Exhibit 10.31B

SECOND AMENDMENT TO COLLABORATION AGREEMENT

This Second Amendment to Collaboration Agreement (this “Second Amendment”) is
effective as of February 9, 2009 (the “Amendment Effective Date”) and is made by
and among Takeda Pharmaceutical Company Limited, a Japanese corporation having
offices at 1-1, Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan (hereinafter
“Takeda”); XOMA (US) LLC, a Delaware limited liability company having offices at
2910 Seventh Street, Berkeley, California 94710, USA (hereinafter “XOMA”) [*]

BACKGROUND

A. XOMA and Takeda entered into a certain Collaboration Agreement dated as of
November 1, 2006 (as amended, including by the First Amendment and, unless
otherwise noted after giving effect to this Second Amendment, the “Agreement”).

B. As part of the Collaboration, Takeda has expressed a desire to obtain
(i) expanded rights to XOMA-Controlled intellectual property rights and
(ii) certain materials and related information, hereinafter identified as, inter
alia [*] the Discovery Know-How and the Systems.

C. XOMA and Takeda wish to amend the Agreement and expand the Collaboration, and
to further enable Takeda to work with XOMA, the XOMA Companies wish to license,
sublicense, and otherwise make available certain items of intellectual property
and deliver to Takeda and, where specified herein, assign to Takeda (and its
Affiliates) all right, title and interest in, the Transferred Materials as
specified herein.

D. Takeda, on its own behalf and on behalf of its Affiliates, agrees to accept
the Transferred Materials under the terms and conditions of this Second
Amendment and, as applicable, the Agreement.

E. The XOMA Companies will benefit from the transactions contemplated by this
Second Amendment and the Agreement, and are willing to (i) grant Takeda the
expanded rights and licenses contained in this Second Amendment [*] and Takeda
agrees to accept such grants [*]

F. Terms which are defined in the Agreement shall have the same meanings when
used in this Second Amendment, unless a different definition is given herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements contained herein, each of the XOMA Companies and Takeda agree as
follows:

Section 1. Amendments. Pursuant to Section 14.9 of the Agreement,

(a) Article 1 (Definitions) of the Agreement is hereby supplemented, amended and
modified with the following definitions:

1.3 “Affiliate” means, as of the Amendment Effective Date, as to a particular
person or entity, any corporation, company, partnership, joint venture and/or
firm that controls, is controlled by or is under common control with such person
or entity. For purposes hereof, “control” means (a) in the case of a corporate
entity, direct or indirect ownership of more than fifty percent

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(50%) of the stock or shares entitled to vote for the election of directors;
(b) in the case of a non-corporate entity, direct or indirect ownership of more
than fifty percent (50%) of the equity interests with the power to direct the
management and policies of such non-corporate entity; or (c) possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the entity in question (whether through ownership of
securities or other ownership interests, by contract or otherwise).

1.8A “Applicable Specifications” means (a) with respect to [*] the [*] Materials
Specifications, (b) with respect to [*] the specifications determined to be
applicable thereto in accordance with Section 3A.4(a), and (c) with respect to
each of the Systems, the specifications corresponding to such System set forth
in Schedule 1.8A.

1.8B “Article 3A Know-How” means, collectively, the Discovery Know-How, HE™
Know-How [*] TES Know-How, and Systems Know-How.

1.8C “Article 3A Patent Rights” means, collectively, the Discovery Patent
Rights, HE™ Patent Rights [*] TES Patent Rights, and Systems Patent Rights.

1.8D “Bacterial Cell Expression Technology” or “BCE Technology” means (a) the
Patent Rights listed on Schedule 1.8D (the “BCE Patent Rights”) [*] BCE Patent
Rights shall be deemed to exclude any and all Article 3A Patent Rights, except
that the Patent Rights titled [*] and more particularly described on Schedule
1.29C as of the Amendment Effective Date shall be deemed to be both BCE Patent
Rights and Discovery Patent Rights.

1.11A “BCE 6A.2 License Term” means that duration of time beginning on the
Amendment Effective Date and ending upon the termination of the license granted
under Section 6A.2 pursuant to Section 13.5A.

1.11B “BCE 6A.6 License Term” means that duration of time beginning on the
Amendment Effective Date and ending upon the termination of the license granted
under Section 6A.6 pursuant to Section 13.5A.

1.11C “BCE Patent Rights” has the meaning specified in Section 1.8D hereof.

1.17A “Claims” has the meaning specified in Section 12.4A hereof.

1.20 “Collaboration Product”, as of the Amendment Effective Date, is amended to
add the following sentence: “No Discovery Product shall be considered a
Collaboration Product.”

1.24 “Confidential Information”, as of the Amendment Effective Date, is amended
to add the following sentence: “[*] shall not be considered to be Confidential
Information of XOMA.”

1.27 “Control” or “Controlled” means, as of the Amendment Effective Date, with
respect to any (a) material, document, item of information, method, data or
other Know-How or (b) Patent Right or other intellectual property right, the
possession (whether by ownership, license, covenant not to sue or otherwise,
other than by a license granted pursuant to this Agreement) by a Party or its
Affiliates of the ability to grant to the other Party access, ownership, a
license, a sublicense and/or a covenant not to sue or otherwise (as provided
herein) under such item or right without violating the terms of any agreement or
other arrangement with any Third Party as of the time such Party would first be
required hereunder to grant the other Party such access, ownership, license or
sublicense.

 

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1.28A “CRO” means any contract research organization [*] engaged in contract
research on behalf of Takeda or a Designated Takeda Affiliate using Transferred
Materials and any provider of storage services to Takeda or a Designated Takeda
Affiliate with respect to [*]

1.28B [*]

1.28C [*]

1.28D “Designated Takeda Affiliate” means Takeda SF or any other Takeda
Affiliate designated by Takeda to XOMA in accordance with Section 3A.5(a).

1.29A “Discovery Know-How” means the Know-How required to be transferred to
Takeda or its Affiliates pursuant to Sections 3A.1 and 3A.4.

1.29B [*]

1.29C “Discovery Patent Rights” means the Patent Rights described on Schedule
1.29C, [*]. Discovery Patent Rights shall be deemed to exclude any and all BCE
Patent Rights, except that the Patent Rights titled [*] and more particularly
described on Schedule 1.29C as of the Amendment Effective Date shall be deemed
to be both BCE Patent Rights and Discovery Patent Rights.

1.29D [*]

1.29E “Discovery Product” means an Antibody, Antibody Product or other
therapeutic, prophylactic or diagnostic compound or product [*] and/or the
practice of the Discovery Patent Rights or other exercise of its rights under
this Second Amendment.

1.29F “Discovery Product Royalty Period” has the meaning specified in
Section 7A.1(d) hereof.

1.45 “GAAP” means, as of the Amendment Effective Date, for each applicable
country or territory, the generally accepted accounting principles for such
country or territory, as they exist from time to time, consistently applied.

1.45A “HE™ Know-How” has the meaning specified in Section 1.46 hereof.

1.45B “HE™ License Term” means that duration of time beginning on the Amendment
Effective Date and ending upon the termination of the license granted under
Section 6A.5 pursuant to Section 13.5A.

1.45C “HE™ Patent Rights” has the meaning specified in Section 1.46 hereof.

1.46 “Human Engineering™ Technology”, as of the Amendment Effective Date, is
amended to read in its entirety as follows: “‘Human Engineering™ Technology’ or
‘HE™ Technology’ means (a) the materials and Know-How (the “HE™ Know-How”) and
Patent Rights (the “HE™ Patent Rights”) listed on Schedule 1.46 [*]”

 

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1.49A [*]

1.57A “Licensed Technology” means the BCE Technology, HE™ Technology [*] TES
Technology, and Systems.

1.61A [*]

1.71 “Program Antibody”, as of the Amendment Effective Date, is amended to
insert the number “(1)” after the words “provided, however, that” and add the
following clause to the end of the last sentence: “and (2) in no event shall the
term “Program Antibody” include any Discovery Product.”

1.75 “Program Technology”, as of the Amendment Effective Date, is amended to
insert the words “, Licensed Technology and [*]” at the end of the last
sentence.

1.87A “Royalty-Bearing Discovery Product” means a Royalty-Bearing Discovery
Product A or Royalty Bearing Discovery Product B.

1.87B “Royalty-Bearing Discovery Product A” means [*] provided, however, an
Antibody Product that is both a Royalty-Bearing Discovery Product A and
Royalty-Bearing Discovery Product B shall be deemed only to be a Royalty Bearing
Discovery Product A.

1.87C “Royalty-Bearing Discovery Product B” means [*]

1.87D “Second Amendment Indemnitee” has the meaning specified in
Section 12.4D(b) hereof.

1.87E “Second Amendment Indemnitor” has the meaning specified in
Section 12.4D(b) hereof.

1.87F “Second Amendment Milestone Payment” has the meaning specified in
Section 7A.1(c) hereof.

1.87G “Software” has the meaning specified in Schedule 6A.3 to the Second
Amendment.

1.87H “Source Code” has the meaning specified in Schedule 6A.3 to the Second
Amendment.

