ex10_3.htm


     

     


    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

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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:

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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: