Document:

ex10_12.htm

EXHIBIT 10.12

FORM OF

XOMA LTD.

 

AMENDED AND RESTATED

CHANGE OF CONTROL SEVERANCE AGREEMENT

This Amended and Restated Change of Control Severance Agreement (the “Agreement”) is made and entered into effective as of _______, 200_ (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 Company and the Employee entered into a Change of Control Severance Agreement effective as of ______, 200_ (the “Original Agreement”) to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change of Control.

D.           The Company and the Employee wish to enter into this Agreement to amend and restate the Original Agreement.

E.           XOMA (US) LLC, a wholly-owned subsidiary of the Company, and the Employee have previously entered into an employment agreement effective as of _______, 200_, which has been amended and restated effective as of _______, 200_ (the “Existing Agreement”) and provides the Employee with certain severance benefits upon the Employee’s termination of employment.

F.           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:

  

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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.

  

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(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.

(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.

  

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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 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.

(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 (the “Severance Payment Period”), with the first two (2) of such monthly installments being paid sixty (60) days after the date of termination and the remaining monthly installments being paid monthly thereafter until fully paid, and 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.

  

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(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, such amount to be paid no later than ten (10) days prior to the date such taxes are due) 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 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 any provision to the contrary in this Agreement, if the Employee is deemed on the date of his or her “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 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.

  

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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.

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

  

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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 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 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.

  

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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.

(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.

  

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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 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, 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.

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.

  

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(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 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.

  

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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.

(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.

(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 of the Code, 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 of the Code.

  

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

  

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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 ________, 2007 (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 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;

  

A-1

  

(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 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 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.

  

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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 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.

  

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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 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;

  

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(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.

  

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

	  	
XOMA LTD.

	  	  	  
	  	  	  
	  	
By:

	  
	  	  	  
	  	
Title:

	  
	  	  	  
	  	
Date:

	  
	  	  	  
	  	  	  
	  	
EMPLOYEE

	  	  	  
	  	  
	  	
Name

	  	  	  
	  	
Date:

	  

 

  

  

  

 

Terms of Individual Change of Control Severance Agreements With Named Executive Officers

(to be read in conjunction with Form of Change of Control Severance Agreement)

 

	
Name

	
Paragraph 1(d)

	
Paragraph 4(c)(i)

	
Paragraph 4(c)(ii)

	
Steven B. Engle

	
24 months

	
2.0

	
24 months

	
24 months

	
Patrick J. Scannon, MD, PhD

	
18 months

	
1.5

	
18 months

	
18 months

	
Fred Kurland

	
18 months

	
1.5

	
18 months

	
18 months

	
Christopher J. Margolin

	
18 months

	
1.5

	
18 months

	
18 months

	
Charles C. Wells

	
18 months

	
1.5

	
18 months

	
18 monthsex10_25a.htm

Exhibit 10.25A

 

[*] indicates that a confidential portion of the text of this agreement has been omitted.

 

GSSM LICENSE AGREEMENT

 

This GSSM License Agreement (this “Agreement”), effective as of May 2, 2008 (the “Effective Date”), is entered into by and between XOMA Ireland Limited, a company with limited liability organized under the laws of the Republic of Ireland having offices at Shannon Airport House, Shannon, County Clare, Ireland (“XOMA”), and Verenium Corporation, a Delaware corporation, with offices at 4955 Directors Place, San Diego, California, 92121-1609 (“Verenium”).

 

BACKGROUND

 

A.           Verenium and XOMA are parties to the Existing Agreement (as defined below);

 

B.           Under the Existing Agreement, Verenium has completed two (2) XOMA Projects (as defined below ), and the Existing Agreement contemplates that Verenium would undertake up to two additional XOMA Projects (the “Remaining XOMA Projects”) upon notice from XOMA as provided in the Existing Agreement; and

 

C.           Verenium is the owner of the GSSM Technologies (as defined below), and XOMA wishes to acquire, and Verenium is willing to grant to XOMA, a co-exclusive license under the GSSM Technologies on the terms and conditions set forth below, in order to permit XOMA, its Development Partners and Collaborators (as such terms are defined below) to engage in certain research, development and commercial activities in return for Verenium being released from its obligations in Section 4.3 and elsewhere under the Existing Agreement to initiate and undertake a scientific collaboration with XOMA with respect to any Remaining XOMA Projects and for certain payments by XOMA to Verenium, as further described below.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter recited, the parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

In this Agreement, the following terms shall have the meanings set forth in this Article.

 

1.1           “Affiliate” means any company, corporation or other entity which is directly or indirectly controlling, controlled by or under common control with a party hereto.  For purposes of this Agreement, with respect to any company, corporation or other entity, “control” (including, with correlative meanings, the terms “controlled” and “controlling”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the subject company, corporation or other entity, whether through the ownership of voting securities, by agreement or otherwise.

 

1.2           “Collaborator” means any Third Party or Affiliate of a party with whom or on whose behalf a party engages in Research and Development, manufacture, use, offer for use, sale, importation and exportation of any Immunoglobulin or Product.

 

1.3           “Confidential Information” means any proprietary or confidential information or material disclosed by a party to the other party pursuant to this Agreement or the Existing Agreement, which is (i) disclosed in tangible form hereunder and is designated thereon as “Confidential” at the time it is delivered to the receiving party, or (ii) disclosed orally hereunder and identified as confidential or proprietary when disclosed and such disclosure of confidential information is confirmed in writing within thirty (30) days by the disclosing party.

 

  

 

  

1.4           “Development Partner” means a Third Party from whom a party either in-licenses a target for development and/or commercialization or with whom a party shares the economic risk of development or commercialization of a target or product, including, without limitation, an Immunoglobulin or a Product.

 

1.5           “Existing Agreement” means the License Agreement, effective as of December 23, 2003, between the parties, as amended in accordance with its terms.

 

1.6           “Field” means use of an Immunoglobulin or product containing or comprising any Immunoglobulin for the diagnosis, treatment, prevention or prophylaxis of any human or animal condition or disease, and all Research and Development activities relating thereto.  The term “Field” shall exclude all other uses, including, but not limited to, (a) animal feed applications for improved feed conversion and/or animal nutrition; (b) identification, selection or expression of proteins, reagents, and/or enzymes or compositions of matter solely for industrial uses, including without limitation in the chemical industry and/or any industrial manufacturing processes; (c) plant science or agricultural applications; and (d) the hydrolytic conversion of plant-based materials to fermentable sugars and/or other chemicals for use in fuel production, and all Research and Development activities relating to any of the foregoing.

