Exhibit 10.3
 

May 15, 2009
Steven B. Engle
Chief Executive Officer
Xoma, Ltd.
2910 Seventh Street
Berkeley, California  94710

Dear Mr. Engle:

The purpose of this letter agreement (the “Agreement”) is to authorize Canaccord
Adams Inc. (“Canaccord”) and Wedbush Morgan Securities, Inc. (“Wedbush” and,
together with Canaccord, the “Placement Agents”) to contact one or more
institutional investors to explore the degree of interest, if any, of such
investors in providing funding to Xoma, Ltd. or its affiliates (the “Company”).
This authorization shall be exclusive to the Placement Agents for a period of 30
days.  The Company may terminate each of the Placement Agents authorization to
contact investors hereunder at any time upon a 10-day written notice.  If the
Company chooses to accept any funding, on terms to be mutually agreed upon by
the Company and any such investor(s), then the Company shall pay to each of the
Placement Agents the fees set forth below if there is any funding of the Company
(a “Financing”) within 6 months of the date of the termination or expiration of
this Agreement by any investors with which the Placement Agents arranged a
conference call or a meeting for the Company during the term of this Agreement.
 
In consideration of the services rendered by the Placement Agents under this
Agreement, the Company agrees to pay to each of Canaccord and Wedbush a cash fee
payable immediately upon the closing of any portion of the Financing equal to 3%
of the aggregate proceeds raised or committed in such Financing from such
investors.  In addition, but only if a Financing is consummated, the Company
agrees to reimburse each of the Placement Agents at closing for all reasonable
travel and other out-of-pocket expenses incurred in connection with the
Placement Agents’ engagement, including the fees and expenses of each of Choate,
Hall & Stewart LLP, as counsel to the Placement Agents, in an amount not to
exceed $100,000, without the Company’s approval.
 
The Company hereby makes to each of the Placement Agents each of the
representations, warranties and covenants made by the Company to the Purchasers
in the Securities Purchase Agreement, to be entered into in connection with the
Financing, as though restated in their entirety herein.
 
The Company hereby agrees to the indemnification and other agreements set forth
in the Indemnification Provisions attached hereto as Addendum A, the provisions
of which are incorporated herein by reference and shall survive the termination
or expiration of this Agreement.
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without regard to conflicts of law principles.  Any
dispute arising out of this Agreement shall be adjudicated in the courts of the
State of New York or in the federal courts sitting in the Southern District of
New York, and each of the parties hereto agrees that service of process upon it
by registered or certified mail at its address set forth herein shall be deemed
adequate and lawful.  Any rights to trial by jury with respect to any such
dispute are hereby waived by each of the Placement Agents and the Company. The
Company shall indemnify each of the Placement Agents against any liabilities
arising under the Securities Act of 1933, as amended, attributable to any
information supplied or omitted to be supplied to any investor by the Company
pursuant to this Agreement.  The Company acknowledges and agrees that each of
the Placement Agents is not and shall not be construed as a fiduciary of the
Company
 

 
 

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and shall have no duties or liabilities to shareholders or creditors of the
Company or any other person by virtue of this Agreement or the retention of each
of the Placement Agents hereunder, all of which are hereby expressly
waived.  This Agreement may be modified only in writing signed by the party to
be charged hereunder.
 
If the foregoing correctly sets forth our agreement, please sign below and
return a copy of this letter to us.
 
Very truly yours,
 
Canaccord Adams Inc.
   
By:______________________________
      Name:
      Title:
   
Wedbush Morgan Securities, Inc.
   
By:______________________________
      Name:
      Title:

Agreed to and accepted
as of the date first written above:
 
Xoma, Ltd.
 
