Exhibit 10.31

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

This Change of Control Severance Agreement (the “Agreement”) dated this 3rd day
of January, 2011 (the “Effective Date”), is between James R. Neal (the
“Employee”) and XOMA Corporation, a Delaware corporation (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 Company and the Employee have agreed to
enter into this Agreement 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 Officer Employment Agreement effective as of January
3, 2012 (the “Existing Agreement”), that 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 that the Company will have the right to terminate
Employee’s employment as the result of :

(i)willful material fraud or material dishonesty in connection with Employee’s
performance hereunder;

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(ii)failure by Employee to materially perform the material duties of his job as
Vice President, Business Development, as documented pursuant to the Company’s
performance management process and procedures;  

(iii)material breach of this Agreement or the Company’s policies set forth on
the Company’s Intranet Portal under “Policy Manual”;  

(iv)misappropriation of a material business opportunity of the Company;

(v)misappropriation of any Company funds or property;  or

(vi)conviction of, or the entering of, a plea of guilty, or no contest, with
respect to a felony or the equivalent thereof.

(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

(c)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.

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(d)“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 terminating eighteen (18) months following the closing of a Change
of Control.

(e)“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 eighteen (18) months following the date of the Employee’s
Involuntary Termination.

(f)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(g)“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 become effective on November 1, 2012
and 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.Employment.  The Company and the Employee acknowledge that, effective as of
November 1, 2012, the Employee’s employment shall be, and shall continue to be,
governed by the Existing Agreement and applicable law.  If the Employee’s
employment terminates after November 1, 2012, 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.

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(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 surviving 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 of each Option shall be extended to sixty (60)
months (but in no event beyond the remainder of the maximum term of the
Option).  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.

(d)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 1.5 times Employee’s annual base salary as in effect immediately
prior to the Involuntary Termination, plus (B) an amount equal to 1.5 times
Employee’s target bonus as in effect for the fiscal year in which the
Involuntary Termination occurs; provided that if Employee has been an officer of
the Company for less than one year at the time of such termination, Employee’s
severance pay shall be limited to an amount equal to .75 times Employee’s annual
base salary as in effect immediately prior to the Involuntary Termination.  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) above shall be paid in monthly installments over nine (9) months (the
“Severance Payment Period”), with the first two (2) of such monthly installments
being paid in a lump sum sixty (60) days after the date of termination and the
remaining monthly installments being paid monthly thereafter until fully paid.
The severance payments described in Section 4(c)(i)(B) shall be paid in a lump
sum sixty (60) days after the date of termination; provided, however, that all
of such severance payments shall be subject to the requirements of Section
4(c)(iii) and Section 9 below.

(i)Provision of Group Health and Certain Other Benefits.  In addition, during a
period of eighteen (18) 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  of the Employee and Employee’s spouse 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 den

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tal) 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 eighteen (18)  month period in this Section
4(c)(ii) upon the employment of the Employee 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, the outstanding
balance of such loan shall be immediately due and payable, together with any
accrued and unpaid interest thereon.

(ii)Section 409A of the Code.  Notwithstanding any provision to the contrary in
this Agreement, if the Employee is deemed on the date of his “separation from
service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the
Company to be a “specified employee” (within the meaning of Treas. Reg.
Section 1.409A-1(i)), then with regard to any payment or benefit (including,
without limitation, any mortgage assistance payment or loan forgiveness referred
to above) that is considered deferred compensation under Section 409A of the
Code payable on account of a “separation from service” that is required to be
delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into account
any applicable exceptions to such requirement), such payment or benefit shall be
made or provided on the date that is the earlier of (i) the expiration of the
six (6)-month period measured from the date of the Employee’s “separation from
service,” or (ii) the date of the Employee’s death (the “Delay Period”).  Upon
the expiration of the Delay Period, all payments and benefits delayed pursuant
to this Section 4(c) (whether they would have otherwise been payable in a single
sum or in installments in the absence of such delay) shall be paid or reimbursed
to the Employee in a lump sum and any remaining payments and benefits due under
this Agreement shall be paid or provided in accordance with the normal payment
dates specified for them herein.  Notwithstanding any provision of this
Agreement to the contrary, for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits upon or following a
termination of employment, references to the Employee’s “termination of
employment” (and corollary terms) with the Company shall be construed to refer
to Employee’s “separation from service” (within the meaning of Treas. Reg.
Section 1.409A-1(h)) with the Company.

(iii)Resignation from the Board of Directors of the Company (“Board”).  If
Employee is a member of the Board at the time of termination of his employment
with the Company (regardless of the reason(s) therefor), Employee shall be
deemed to have resigned from the Board effective as of the date of such
termination of employment, unless Employee and the Company agree otherwise in
writing.

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(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.

(e)Disability or Death.  If the Employee’s employment with the Company
terminates due to the Employee’s death or permanent 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 permanent 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.

(f)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, within the period of time mandated by law,
and in no event later than ten (10) days after the date of termination.

(g)Release of Claims.  As a condition of entering into this Agreement and
receiving the benefits under this Section 4, the Employee agrees to execute, on
or before the date that is fifty (50) days following the date of termination,
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.

5.Post-Termination Obligations.  All payments and benefits provided to Employee
under this Agreement shall be subject to Employee’s compliance with the
following provisions during the term of his employment and/or a Change of
Control Protection Period.

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(a)Confidential Information and Competitive Conduct.  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 operated by them, and the
Employee confirms that such information constitutes the exclusive property of
the Company. The Employee shall not otherwise act or conduct 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 nine (9)
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. Employee recognizes that the possible restrictions
on his activities which may occur as a result of his performance of his
obligations under this Section 5 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 marketing and sale of
biological materials intended for use as therapeutic 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
marketing and sale 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 (i)
any defamation, libel or slander or any communication of any facts or opinions
that might tend to disparage, degrade or harm the reputation of the other and
its respective officers, directors, employees, representatives, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations and assigns or (ii) 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)Agreement Not to Solicit Employees.  Employee agrees that during the term of
his employment with the Company or any entity owned by or affiliated with the
Company (whether pursuant to this Agreement or otherwise), and for one (1) year
following the termination thereof for any reason whatsoever, he will not, either
directly or indirectly, on his own behalf or in the service or on behalf of
others, solicit or divert, attempt to solicit or divert or induce or attempt to
induce to discontinue employment with the Company, or any subsidiary or
affiliate thereof, any person employed by the Company, or any subsidiary or
affiliate thereof, whether or not such employee is a full time employee or a
temporary employee of the Company, or any subsidiary or affiliate thereof, and
whether or not such employment is for a determined period or is at-will.

(d)Failure of Employee to Comply. If, for any reason other than death or
disability, Employee shall, without written consent of the Company, fail to
comply with the provisions of Sections 5(a), (b) or (c)  above, (i) his rights
to any future payments or other benefits hereunder shall terminate immediately,
(ii) the Company’s obligations to make such

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payments and provide such benefits shall cease immediately; and (iii) Employee
shall refund to the Company all termination payments received by Employee
pursuant to this Agreement.

(e)Understanding of Covenants.  The Employee represents that the Employee (i) is
familiar with the foregoing covenants not to compete, and not to disparage and
not to solicit employees, 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.

(f)Remedies. Employee agrees that monetary damages would not be ade-quate
compensation for any loss incurred by the Company by reason of a breach of the
provisions of this Section 5 and hereby agrees to waive the defense in any
action for spe-cific performance that a remedy at law would be adequate.

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 independent public accountants immediately prior to the Change
of Control (the “Accountants”).  The initial Excise Tax Gross-Up and Additional
Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no
later than ten (10) days prior to the due date for the payment of any excise
tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no
later than the due date for the payment of any excise tax.  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 (but in no event
later than the end of the calendar year in which the applicable taxes are paid
to (or received from) the Internal Revenue Service) 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.

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(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.  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.

9.Arbitration.   All claims or controversies between Employee and the Company
relating in any manner whatsoever to Employee’s employment with the Company or
the termination of that employment shall be resolved by arbitration in front of
one neutral arbitrator in accordance with the then applicable Employment Dispute
Resolution rules of the American Arbitration Association (“the AAA
Rules”).  Claims subject to arbitration shall include contract claims, tort
claims and claims relating to compensation and stock options, as well as claims
based on any federal, state, or local law statute, or regulation, including but
not limited to any claims arising under Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, and the California Fair Employment and Housing Act (“Arbitrable
Claims”).  However, claims for unemployment insurance, claims under applicable
workers’ compensation laws, and claims under the National Labor Relations Act
shall not be subject to arbitration.  The arbitrator shall apply the same
substantive law with the same statutes of limitations and same remedies that
would apply if the claims were brought in a court of law.  The arbitrator shall
have the authority to consider and decide pre-hearing motions, including
dispositive motions.