 

1.7           “First Commercial Sale” means the initial transfer by a Selling Party (either directly or through a Third Party, including without limitation any joint venture or similar arrangement in which the Selling Party is a participant) of a Product for value and not for demonstration, pre-clinical or clinical testing or promotional purposes.

 

1.8           “GSSM Technologies” means (a) the inventions patentable under applicable patent law that are claimed in the Verenium Patent Rights and (b) the Verenium Know-How.

 

1.9           “Immunoglobulin” means any molecule that has an amino acid sequence by virtue of which it specifically interacts with an antigen and/or haptogen and wherein that amino acid sequence consists essentially of a functionally operating region of an antibody variable region or functional equivalent thereof, including without limitation any naturally occurring or recombinant form of such a molecule.  Without limiting the foregoing, included in the definition of Immunoglobulin shall be full immunoglobulin molecules (e.g., IgG, IgM, IgE, IgA and IgD molecules), ScFv, Fv and Fab molecules, as well as other formats such as diabodies, nanobodies and unibodies.

 

1.10           “Improved Immunoglobulin” means any Immunoglobulin discovered, isolated, optimized, developed or commercialized using any technique, method, information or material within the GSSM Technologies, together with all inventions or improvements embodied in such Immunoglobulin.

 

1.11           “Net Sales” means, solely with respect to sales by a Selling Party (either directly or through a Third Party, including without limitation any joint venture or similar arrangement in which the Selling Party is a participant), the gross amount invoiced by the Selling Party (or such joint venture or similar arrangement) to an independent Third Party less the following items:

 

(a)           Trade, cash and quantity discounts actually allowed and taken directly with respect to such sales;

  

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(b)           Excises, sales taxes or other taxes imposed upon and paid directly with respect to such sales (excluding national, state or local taxes based income);

 

(c)           Amounts repaid or credited by reason of rejections, defects, recalls or returns or because of rebates or retroactive price reduction; and

 

(d)           Freight, transportation and insurance.

 

1.12           “New Inventions” means inventions or improvements first conceived of or reduced to practice by or on behalf of XOMA or Verenium arising out of use of the GSSM Technologies, Verenium Patent Rights or Verenium Know-How during the term of this Agreement.

 

1.13           “Product” means any composition of matter or article of manufacture, including without limitation any diagnostic, prophylactic or therapeutic product, which contains or comprises any Improved Immunoglobulin.

 

1.14           “Research and Development” means creation, identification, analysis, research, characterization or development of actual or potential products (including, without limitation antibody array or chip).  Included within the definition of “Research and Development”, without limiting such definition, shall be the identification, selection, isolation, purification, characterization, study and/or testing of an Immunoglobulin and all in vitro screening or assays customarily performed in pre-clinical and clinical research and uses associated with obtaining FDA or equivalent agency regulatory approval.

 

1.15           “Selling Party” means, as applicable, XOMA or any of its Affiliates, Development Partners, Collaborators or any licensee of any Product from any of the foregoing.

 

1.16           “Third Party” means any person or entity other than Verenium or XOMA or any of their respective Affiliates.

 

1.17           “Valid Claim” means a claim of an issued and unexpired patent included within the Verenium Patent Rights which has not been held invalid in a final decision of a court of competent jurisdiction from which no appeal may be taken, and which has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise.

 

1.18           “Verenium Know-How” means the information, techniques, data, materials and chemicals controlled by Verenium that are necessary to practice the inventions claimed in the Verenium Patent Rights to discover, isolate, optimize, develop or commercialize Immunoglobulins in the Field.  The Verenium Know-How is listed on Schedule 1.18.

 

1.19           “Verenium Patent Rights” means the inventions patentable under applicable patent law that are claimed in the patent applications and patents listed on Schedule 1.19 hereto and all divisions, continuations, continuations-in-part, applications claiming priority thereto, and substitutions thereof; all foreign patent applications corresponding to the preceding applications; all U.S. and foreign patents issuing on any of the preceding applications, including extensions, reissues and re-examinations; and any patents or patent applications, whether now existing or obtained in the future, owned or controlled by Verenium containing a claim that is dominating over the foregoing patent rights (i.e., is necessarily infringed by the practicing of a claim in one of the foregoing patents or applications).

 

1.20           “XOMA Projects” means up to four (4) different projects conducted or to be conducted by Verenium for XOMA pursuant to the Existing Agreement as described in further detail in Section 4.3 of the Existing Agreement.

  

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The above definitions are intended to encompass the defined terms in both the singular and plural forms.

 

ARTICLE 2

 

LICENSE GRANT

 

2.1           License Grant; Agreements.  Subject to the other terms and conditions of this Agreement, Verenium grants to XOMA a world-wide, co-exclusive license under the Verenium Know-How and Verenium Patent Rights to use and practice the GSSM Technologies, on its own behalf and on behalf of any Affiliate, Development Partner or Collaborator, to discover, isolate, optimize, develop or commercialize any Immunoglobulin (including without limitation an Improved Immunoglobulin) or Product in the Field.  For the purposes of this Agreement, the term “co-exclusive” shall mean that, within the Field, only Verenium and XOMA (and their respective Affiliates) may use and practice the GSSM Technologies, on their own behalf and on behalf of their respective Development Partners and Collaborators, for the discovery, isolation, optimization, development and commercialization of any Immunoglobulin or Product in the Field.  Verenium retains the right under the Verenium Know-How and Verenium Patent Rights to use and practice the GSSM Technologies, on its own behalf and on behalf of its Affiliates, Development Partners and Collaborators, to discover, isolate, optimize, develop or commercialize any Immunoglobulin or Product in the Field, but Verenium shall not grant any further licenses to any Third Party under the Verenium Know-How or Verenium Patent Rights to use or practice the GSSM Technologies to discover, isolate, optimize, develop or commercialize any Immunoglobulin or Product in the Field, provided, however, that notwithstanding any other provision of this Agreement, Verenium shall be entitled to (a) transfer Improved Immunoglobulins and nucleic acids coding for Improved Immunoglobulins as is reasonably necessary to permit any Third Party working as a subcontractor or service provider for Verenium or its Affiliates, Development Partners or Collaborators to undertake any activities which Verenium would otherwise be permitted to undertake; and (b) transfer Improved Immunoglobulins and nucleic acids coding for Improved Immunoglobulins as is reasonably necessary to permit Verenium or any of its Affiliates, Development Partners or Collaborators to make, have made, use, sell, offer to sell, import or export any Product.  For the sake of clarity, Verenium may use and practice the GSSM Technologies under the rights retained in the immediately preceding sentence of this Section 2.1 on behalf of any of its Development Partners or Collaborators only in respect of or in connection with the activities that such Development Partner or Collaborator is engaged in that are the basis for meeting the definition of Development Partner or Collaborator and not any other activities.  Without limiting the foregoing, Verenium retains for itself all rights under the Verenium Know-How and Verenium Patent Rights that are not expressly licensed to XOMA under this Section 2.1.  Except as specifically set forth in this Agreement, no license or other intellectual property interest is granted, by implication or otherwise, in any information by Verenium under this Agreement or under any patents or patent applications owned or controlled by Verenium.