 
By:______________________________
      Name:
      Title:

 
 

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ADDENDUM A
 

 
INDEMNIFICATION PROVISIONS
 
In connection with the engagement of Canaccord Adams Inc. (“Canaccord”) and
Wedbush Morgan Securities, Inc. (“Wedbush” and, together with Canaccord, the
“Placement Agents”) by Xoma, Ltd. (the “ Company ”) pursuant to a letter
agreement dated May 15, 2009, between the Company and the Placement Agents, as
it may be amended from time to time in writing (the “ Agreement ”), the Company
hereby agrees as follows:
 
1.  
To the extent permitted by law, the Company will indemnify each of the Placement
Agents and their affiliates, stockholders, directors, officers, employees and
controlling persons (within the meaning of Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended) against all losses, claims, damages, expenses and liabilities, as the
same are incurred (including the reasonable fees and expenses of counsel),
relating to or arising out of its activities hereunder or pursuant to the
Agreement, except to the extent that any losses, claims, damages, expenses or
liabilities (or actions in respect thereof) are found in a final judgment (not
subject to appeal) by a court of law to have resulted primarily and directly
from any indemnified person’s willful misconduct or gross negligence or from
untrue statements or omissions made in reliance upon and conformity with
information supplied in writing by the Placements Agents or their agents
specifically for inclusion in a Company Registration Statement or any prospectus
(including supplements) the Financing (as defined in the Agreement).

 
2.  
Promptly after receipt by Canaccord or the Co-Placement Agent of notice of any
claim or the commencement of any action or proceeding with respect to which the
Placement Agents are entitled to indemnity hereunder, one or both of the
Placement Agents will notify the Company in writing of such claim or of the
commencement of such action or proceeding, and the Company will assume the
defense of such action or proceeding and will employ counsel reasonably
satisfactory to the Placement Agents and will pay the fees and expenses of such
counsel.  Notwithstanding the preceding sentence, the Placement Agents will be
entitled to employ one counsel to represent both of them separate from counsel
for the Company and from any other party in such action if counsel for either of
the Placement Agents reasonably determines that it would be inappropriate under
the applicable rules of professional responsibility for the same counsel to
represent both the Company and the Placement Agents.  In such event, the
reasonable fees and disbursements of no more than one such separate counsel will
be paid by the Company.  The Company will have the exclusive right to settle the
claim or proceeding provided that the Company will not settle any such claim,
action or proceeding without the prior written consent of each of the Placement
Agents, which will not be unreasonably withheld.

 
3.  
The Company agrees to notify each of the Placement Agents promptly of the
assertion against it or any other person of any claim or the commencement of any
action or proceeding relating to a transaction contemplated by the Agreement.

 
4.  
If for any reason the foregoing indemnity is unavailable to the Placement Agents
or insufficient to hold the Placement Agents harmless, then the Company shall
contribute to the amount paid or payable by each of the Placement Agents as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on
the one hand and each of the Placement Agents on the other, but also the
relative fault of the Company on the one hand and each of the Placement Agents
on the other that resulted in such losses, claims, damages or liabilities, as
well as any relevant equitable considerations.  The amounts paid or payable by a
party in respect of losses, claims, damages and liabilities

 

 
 

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referred to above shall be deemed to include any legal or other fees and
expenses incurred in defending any litigation, proceeding or other action or
claim.  Notwithstanding the provisions hereof, each of the Placement Agent’s
share of the liability hereunder shall not be in excess of the amount of fees
actually received by each of the Placement Agents under the Agreement (excluding
any amounts received as reimbursement of expenses incurred by each of the
Placement Agents.
 
5.  
These Indemnification Provisions shall remain in full force and effect whether
or not the transaction contemplated by the Agreement is completed and shall
survive the termination of the Agreement, and shall be in addition to any
liability that the Company might otherwise have to any indemnified party under
the Agreement or otherwise.

 
CANACCORD ADAMS INC.
 
 
By:______________________________________
      Name:
      Title:
     
WEDBUSH MORGAN SECURITIES, INC.
   
By:_______________________________________
      Name:
      Title:

Agreed to and accepted
as of the date first written above:
 
XOMA, LTD.
 
 
By:____________________________________
      Name:
      Title: