAS,
the Employee was employed by the Company; and
WHEREAS,
the Company and the Employee have entered into a Change of Control Severance
Agreement effective as of ________, 2006 (the “Severance
Agreement”).
NOW
THEREFORE, in consideration of the mutual promises made herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee (collectively referred to as the
“Parties”) desiring to be legally bound do hereby agree as follows:
1. Termination.
The
Employee’s employment with the Company terminated on ___________,
20__.
2. Consideration.
Subject
to and in consideration of the Employee’s release of claims as provided herein,
the Company has agreed to pay the Employee certain benefits and the Employee
has
agreed to provide certain benefits to the Company, both as set forth in the
Severance Agreement.
3. Release
of Claims.
The
Employee agrees that the foregoing consideration represents settlement in full
of all currently outstanding obligations owed to the Employee by the Company.
The Employee, on the Employee’s own behalf and the Employee’s respective heirs,
family members, executors and assigns, hereby fully and forever releases the
Company and its past, present and future officers, agents, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
parents, predecessor and successor corporations, and assigns, from, and agrees
not to xxx or otherwise institute or cause to be instituted any legal or
administrative proceedings concerning any claim, duty, obligation or cause
of
action relating to any matters of any kind, whether presently known or unknown,
suspected or unsuspected, that the Employee may possess arising from any
omissions, acts or facts that have occurred up until and including the Effective
Date (as defined below) of this Agreement including, without
limitation:
(a) any
and
all claims relating to or arising from the Employee’s employment relationship
with the Company and the termination of that relationship;
(b) any
and
all claims relating to, or arising from, the Employee’s right to purchase, or
actual purchase of shares of the Company, including, without limitation, any
claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty
under applicable state corporate law and securities fraud under any state or
federal law;
(c) any
and
all claims for wrongful discharge of employment, termination in violation of
public policy, discrimination, breach of contract (both express and implied),
breach of a covenant of good faith and fair dealing (both express and implied),
promissory estoppel, negligent or intentional infliction of emotional distress,
negligent or intentional misrepresentation, negligent or intentional
interference with contract or prospective economic advantage, unfair business
practices, defamation, libel, slander, negligence, personal injury, assault,
battery, invasion of privacy, false imprisonment and conversion;
(d) any
and
all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, The Worker Adjustment and
Retraining Notification Act, the California Fair Employment and Housing Act,
and
Labor Code Section 201, et
seq.
and
Section 970, et
seq.
and all
amendments to each such Act as well as the regulations issued
thereunder;
(e) any
and
all claims for violation of the federal or any state constitution;
(f) any
and
all claims arising out of any other laws and regulations relating to employment
or employment discrimination; and
(g) any
and
all claims for attorneys’ fees and costs.
The
Employee agrees that the release set forth in this Section 4 shall be and
remain in effect in all respects as a complete general release as to the matters
released. Notwithstanding the foregoing, this release does not extend to any
obligations now or subsequently incurred under this Agreement, the Severance
Agreement, the Indemnification Agreement between the Employee and the Company
(or its successor or acquirer), the outstanding share award agreements between
the Employee and the Company (or its successor or acquirer), or any employee
benefit plan of which the Employee is a participant and under which all benefits
due under such plan have not yet been paid or provided.
4. Acknowledgment
of Waiver of Claims under ADEA.
The
Employee acknowledges that the Employee is waiving and releasing any rights
the
Employee may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. The Employee
and the Company agree that this waiver and release does not apply to any rights
or claims that may arise under the ADEA after the Effective Date of this
Agreement. The Employee acknowledges that the consideration given for this
waiver and release agreement is in addition to anything of value to which the
Employee was already entitled. The Employee further acknowledges that the
Employee has been advised by this writing that (a) the Employee should
consult with an attorney prior
to
executing this Agreement; (b) the Employee has at least twenty-one (21)
days within which to consider this Agreement; (c) the Employee has seven
(7) days following the execution of this Agreement by the Parties to revoke
the
Agreement; and (d) this Agreement shall not be effective until the
revocation period has expired. Any revocation should be in writing and delivered
to the Company by the close of business on the seventh (7th)
day from
the date that the Employee signs this Agreement.
-2-
5. Civil
Code Section 1542.
The
Employee represents that the Employee is not aware of any claims against the
Company other than the claims that are released by this Agreement. The Employee
acknowledges that the Employee has been advised by legal counsel and is familiar
with the provisions of California Civil Code Section 1542, which provides
as follows:
A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR
SUSPECT TO EXIST IN HER OR HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH
IF KNOWN BY HER OR HIM MUST HAVE MATERIALLY AFFECTED HER OR HIS SETTLEMENT
WITH
THE DEBTOR.
The
Employee, being aware of said code section, agrees to expressly waive any rights
the Employee may have thereunder, as well as under any other statute or common
law principles of similar effect.