 

2.2           Verenium Transfer to XOMA.  Within thirty (30) days of the Effective Date, Verenium shall transfer to XOMA, at a mutually agreed place and time and at XOMA’s expense, the Verenium Know-How listed on Schedule 1.18.  XOMA shall be entitled to ten (10) person-days of Verenium scientific staff time (one (1) to four (4) of which person-days shall be at XOMA’s facilities) during the three (3) month period following such transfer of Verenium Know-How to XOMA (which period may be extended by mutual written consent of the parties, which consent shall not be unreasonably withheld).  Thereafter, XOMA will be able to consult with Verenium scientific staff at a cost of $2,500/person-day (based on an eight hour day) beyond the ten (10) person-days, to be paid by XOMA to Verenium upon receipt of an invoice therefor.  Verenium confirms that the Verenium Know-How listed on Schedule 1.18 constitutes all of the most recent materials (excluding generally available laboratory materials) used by it to practice the inventions claimed in the Verenium Patent Rights to discover, isolate, optimize, develop or commercialize Immunoglobulins in the Field.  From time to time, but no more often than once every year, XOMA shall have the right to request in writing, and Verenium shall provide (at XOMA’s expense), any updates or improvements that fall within the Verenium Know-How.

  

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2.3           Limitations on Sublicense.  For the sake of clarity, the license granted in Section 2.1 is personal to XOMA and is to be used solely by XOMA on behalf of itself and its Affiliates or by XOMA on behalf of its Development Partners or Collaborators, and XOMA shall not grant any sublicenses under the license granted in Section 2.1, provided, however, that notwithstanding any other provision of this Agreement, XOMA shall be entitled to (a) transfer Improved Immunoglobulins and nucleic acids coding for Improved Immunoglobulins as is reasonably necessary to permit any Third Party working as a subcontractor or service provider for XOMA or its Development Partners or Collaborators to undertake any activities which XOMA would otherwise be permitted to undertake pursuant to this Agreement; and (b) transfer Improved Immunoglobulins and nucleic acids coding for Improved Immunoglobulins as is reasonably necessary to permit XOMA or any of its Affiliates, Development Partners or Collaborators to make, have made, use, sell, offer to sell, import or export any Product as to which the obligations of Article 3 are satisfied. For the sake of clarity, XOMA may use and practice the GSSM Technologies under the license granted in Section 2.1 on behalf of any of its Development Partners or Collaborators only in respect of or in connection with the activities that such Development Partner or Collaborator is engaged in that are the basis for meeting the definition of Development Partner or Collaborator and not any other activities.

 

2.4           Ownership; Patent Rights; Enforcement.

 

(a)           Verenium shall retain ownership of the Verenium Patent Rights.  As between the parties, (i) XOMA shall own all rights in and to any New Inventions first conceived of or reduced to practice by or on behalf of XOMA that (A) are Improved Immunoglobulins or methods of use of Improved Immunoglobulins, or (B) are applicable only to Immunoglobulins, including without limitation methods of building Immunoglobulin libraries, screening Immunoglobulins, improved Immunoglobulin vectors, and antibody structure/function relationships and uses, and shall have the right to secure patent protection therefor, and (ii) Verenium shall own all rights in and to any New Inventions first conceived of or reduced to practice by or on behalf of Verenium that (A) are Improved Immunoglobulins or methods of use of Improved Immunoglobulins, or (B) are applicable only to Immunoglobulins, such as methods of screening Immunoglobulins, improved Immunoglobulin vectors, and antibody structure/function relationships and uses, and shall have the right to secure patent protection therefor.

 

(b)           With regard to all New Inventions other than those described in Section 2.4(a) (“Verenium-Owned New Inventions”):

 

(i)      each party shall provide the other party written notice of all such New Inventions first conceived of or reduced to practice by or on behalf of such party reasonably promptly after the applicable conception or reduction to practice; provided, however, that Verenium shall not be required to notify XOMA of any such New Inventions of Verenium other than those that are necessary or useful to practice the inventions claimed in the Verenium Patent Rights to discover, isolate, optimize, develop or commercialize Immunoglobulins in the Field; and

 

(ii)      all Verenium-Owned New Inventions shall be owned solely by Verenium and Verenium shall have the right to secure patent protection therefor, XOMA hereby assigns and agrees to take such other actions (at Verenium’s expense) as may be necessary or appropriate to effect the ownership of Verenium-Owned New Inventions by Verenium, and the Verenium-Owned New Inventions shall be listed on Schedule 1.19, included in the definition of Verenium Patent Rights and subject to the license granted under Section 2.1.

  

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(c)           Verenium shall continue to file for, prosecute to issuance, maintain and extend the applicable life of the Verenium Patent Rights in accordance with its then most current corporate practices and policies and will provide XOMA with notice of, and where feasible copies of relevant documentation relating to, all significant filings and other developments in connection therewith.  If Verenium elects not to file, maintain, prosecute or extend any Verenium Patent Right, it shall provide XOMA with reasonable prior written notice of such intention.  At Verenium’s sole election, depending upon applicable factors such as rights retained by Verenium and rights granted by Verenium to Third Parties thereunder, Verenium may permit XOMA, at the sole option and expense of XOMA, to file, maintain, prosecute or extend such patent application, patent, or other intellectual property right, which rights shall continue to be included in the Verenium Patent Rights or, at the sole discretion of Verenium, may be assigned to XOMA, subject to a license back to Verenium of rights under such patent application, patent, or other intellectual property right as appropriate outside of the scope of the rights granted to XOMA in Section 2.1.

 

(d)           Verenium shall promptly notify XOMA of any actual or threatened proceeding relating to the Verenium Patent Rights and/or each party shall promptly notify the other party of any infringement of the Verenium Patent Rights or unauthorized use or misappropriation of the Verenium Know-How by Third Parties of which it becomes aware.  At its sole option and expense, Verenium shall have the sole right to bring and/or control, by counsel of its own choice any action or proceeding relating to the Verenium Patent Rights, including the negotiation of any agreements relating thereto, subject to this Section 2.4(d).  With respect to any such action or proceeding relating to the Verenium Patent Rights that involves use of the GSSM Technologies to discover, isolate, optimize, develop or commercialize any Immunoglobulin or product comprised of or containing any Immunoglobulin in the Field, XOMA shall have the right, at its own expense, to be represented in any such action by counsel of its own choice, and Verenium and its counsel will reasonably cooperate with XOMA and its counsel in strategizing, preparing, and presenting any such action or proceeding.  If Verenium notifies XOMA that it does not intend to bring an action or proceeding to defend against any infringement of the Verenium Patent Rights or unauthorized use or misappropriation of the Verenium Know-How that involves use of the GSSM Technologies to discover, isolate, optimize, develop or commercialize any Immunoglobulin or product comprised of or containing any Immunoglobulin in the Field, or if Verenium does not indicate to XOMA its intention to bring any such action within a reasonable time after written notice from XOMA of XOMA’s reasonable request that Verenium do so, the parties will meet to discuss an appropriate course of action.  If Verenium and XOMA cannot agree on the appropriate course of action within a reasonable time, then the provisions of Section 3.2 and Section 3.4 (with respect to the first event and payment listed thereunder only) shall be of no further force or effect with respect to any payment thereunder not yet made.

 

ARTICLE 3

 

CONSIDERATION

 

3.1           Technology Access Fee.  XOMA shall pay to Verenium a non-refundable, non-creditable technology access fee of Seven Hundred Fifty Thousand Dollars (US$750,000) in two (2) installments of Three Hundred Twelve Thousand Five Hundred Dollars (US$312,500) each upon the first day of the first and second full calendar quarters immediately following the Effective Date and two (2) installments of Sixty-Two Thousand Five Hundred Dollars (US$62,500) each upon the first day of the third and fourth full calendar quarters immediately following the Effective Date.

  

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3.2           Annual Maintenance Fee.  XOMA shall pay to Verenium a non-refundable, non-creditable annual maintenance fee of [*] Dollars (US$[*]) on each of the first [*] anniversaries of the Effective Date and, for [*] successive anniversaries, an annual maintenance fee of [*] Dollars (US$[*]) commencing the [*] anniversary of the Effective Date.

 

3.3           Development Partner/Collaborator Access Fee.  Commencing as of the Effective Date, if XOMA uses the GSSM Technologies in any transaction with a Development Partner or Collaborator, for the first [*] of such transactions only, XOMA shall pay to Verenium a non-refundable, non-creditable access fee of [*] Dollars (US$[*]) within thirty (30) days of the use of such GSSM Technologies.  For the avoidance of doubt, XOMA shall not be obligated pursuant to this Section 3.3 to pay to Verenium any amount in excess of [*] Dollars (US$[*]).

 

3.4           Milestone Payments.  Within thirty (30) days following, as applicable (a) the achievement by XOMA or an Affiliate of XOMA, or (b) receipt by XOMA of notice from the relevant Development Partner or Collaborator of XOMA or licensee of any Product from any of the foregoing (or XOMA otherwise becoming aware) of achievement by such Development Partner, Collaborator or licensee, in each case of the following milestones with respect to each Product, XOMA shall pay to Verenium the applicable non-refundable, non-creditable payments below:

 

	
Event

	
  Payment

	 	 
	
Initiation (i.e., dosing of a first human patient) of a first Phase I (or equivalent) trial

	
US$250,000

	 	 
	
Approval of NDA , BLA or equivalent

	
US$750,000

3.5           Royalties.  With respect to any Product sold by or on behalf of XOMA, or any of its Affiliates, Development Partners or Collaborators or licensee of any of the foregoing, there shall be due to Verenium a royalty in cash equal to [*] percent ([*]%) of the Net Sales of such Product in each calendar quarter, commencing with the first calendar quarter ending after the Effective Date.  Royalties due under this Article 3 shall be payable on a country-by-country and Product-by-Product basis from the First Commercial Sale of such Product until the expiration of the last-to-expire Verenium Patent Right in such country with respect to which a Valid Claim covers the manufacture, use, sale, offer for sale, import or export of such Product or the [*] anniversary of such First Commercial Sale, whichever is later. In the event that XOMA, a Development Partner or Collaborator or a licensee must obtain a license to any issued patent from one or more Third Parties in order to practice the GSSM Technologies in the manner authorized by this Agreement, and after good faith consultation with Verenium and the provision of an opinion of reputable patent counsel supporting the need to obtain such a patent license from such Third Party, then XOMA shall be entitled to a credit equal to [*] percent ([*]%) of the amount by which the total royalties on Net Sales of the applicable Product that is actually paid under the terms of bona fide and arm’s length patent license(s) from such Third Party or Third Parties exceeds [*] percent ([*]%) of Net Sales of such Product; provided, however, that in no event shall the total royalty amount due to Verenium under this Article 3 with respect to such Product be reduced by more than [*] percent ([*]%) of the amount set forth in the first sentence of this Section 3.5 in any calendar quarter.

