Exhibit 10.2
 
XOMA (US) LLC
EMPLOYMENT AGREEMENT
 
NAME:  John Varian
 
TITLE:  Interim Chief Executive Officer
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of the 31st day of August,
2011, by and between XOMA (US) LLC (the “Company”) and the person executing this
Agreement as employee (“Employee”).
 
1.  Employment.  On the terms and conditions set forth herein, Company hereby
employs Employee, and Employee hereby accepts such employment.  While employed
hereunder, Employee shall devote all of the Employee’s best efforts and
attention to the business and affairs of the Company.
 
2.  Position.  Employee is employed by the Company to render services to the
Company in the position of Interim Chief Executive Officer.  Employee shall
perform such duties and responsibilities as are normally related to such
position in accordance with the standards of the industry and any additional
duties now or hereafter assigned to Employee by the Company.  Employee shall
abide by the rules, regulations, and practices as adopted or modified from time
to time in the Company’s sole discretion.
 
3.  Compensation.  In consideration of the service to be rendered under this
Agreement, the Company shall pay Employee a salary at the rate of $400,000 per
year (“Base Salary”).  The Base Salary will be paid to Employee in equal,
semi-monthly installments on the fifteenth and the last day of the month in
accordance with the Company’s regularly established payroll practice.
 
4.  Benefits.  Employee shall be eligible to participate in the benefits made
generally available by the Company to similarly-situated employees, in
accordance with the benefits plans established by the Company, as may be amended
from time to time in the Company’s sole discretion, excluding the Company’s CEO
Incentive Compensation Plan and Management Incentive Compensation Plan.
 
5.  Expenses.  The Company shall reimburse Employee for reasonable business
expenses incurred in the performance of Employee’s duties hereunder in
accordance with the Company’s expense reimbursement guidelines.
 
 
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6.  At-Will Employment.  The employment relationship between the Company and the
Employee shall be “at-will” at all times.  Either the Company or the Employee
may terminate Employee’s employment with the Company at any time, without any
advance notice, for any reason or no reason at all, notwithstanding anything to
the contrary contained in or arising under any statements, policies, or
practices of the Company relating to the employment, discipline or termination
of its employees.  Upon and after such termination, all obligations of the
Company under this Agreement shall cease, except as provided in Paragraphs 7 and
10.
 
7.  Severance Payments.  Upon termination of Employee’s employment for any
reason other than for Cause (as defined below) or upon Employee’s resignation
for Good Reason (as defined below), Employee will be entitled to his then
current salary pursuant to this Agreement for, if such termination or
resignation occurs prior to December 31, 2011, a period of two (2) months or, if
such termination or resignation occurs thereafter, a period of three (3) months,
in each case following such termination or resignation.  “Cause” shall mean:
 
          (i)  willful material fraud or material dishonesty in connection with
Employee’s performance hereunder;
 
         (ii)  failure by Employee to substantially perform the material duties
of his job as Interim Chief Executive Officer;
   
         (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.
 
“Good Reason” shall mean, unless remedied by the Company within sixty (60) days
after the receipt of written notice from the Employee as provided below or
consented to in writing by the Employee, (i) the material diminution of any
material duties or responsibilities of the Employee; or (ii) a material
reduction in the Employee's base salary; provided, however, that the Employee
must have given written notice to the Company of the existence of any such
condition within ninety (90) days after the initial existence thereof (and the
failure to provide such timely notice will constitute a waiver of the Employee’s
ability to terminate employment for Good Reason as a result of such condition),
and the Company will have a period of sixty (60) days from receipt of such
written notice during which it may remedy the condition; provided further,
however, that any termination of employment by the Employee for Good Reason must
occur not later than one hundred eighty (180) days following the initial
existence of the condition giving rise to such Good Reason in order to qualify
for the severance pay set forth in this Paragraph 7.
 
 
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8.  Proprietary Rights.  Employee agrees to sign and be bound by the terms of
the Proprietary Information Agreement, which is attached hereto as Exhibit A.
 