6. No
Pending or Future Lawsuits.
The
Employee represents that the Employee has no lawsuits, claims or actions pending
in the Employee’s name, or on behalf of any other person or entity, against the
Company or any other person or entity referred to herein. The Employee also
represents that the Employee does not intend to bring any claims on the
Employee’s own behalf or on behalf of any other person or entity against the
Company or any other person or entity referred to herein except, if necessary,
with respect to the agreements listed in the last sentence of Section 4 of
this
Agreement.
7. Confidentiality.
The
Employee agrees to use the Employee’s best efforts to maintain in confidence the
existence of this Agreement, the contents and terms of this Agreement, and
the
consideration for this Agreement (hereinafter collectively referred to as
“Release Information”). The Employee agrees to take every reasonable precaution
to prevent disclosure of any Release Information to third parties and agrees
that there will be no publicity, directly or indirectly, concerning any Release
Information. The Employee agrees to take every precaution to disclose Release
Information only to those attorneys, accountants, governmental entities and
family members who have a reasonable need to know of such Release
Information.
8. No
Adverse Cooperation.
The
Employee agrees the Employee will not act in any manner that might damage the
business of the Company. The Employee agrees that the Employee will not counsel
or assist any attorneys or their clients in the presentation or prosecution
of
any disputes, differences, grievances, claims, charges or complaints by any
third party against the Company and/or any officer, director, employee, agent,
representative, shareholder or attorney of the Company, unless compelled under
a
subpoena or other court order to do so.
9. Costs.
The
Parties shall each bear their own costs, expert fees, attorneys’ fees and other
fees incurred in connection with this Agreement.
10. Authority.
The
Company represents and warrants that the undersigned has the authority to act
on
behalf of the Company and to bind the Company and all who may claim through
it
to the terms and conditions of this Agreement. The Employee represents and
warrants that the
-3-
Employee
has the capacity to act on the Employee’s own behalf and on behalf of all who
might claim through the Employee to bind them to the terms and conditions of
this Agreement.
11. No
Representations.
The
Employee represents that the Employee has had the opportunity to consult with
an
attorney, and has carefully read and understands the scope and effect of the
provisions of this Agreement. Neither party has relied upon any representations
or statements made by the other party hereto which are not specifically set
forth in this Agreement.
12. Severability.
In the
event that any provision hereof becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision.
13. Entire
Agreement.
This
Agreement and the Severance Agreement and the agreements and plans referenced
therein represent the entire agreement and understanding between the Company
and
the Employee concerning the Employee’s separation from the Company, and
supersede and replace any and all prior agreements and understandings concerning
the Employee’s relationship with the Company and the Employee’s compensation by
the Company. This Agreement may only be amended in writing signed by the
Employee and an executive officer of the Company.
14. Governing
Law.
This
Agreement shall be governed by the internal substantive laws, but not the choice
of law rules, of the State of California.
15. Effective
Date.
This
Agreement is effective eight
(8)
days after it has been signed by the Parties (the “Effective Date”) unless it is
revoked by the Employee within seven (7) days of the execution of this Agreement
by the Employee.
16. Counterparts.
This
Agreement may be executed in counterparts, and each counterpart shall have
the
same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.
17. Voluntary
Execution of Agreement.
This
Agreement is executed voluntarily and without any duress or undue influence
on
the part or behalf of the Parties hereto, with the full intent of releasing
all
claims. The Parties acknowledge that:
(a) they
have
read this Agreement;
(b) they
have
been represented in the preparation, negotiation and execution of this Agreement
by legal counsel of their own choice or that they have voluntarily declined
to
seek such counsel;
(c) they
understand the terms and consequences of this Agreement and of the releases
it
contains; and
(d) they
are
fully aware of the legal and binding effect of this Agreement.
-4-
IN
WITNESS
WHEREOF, the Parties have executed this Agreement on the respective dates set
forth below.
XOMA
LTD.
By:
__________________________________________
Title:
_________________________________________
Date:
_________________________________________
EMPLOYEE
______________________________________________
Name
Name
Date:
_________________________________________
-5-
Terms
of
Individual Executive Officer Change of Control and Severance
Agreements
(to
be
read in conjunction with Form of Change of Control and Severance
Agreement)
|
Name
|
Paragraph
1(d)
|
Paragraph
4(c)(i)
|
Paragraph
4(c)(ii)
|
|
|
Xxxx
X. Xxxxxxxx
|
24
months
|
2.0
|
24
months
|
24
months
|
|
Xxxxxxx
X. Xxxxxxx, MD, PhD
|
18
months
|
1.5
|
18
months
|
18
months
|
|
Xxxxxxxxxxx
X. Xxxxxxxx
|
18
months
|
1.5
|
18
months
|
18
months
|
|
J.
Xxxxx Xxxxx II
|
18
months
|
1.5
|
18
months
|
18
months
|
-6-