  

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3.6           Payments to Verenium; Currency.  The parties hereby acknowledge that the value contributed by Verenium to any Product developed and/or commercialized by or on behalf of XOMA, or any of its Affiliates, Development Partners or Collaborators or licensee of any of the foregoing is the right to use and practice the GSSM Technologies, Verenium Patent Rights and Verenium Know-How provided pursuant to the license granted under Section 2.1 and the transfer pursuant to Section 2.2 and that all of the payments in this Article 3 will be payable by XOMA in accordance with the terms and conditions hereof regardless of whether or not the development, manufacture, use, sale, offer for sale, import or export of such Product is covered by any Verenium Patent Rights.  All payments due hereunder shall be paid by wire transfer in United States dollars in immediately available funds to an account designated by Verenium.  Payments required pursuant to Section 3.4 hereof shall be due and payable to Verenium when the corresponding milestones are achieved and shall be paid within thirty (30) days following, as applicable (a) the achievement by XOMA or an Affiliate of XOMA, or (b) receipt by XOMA of notice from the relevant Development Partner or Collaborator of XOMA or licensee of any Product from any of the foregoing (or XOMA otherwise becoming aware) of achievement by such Development Partner, Collaborator or licensee, of such milestone.  Payments required pursuant to Section 3.5 hereof shall be due and payable to Verenium when the corresponding Net Sales are received by XOMA (or any joint venture or similar arrangement in which XOMA is a participant) or, where XOMA is not the Selling Party, when the corresponding Net Sales calculations are received by XOMA from such Selling Party and, in each case, shall be paid within thirty (30) days thereof.  If any currency conversion shall be required in connection with the payment of any royalties hereunder, such conversion shall be made by using the exchange rate for the purchase of U.S. dollars quoted in the U.S. version of The Wall Street Journal on the last business day of the calendar quarter to which such payments relate.

 

3.7           Payment Reports to Verenium.  XOMA shall make a written report to Verenium within thirty (30) days following, as applicable (a) the achievement by XOMA or an Affiliate of XOMA, or (b) receipt by XOMA of notice from the relevant Development Partner or Collaborator of XOMA or licensee of any Product from any of the foregoing (or XOMA otherwise becoming aware) of achievement by such Development Partner, Collaborator or licensee, of each of the milestones set forth in Section 3.4 with respect to each Product, stating in each such report the Product to which such milestone relates and the specific milestone achieved, including the relevant agency or other regulatory body.  After the First Commercial Sale of a Product on which royalties are required to be paid hereunder, XOMA shall make quarterly written reports to Verenium within thirty (30) days after the end of each calendar quarter or, where XOMA is not the Selling Party, within thirty (30) days after the corresponding Net Sales calculations are received by XOMA from such Selling Party, stating in each such report, by country, the number, description, and aggregate Net Sales of each Product sold during the calendar quarter.  XOMA shall treat all reports delivered pursuant to this Section 3.7 as Confidential Information of Verenium.

 

3.8           Payment Records and Inspection.  XOMA shall keep, and shall use commercially reasonable efforts to require all other Selling Parties to keep, complete, true and accurate books of account and records for the purpose of determining the amounts payable under this Agreement.  Such books and records shall be kept at the principal place of business of XOMA for at least [*] following the end of the calendar quarter to which they pertain.  Upon the written request of Verenium and not more than once in each calendar year, XOMA shall permit an independent consultant appointed by Verenium and reasonably acceptable to XOMA to have access during normal business hours to such of the records of XOMA as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than [*] prior to the date of such request, unless a discrepancy is found.  The consultant shall disclose to Verenium only the results and conclusions of its review and the specific details concerning any discrepancies.  No other information shall be shared by the consultant without the prior consent of XOMA unless disclosure is required by law, regulation or judicial order.  Inspections conducted under this Section 3.8 shall be at the expense of Verenium, unless an underpayment exceeding [*] percent ([*]%) of the amount stated for the full period covered by the inspection is identified, in which case all out-of-pocket costs relating to the inspection will be paid promptly by XOMA.  Any underpayments or unpaid amounts discovered by such inspections or otherwise will be paid promptly by XOMA, with interest from the date(s) such amount(s) were due at a rate equal to the lesser of the prime rate reported by the Bank of America plus two percent (2%) or the highest interest rate permitted under applicable law.

  

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3.9           Certain Changes to the Existing Agreement.  The Existing Agreement is hereby modified as follows (it being understood that, in all other respects, the Existing Agreement remains in full force and effect):

 

(a)           The royalty applicable to the XOMA Development Product (as defined in the Existing Agreement) arising from the first XOMA Project completed by Verenium (i.e. [*] antibody) shall be [*] percent ([*]%) of Net Sales, instead of the [*] percent ([*]%) set forth in Section 4.3(j) of the Existing Agreement; and

 

(b)           Upon the Effective Date, any and all obligations of Verenium to initiate or conduct any XOMA Projects as set forth in Section 4.3 and elsewhere in the Existing Agreement are terminated.

 

ARTICLE 4

 

CONFIDENTIALITY

 

4.1           Confidential Information.  Except as expressly provided herein, the parties agree that, for the term of this Agreement and for five (5) years thereafter, the receiving party shall keep completely confidential and shall not publish or otherwise disclose and shall not use for any purpose except for the purposes contemplated by this Agreement any Confidential Information furnished to it by the disclosing party hereto, except to the extent that it can be established by the receiving party by written proof that such Confidential Information:

 

(a)           was already known to the receiving party, other than under an obligation of confidentiality, at the time of disclosure;

 

(b)           was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party;

 

(c)           became generally available to the public or otherwise part of the public domain after its disclosure other than through any act or omission of the receiving party in breach of this Agreement;

 

(d)           was subsequently lawfully disclosed to the receiving party by a person other than a party hereto; or

 

(e)           was independently developed by Verenium or XOMA, as the case may be, without reference or access to the Confidential Information of the other party.

 

4.2           Permitted Use and Disclosures.  Each party hereto may use or disclose information disclosed to it by the other party to the extent such use or disclosure is reasonably necessary in complying with applicable law or government regulations; provided, however, that if a party is required to make any such disclosure of another party’s Confidential Information, it will give reasonable advance notice to the latter party of such disclosure and, will use its reasonable efforts to secure confidential treatment of such information prior to its disclosure (whether through protective orders or otherwise).  In the event XOMA intends to publish or present data or other information that constitutes or includes Confidential Information of Verenium, XOMA shall provide Verenium with notice thereof and a draft of the relevant manuscript or presentation reasonably in advance of such publication or presentation, and XOMA may make such publication or presentation with Verenium’s prior written consent, which consent shall not be unreasonably withheld or delayed.

  

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4.3           Confidential Terms.  Except as expressly provided herein, each party agrees not to disclose any terms of this Agreement to any Third Party without the consent of the other party; provided, that disclosures may be made without such consent as required by securities or other applicable laws, or to a party’s accountants, attorneys and other professional advisors; provided, further, that disclosure of the terms of this Agreement may be made by a party without such consent of the other party to actual or potential Development Partners, Collaborators, acquirers or investors who agree to be bound by the confidentiality provisions of this Agreement or are otherwise subject to requirements of confidentiality at least as stringent as those contained herein.

 

4.4           Agreement Announcement.  The parties hereby agree to the release of a press release in a form to be agreed between them within a reasonable period of time following full execution of this Agreement, that the fact of the consummation of this Agreement as well as such terms as are expressly described in such press release (but not its financial or other terms) shall be deemed to be in the public domain following such release, and that once any information has been approved by the parties for disclosure, no further consent or approval shall be required under this Article 4 with respect to disclosure of such information.

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES

 

5.1           Representations and Warranties.  (a) Verenium represents and warrants to XOMA that:  (i) it is the sole and exclusive owner or exclusive licensee of all right, title and interest in the Verenium Patent Rights and Verenium Know-How as of the Effective Date; provided, however, that XOMA acknowledges that the vector described in item 1 on Schedule 1.18 includes a promoter owned by a Third Party and XOMA shall be responsible for obtaining the necessary license from such Third Party for use of such promoter; (ii) Verenium has the legal right, authority and power to enter into this Agreement; (iii) this Agreement shall constitute a valid and binding obligation of Verenium enforceable in accordance with its terms; and (iv) the performance of obligations under this Agreement by Verenium shall not result in a breach of any agreements, contracts or other arrangements to which it is a party.

 

(b)           XOMA represents and warrants to Verenium that:  (i) XOMA has the legal right, authority and power to enter into this Agreement; (ii) this Agreement shall constitute a valid and binding obligation of XOMA enforceable in accordance with its terms; and (iii) the performance of obligations under this Agreement by XOMA shall not result in a breach of any agreements, contracts or other arrangements to which it is a party.

 

5.2           Disclaimer.  Nothing in this Agreement is or shall be construed as:

 

(a)           A warranty or representation by Verenium as to the validity or scope of any claim or patent within the Verenium Patent Rights;

 

(b)           A warranty or representation that anything discovered, developed, made, used, sold, or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of any patent rights or other intellectual property right of any Third Party;

 

(c)           An obligation to bring or prosecute actions or suits against Third Parties for infringement of any of the Verenium Patent Rights;

  

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(d)           An obligation to maintain any patent or to continue to prosecute any patent application included within the Verenium Patent Rights in any country; or

 

(e)           Granting by implication, estoppel, or otherwise any licenses or rights under patents or other rights of Verenium or Third Parties, regardless of whether such patents or other rights are dominant or subordinate to any patent within the Verenium Patent Rights.

 

5.3           No Other Warranties.  EXCEPT AS OTHERWISE SET FORTH IN SEC­TION 5.1 ABOVE, NEITHER PARTY HERETO MAKES ANY WARRANTIES WITH RESPECT TO ANY OF THE PATENT RIGHTS, MATERIALS OR KNOW-HOW LICENSED HEREUNDER, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OF VALIDITY OF SUCH PATENT RIGHTS, MATERIALS OR KNOW-HOW, OR OF NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.

 

ARTICLE 6

 

INDEMNIFICATION

 

6.1           Indemnification.  (a)    Verenium agrees to indemnify, defend and hold XOMA and its directors, officers, employees and agents (the “XOMA Indemnified Parties”) harmless from and against any and all liabilities, losses and expenses (including without limitation attorneys and professional fees and other costs of litigation), resulting from any claims, demands or causes of action by any Third Party (each, a “XOMA Liability”) arising out of (i) the exercise of any right granted to Verenium pursuant to this Agreement, or (ii) any breach of this Agreement by Verenium, except to the extent, in each case, that such XOMA Liability is caused by the negligence or willful misconduct of XOMA.  For the avoidance of doubt, the obligations of this Section 6.1(a) shall not apply to any XOMA Liability unrelated to this Agreement.

 

(b)           XOMA agrees to indemnify, defend and hold Verenium and its directors, officers, employees and agents (the “Verenium Indemnified Parties” and, together with the XOMA Indemnified Parties, each an “Indemnified Party”) harmless from and against any and all liabilities, losses and expenses (including without limitation attorneys and professional fees and other costs of litigation), resulting from any claims, demands or causes of action by any Third Party (each, a “Verenium Liability”) arising out of (i) the discovery, isolation or optimization of any Immunoglobulin (including without limitation an Improved Immunoglobulin) or Product by or on behalf of XOMA or development, possession, manufacture, use, sale or other disposition of any Immunoglobulin (including without limitation an Improved Immunoglobulin) or Product or the provision of any service or goods relating thereto by XOMA, or any of its Affiliates, Development Partners, Collaborators or any customer, vendor or other representative of any thereof, whether based on breach of warranty, negligence, product liability or otherwise, (ii) the exercise of any right granted to XOMA or any of its Affiliates, Development Partners or Collaborators pursuant to this Agreement, or (iii) any breach of this Agreement by XOMA, except to the extent, in each case, that such Verenium Liability is caused by the negligence or willful misconduct of Verenium.  For the avoidance of doubt, the obligations of this Section 6.1(b) shall not apply to any Verenium Liability unrelated to this Agreement.