10.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

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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.

(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)Governing Law. This Agreement has been executed and delivered in the State of
California, and its validity interpretation, performance, and enforcement shall
be governed by the laws of said State. The parties agree that any legal disputes
concerning this Agreement, or Employee’s next employment, will be filed in
Alameda County, California.

(e)Severability.  In the event any provision of this Agreement or any part
hereof is held invalid, such invalidity shall not affect any remaining part of
such provision or any other provision. If any court construes any provision of
this Agreement to be illegal, void or unenforceable because of the duration or
the area or matter covered thereby, such court shall reduce the duration, area
or matter of such provision, and, in its reduced form, such provision shall then
be enforceable and shall be enforced.

(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.

(i)It is intended that this Agreement will comply with Section 409A of the Code
and any regulations and guidelines promulgated thereunder (collectively,
“Section 409A”), to the extent the Agreement is subject thereto, and the
Agreement shall be interpreted on a basis consistent with such intent.  If an
amendment of the Agreement is necessary in order for it to comply with Section
409A, the parties hereto will negotiate in good faith to amend the Agreement in
a manner that preserves the original intent of the parties to the extent
reasonably possible.  No action or failure to act pursuant to this Section 11(g)
shall subject the Company to any claim, liability, or expense, and the Company
shall not have any obligation to indemnify or otherwise protect the Employee
from the obligation to pay any taxes, interest or penalties pursuant to Section
409A.  

(ii)With respect to any reimbursement or in-kind benefit arrangements of the
Company and its subsidiaries that constitute deferred compensation for purposes
of Sec

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tion 409A, except as otherwise permitted by Section 409A, the following
conditions shall be applicable: (A) the amount eligible for reimbursement, or
in-kind benefits provided, under any such arrangement in one calendar year may
not affect the amount eligible for reimbursement, or in-kind benefits to be
provided, under such arrangement in any other calendar year (except that the
health and dental plans may impose a limit on the amount that may be reimbursed
or paid), (B) any reimbursement must be made on or before the last day of the
calendar year following the calendar year in which the expense was incurred, and
(C) the right to reimbursement or in-kind benefits is not subject to liquidation
or exchange for another benefit.  Whenever a payment under this Agreement
specifies a payment period with reference to a number of days (e.g., “payment
shall be made within thirty (30) days after termination of employment”), the
actual date of payment within the specified period shall be within the sole
discretion of the Company.  Whenever payments under this Agreement are to be
made in installments, each such installment shall be deemed to be a separate
payment for purposes of Section 409A.

(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.

(i)Effect of Prior Agreements.This Agreement contains the entire understanding
between the parties hereto and, effective as of November 1, 2012, shall replace
and supersede all prior change of control severance agreements between the
Company and Employee, but shall not replace or supersede any indemnification
agreement between the Employee and the Company (or its successor or acquirer),
any share award agreement between the Employee and the Company (or its successor
or acquirer), or any employee benefit plan in which the Employee is a
participant and under which all benefits due under such plan have not yet been
paid or provided.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, and it shall be effective as of
November 1, 2012.

COMPANY:

 

 

 

 

 

 

 

 

 

 

 

XOMA CORPORATION

 

 

 

 

 

 

 

By:

 

/s/ John Varian

 

 

 

 

John Varian

 

 

 

 

Interim Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

EMPLOYEE:

 

 

 

 

 

 

 

 

/s/ James R. Neal

 

 

 

 

James R. Neal

 

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EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (this “Agreement”) is made and entered into by
and between XOMA Corporation (the “Company”) and James R. Neal (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 November 1, 2012 (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 full and
complete 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 sue 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 based on contract, tort or statute including, but not
limited to, claims for wrongful discharge of employment, termination in
violation of public

 

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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/or the California Labor Code and all amendments to each such Act/statute 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 3 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
post-termination obligations set forth in Section 5 of 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 Legal Department of the
Company by the close of business on the seventh (7th) day from the date that the
Employee signs this Agreement.

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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 injuries that have not yet been reported to the Company’s workers’
compensation carrier, 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 3 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.

-3-

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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 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

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(d)they are fully aware of the legal and binding effect of this Agreement. 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

 

 

 

XOMA CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

 

 

  

 

 

 

Title:

 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

Date:

 

 

 

-5-