9.  Agreement Not to Compete.  Notwithstanding any provisions of the Proprietary
Information Agreement referred to in Paragraph 8 hereof, while employed
hereunder by the Company, Employee will not (i) directly or indirectly, engage
in any other occupation, employment, consultation, or other activity in
competition with the business, developments, products, work, or activities of
the Company; or (ii) engage, directly or indirectly, in any other business
activity (whether or not for pecuniary advantage) that might interfere with
Employee’s duties and responsibilities hereunder or create a conflict of
interest with the Company.
 
10.    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
before one arbitrator in accordance with the then applicable JAMS Employment
Arbitration Rules and Procedures, which can be found at www.jamsadr.com. Claims
subject to arbitration shall include contract claims, tort claims, 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.
 
Either party may bring an action in court to compel arbitration under this
Agreement and to enforce an arbitration award.  Otherwise, neither party shall
initiate or prosecute any lawsuit in any way related to any Arbitrable Claim,
including without limitation any claim as to the making, existence, validity, or
enforceability of the agreement to arbitrate.  All arbitration hearings under
this Agreement shall be conducted in or near Berkeley, California.  Arbitration
shall be final and binding upon the parties and shall be the exclusive remedy
for all Arbitrable Claims, except that either party may, at its option, seek
injunctive relief under Cal. Code Civ. Proc. § 1281.8 in a court of competent
jurisdiction for any claim or controversy arising out of or related to the
unauthorized use, disclosure, or misappropriation of the confidential and/or
proprietary information of either party. 
 
Each party shall pay for its own costs and attorney’s fees, if any.  However, if
any party prevails on a statutory claim which affords the prevailing party
attorney’s fees, then the arbitrator may award reasonable attorney’s fees and
costs to the prevailing party as provided by law.  The costs and fees of the
arbitrator shall be paid by the Company.
 
THE PARTIES UNDERSTAND AND AGREE THAT THIS AGREEMENT TO ARBITRATE CONSTITUTES A
WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES SUBJECT
TO ARBITRATION UNDER THIS AGREEMENT.
 
 
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11.  Severability.  In any provision of this Agreement shall be held by a court
or arbitrators to be invalid, unenforceable, or void, such provision shall be
enforced to the fullest extent permitted by law, and the remainder of the
Agreement shall remain in full force and effect.  In the event that the time
period or scope of any provision is declared by a court or arbitrators of
competent jurisdiction to exceed the maximum time period or scope that such
court or arbitrators deem enforceable, then such court or arbitrators shall
reduce the time period or scope to the maximum time period or scope permitted by
law.
 
12.  Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
 
13.  Successors and Assigns.  Except as otherwise expressly provided in this
Agreement, the provisions hereof shall inure to the benefit of the successors
and assigns of the Company.  Employee agrees that Employee shall have no right
to assign and shall not assign or purport to assign any rights or obligations
under this Agreement.  The Company may transfer its rights hereunder to any
other person or entity.
 
14.  Amendments; Waivers.  This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Employee and by a
duly authorized representative of the Company other than Employee.  By an
instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was
or is obligated to comply with or perform, provided, however, that such a waiver
shall not operate as a waiver of, or estoppel with respect to, any other
subsequent failure.  No failure to exercise and no delay in exercising any
right, remedy, or power hereunder shall operate as a waiver thereof, no shall
any single or partial exercise of any right, remedy, or power hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
 
15.  Entire Agreement.  The terms of this Agreement are intended by the parties
to be the final expression of their agreement with respect to terms of
Employee’s employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous statements or agreements, except for agreements
specifically referenced herein (including the Proprietary Information Agreement
attached as Exhibit A, and the Company’s Share Option Plans and Agreements).
 
 
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    IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.

XOMA (US) LLC.
 
 
By: 
_____________________________________                       _____________________________________
        Charles C. Wells
        Vice President,
        Human Resources
        and Information Technology
 
   John Varian
   Interim Chief Executive Officer

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