 

6.2           Procedure.  To receive the benefit of indemnification under Section 6.1, an Indemnified Party must (i) promptly notify the other party in writing of a claim, demand or cause of action; provided, that failure to give such notice shall not relieve the other party of its indemnification obligations except where, and solely to the extent that, such failure actually and materially prejudices the rights of the other party; (ii) provide reasonable cooperation (at the other party’s expense); and (iii) tender to the other party (and its insurer) full authority to defend or settle the claim or suit; provided that no settlement requiring any admission by the Indemnified Party or that imposes any obligation on the Indemnified Party shall be made without the Indemnified Party’s consent.  The other party shall not have any obligation to indemnify any Indemnified Party in connection with any settlement made without the other party’s written consent.  Each Indemnified Party has the right to participate at its own expense in the claim or suit and in selecting counsel therefor.  Each Indemnified Party shall cooperate with the other party (and its insurer), as reasonably requested.

  

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ARTICLE 7

 

TERM AND TERMINATION

 

7.1           Term.  Subject to Sections 7.4 and 7.5 hereof, the term of this Agreement will commence on the Effective Date and shall remain in full force and effect until the expiration of all payment obligations under Article 3, unless earlier terminated pursuant to Section 7.2 or 7.3; provided, however, that, to the extent any of the Verenium Know-How is not included in the Verenium Patent Rights and all Verenium Patent Rights have expired, upon such expiration and absent any earlier termination pursuant to Section 7.2 or 7.3, XOMA shall have a royalty-free, fully paid up right and license to continue to use the Verenium Know-How as permitted by Article 2.

 

7.2           Termination for Material Breach.  This Agreement may be terminated by the non-breaching party upon any material breach of this Agreement by the other party, effective five (5) days after giving notice to the breaching party of such termination in the case of a payment breach and sixty (60) days after giving written notice to the breaching party of such termination in the case of any other breach, which notice shall describe such breach in reasonable detail.  The foregoing notwithstanding, if such breach is cured or shown to be non-existent within the aforesaid five (5) or sixty (60) day period, the notice shall be deemed automatically withdrawn and of no effect and the notifying party shall provide written notice to the breaching party of the withdrawal.

 

7.3           Termination for Insolvency.  If voluntary or involuntary proceedings by or against either party are instituted in bankruptcy under any insolvency law, or a receiver or custodian is appointed for either party, or proceedings are instituted by or against either party for corporate reorganization or the dissolution of such party, which proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or if either party makes an assignment for the benefit of creditors, or substantially all of the assets of either party are seized or attached and not released within sixty (60) days thereafter, the other party may immediately terminate this Agreement effective upon notice of such termination.

 

7.4           Effect of Termination.    Termination of this Agreement shall not release any party hereto from any liability which, at the time of such termination, has already accrued to the other party or which is attributable to a period prior to such termination nor preclude either party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.  It is understood and agreed that monetary damages may not be a sufficient remedy for any breach of this Agreement and that the non-breaching party may be entitled to injunctive relief as a remedy for any such breach.  Such remedy shall not be deemed to be the exclusive remedy for any such breach of this Agreement, but shall be in addition to all other remedies available at law or in equity.  Upon any termination of this Agreement, Verenium and XOMA shall promptly destroy (and certify such destruction) or return to the other party all Confidential Information received from such other party (except that each party may retain one copy for its files solely for the purpose of determining its rights and obligations hereunder).

  

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7.5           Survival.  Sections 2.4(a) and (b), 3.8 (for the period specified therein), 3.9, 7.4 and 7.5, and Articles 1, 4, 5, 6 and 8, shall survive any termination hereof.

 

ARTICLE 8

 

MISCELLANEOUS PROVISIONS

 

8.1           Governing Laws.  This Agreement and any dispute, including without limitation any arbitration, arising from the performance or breach hereof shall be governed by and construed and enforced in accordance with the laws of the state of California, without reference to conflicts of laws principles.

 

8.2           Assignment.  Neither party may transfer or assign this Agreement, directly or indirectly, or any of its rights hereunder without the prior written consent of the other party, except that (a) XOMA may transfer or assign this Agreement, directly or indirectly, to any Affiliate of XOMA (provided that XOMA Ltd. guarantees the performance of this Agreement by such Affiliate) or to a Third Party in connection with the transfer or sale of all or substantially all of XOMA’s business or assets relating to antibody discovery and optimization and the provision of related services, whether through sale of stock, sale of assets, amalgamation, merger, consolidation or comparable transaction, and (b) Verenium may transfer or assign this Agreement, directly or indirectly, to any Affiliate of Verenium (provided that Verenium hereby guarantees the performance of this Agreement by such Affiliate) or to a Third Party in connection with the transfer or sale of all or substantially all of Verenium’s business or assets relating to GSSM Technologies to such Third Party, whether through sale of stock, sale of assets, amalgamation, merger, consolidation or comparable transaction.  Any such attempted transfer or assignment in violation of this Section 8.2 shall be void.  In the event of a permitted change in control, the original party’s (or its successor’s) obligations hereunder shall continue.  This Agreement shall be binding upon and inure to the benefit of the parties and their permitted successors and assigns.

 

8.3           Waiver.  No waiver of any rights shall be effective unless consented to in writing by the party to be charged and the waiver of any breach or default shall not constitute a waiver of any other right hereunder or any subsequent breach or default.

 

8.4           Severability.  In the event that any provisions of this Agreement are determined to be invalid or unenforceable by a court of competent jurisdiction, the remainder of the Agreement shall remain in full force and effect without said provision.

 

8.5           Notices.  All notices, requests and other communications hereunder shall be in writing and shall be delivered or sent in each case to the respective address specified below, or such other address as may be specified in writing to the other party hereto, and shall be effective on receipt:

 

	 	
Verenium:

	
Verenium  Corporation

4955 Directors Place

San Diego, CA  92121-1609

Attn:  Intellectual Property Department

	 	  	  
	 	
XOMA:

 

	
XOMA Ireland Limited

Shannon Airport House

Shannon, County Clare

Ireland

Attn:  Company Secretary

	 	  	  
	 	  	
with a copy (which shall not constitute notice) to:

	 	  	  
	 	  	
Cahill Gordon & Reindel llp

80 Pine Street

New York, New York 10005

Attn:  Geoffrey E. Liebmann

  

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8.6           Independent Contractors.  Both parties are independent contractors under this Agreement.  Nothing contained in this Agreement is intended nor is to be construed so as to constitute Verenium or Verenium as partners or joint venturers with respect to this Agreement.  Except as expressly provided herein, neither party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other party or to bind the other party to any other contract, agreement, or undertaking with any third party.

 

8.7           Compliance with Laws.  In exercising their rights under this license, the parties shall comply in all material respects with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction over the exercise of rights under this Agreement.

 

8.8           Bankruptcy.  All rights and licenses granted under or pursuant to this Agreement by one party to the other are, for all purposes of Section 365(n) of Title XI of the United States Code (“Title XI”), licenses of rights to “intellectual property” as defined in Title XI.  During the term of this Agreement each party shall create and maintain current copies to the extent practicable of all such intellectual property.  If a bankruptcy proceeding is commenced by or against one party under Title XI, the other party shall be entitled to a copy of any and all such intellectual property and all embodiments of such intellectual property, and the same, if not in the possession of such other party, shall be promptly delivered to it (a) upon such party’s written request following the commencement of such bankruptcy proceeding, unless the party subject to such bankruptcy proceeding, or its trustee or receiver, elects within thirty (30) days to continue to perform all of its obligations under this Agreement, or (b) if not delivered as provided under clause (a) above, upon such other party’s request following the rejection of this Agreement by or on behalf of the party subject to such bankruptcy proceeding.  If a party has taken possession of all applicable embodiments of the intellectual property of the other party pursuant to this Section 8.8 and the trustee in bankruptcy of the other party does not reject this Agreement, the party in possession of such intellectual property shall return such embodiments upon request.  If a party seeks or involuntarily is placed under Title XI and the trustee rejects this Agreement as contemplated under 11 U.S.C. 365(n)(1), the other party hereby elects, pursuant to Section 365(n) of Title XI, to retain all rights granted to it under this Agreement to the extent permitted by law.

 

8.9           Use of Name.  Neither party shall use the name or trademarks of the other party, except to the extent that a party is permitted to use the Confidential Information of the other party pursuant to Article 4, without the prior written consent of such other party.

 

8.10         Further Actions.  Each party agrees to execute, acknowledge and deliver such further instruments, and do such other acts, as may be necessary and appropriate in order to carry out the purposes and intent of this Agreement.

 

8.11         Entire Agreement; Amendment.  This Agreement constitutes the entire and exclusive Agreement between the parties with respect to the subject matter hereof and supersedes and cancels all previous discussions, agreements, commitments and writings in respect thereof; provided, however, that the Existing Agreement as amended by Section 3.9, shall remain in full force and effect in accordance with its terms.  No amendment or addition to this Agreement shall be effective unless reduced to writing and executed by the authorized representatives of the parties.

  

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8.12           Arbitration.  (a)  Solely with respect to any dispute between the parties to this Agreement (other than any dispute which arises out of or relates to infringement, validity and/or enforceability of the Verenium Patent Rights) upon ten (10) days written notice, any party involved in the dispute may initiate arbitration by giving notice to that effect to the other party or parties involved in the dispute and by filing the notice with the American Arbitration Association or its successor organization (“AAA”) in accordance with its Commercial Arbitration Rules.  Such dispute shall then be settled by arbitration in California, in accordance with the Commercial Arbitration Rules of the AAA or other rules agreed to by the parties involved in the dispute, by a panel of three neutral arbitrators, who shall be selected by the parties involved in the dispute using the procedures for arbitrator selection of the AAA.

 

(b)            The panel shall render its decision and award, including a statement of reasons upon which such award is based, within thirty (30) days after the arbitration hearing.  The decision of the panel shall be determined by majority vote among the arbitrators, shall be in writing and shall be binding upon the parties involved in the dispute, final and non-appealable.  Judgment upon the award rendered by the panel may be entered in any court having jurisdiction thereof in accordance with Section 8.13(a).

 

(c)           All expenses of any arbitration pursuant to this Section 8.12, including fees and expenses of the parties’ attorneys, fees and expenses of the arbitrators, and fees and expenses of any witness or the cost of any proof produced at the request of the arbitrators, shall be paid by the non-prevailing party.

 

8.13         Venue; Jurisdiction.  (a)  Any action or proceeding brought by either party seeking to enforce any provision of, or based on any right arising out of, this Agreement must be brought against any of the parties in the courts of the State of California.  Each party (i) hereby irrevocably submits to the jurisdiction of the state courts of the State of California and to the jurisdiction of any United States District Court in the State of California, for the purpose of any suit, action, or other proceeding arising out of or based upon this Agreement or the subject matter hereof brought by any party or its successors or assigns, (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action, or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action, or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii) hereby waives and agrees not to seek any review by any court of any other jurisdiction that may be called upon to grant an enforcement of the judgment of any such California state or federal court.

 

(b)           Process in any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be served on any party anywhere in the world.  Each party consents to service of process by registered mail at the address to which notices are to be given pursuant to Section 8.5.  Nothing herein shall affect the right of a party to serve process in any other manner permitted by applicable law.  Each party further agrees that final judgment against it in any such action or proceeding arising out of or relating to this Agreement shall be conclusive and may be enforced in any other jurisdiction within or outside the United States of America by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of its liability.

  

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(c)           Each party agrees that it shall not, and that it shall instruct those in its control not to, take any action to frustrate or prevent the enforcement of any writ, decree, final judgment, award (arbitral or otherwise) or order entered against it with respect to this Agreement or the Verenium Patent Rights and shall agree to be bound thereby as if issued or executed by a competent judicial tribunal having personal jurisdiction situated in its country of residence or domicile.

 

8.14         Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

  

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IN WITNESS WHEREOF, Verenium and XOMA have executed this Agreement in duplicate originals by duly authorized officers.

	
VERENIUM CORPORATION

	  	
XOMA IRELAND LIMITED

	  
	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  
	  	
Gerald M. Haines II

	  	  	
Alan Kane, Director

	  
	  	
Executive Vice President & CLO

	  	  	
duly authorized for and on behalf of

XOMA Ireland Limited in the presence

of:

	  
	  	  	  	  	
  

 

	  

  

 

  

SCHEDULE 1.18

 

Verenium Know-How*

 

[*]

 

*           [*]

  

 

  

SCHEDULE 1.19

 

Verenium Patent Rights -- Patents, Etc.

 

[*]

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