1.87I [*]

1.88A [*]

1.88B [*].

1.89A “Systems” means the informatics and other materials handling systems,
associated software applications, related data systems, Patent Rights related to
the foregoing (the “Systems Patent Rights”) and related Know-How (the “Systems
Know-How”), each as more particularly described on Schedule 1.89A. For the
purposes of the Agreement, Systems shall not include any Third Party software,
operating system, data device or other materials not part of, or actually
integrated into, the Systems as delivered to Takeda.

 

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1.89B “Systems Know-How” has the meaning specified in Section 1.89A hereof.

1.89C “Systems License Term” means that duration of time beginning on the
Amendment Effective Date and ending upon the termination of the license granted
under Section 6A.3 pursuant to Section 13.5A.

1.89D “Systems Patent Rights” has the meaning specified in Section 1.89A hereof.

1.89E [*]

1.89F [*]

1.89G [*]

1.90A “Takeda Discovery Patent Rights” means Patent Rights to the extent
Controlled by Takeda that arise out of Takeda’s or a Designated Takeda
Affiliate’s use or practice of the Discovery Patent Rights or Licensed
Technology.

1.90B “Takeda Licensee” means, solely with respect to Discovery Products, any
Third Party to whom Takeda or a Designated Takeda Affiliate licenses or grants
rights, as part of a bona fide collaboration, development, commercialization or
marketing arrangement, to develop, commercialize, market or distribute any
Discovery Product; provided, however, no Third Party shall be a Takeda Licensee
if (a) such Third Party is known by Takeda to be, at the time of determination,
either misappropriating the Article 3A Know-How or infringing any of the Article
3A Patent Rights or (b) such Takeda Licensee does not take material economic
risk with respect to the discovery, identification, development or
commercialization of such Discovery Product that is the subject of the
applicable arrangement; and provided, further, that the foregoing clause
(b) shall not prevent Takeda from using any Third Party as a distributor or
selling agent of such Discovery Products. All arrangements with a Takeda
Licensee related to Discovery Products shall be pursuant to a written agreement,
which will incorporate the applicable provisions of the Agreement (including
without limitation Article 3A) and, where applicable, provide that XOMA and its
Affiliates shall be third party beneficiaries thereof.

1.90C “Takeda San Francisco” or “Takeda SF” means Takeda San Francisco, Inc., a
Delaware corporation having offices at 285 East Grand Avenue, South San
Francisco, California 94080, USA, as of the Amendment Effective Date.

1.91A [*]

1.92A “TES Know-How” has the meaning specified in Section 1.93C hereof.

1.92B “TES License Term” means that duration of time beginning on the Amendment
Effective Date and ending upon the termination of the license granted under
Section 6A.4 pursuant to Section 13.5A.

1.92C “TES Patent Rights” has the meaning specified in Section 1.93C hereof.

1.93A [*]

1.93B “Transferred Materials” means, collectively [*] the Article 3A Know-How,
the Systems and any materials actually transferred to Takeda pursuant to Article
3A.

 

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1.93C “Transient Expression System Technology” or “TES Technology” means (a) the
materials and Know-How (the “TES Know-How”) and the Patent Rights (the “TES
Patent Rights”), listed on Schedule 1.93C [*]

1.95A “XOMA Collaboration Partner” means, solely with respect to a Third Party
with whom XOMA licenses or grants rights, as part of a bona fide collaboration,
development, commercialization or marketing arrangement, to develop,
commercialize, market or distribute any compound or product; provided, however,
no Third Party shall be a Collaboration Partner if (a) such Third Party is known
by XOMA to be, at the time of determination, either misappropriating any Takeda
Know-How or infringing any Takeda Discovery Patent Rights or (b) such
Collaboration Partner does not take material economic risk with respect to the
discovery, identification, development or commercialization of such compound or
product that is the subject of the applicable arrangement; and provided,
further, that the foregoing clause (b) shall not prevent XOMA from using any
Third Party as a distributor or selling agent of such compounds or products.

1.95B [*]

1.95C “[*] Materials Specifications” means the specifications listed on
Schedule 1.95B.

(b) The Agreement is hereby supplemented by adding the following Article 3A
following existing Article 3:

ARTICLE 3A

XOMA TO TAKEDA TRANSFERS

3A.1 Assignments and Deliverables.

(a) XOMA shall on behalf of itself and each XOMA Company, and as evidenced by a
Bill of Sale in the form attached as Exhibit A, assign and transfer to Takeda
all right, title and interest, free and clear of all liens, security interests
and statutory encumbrances, (i) upon satisfaction by XOMA or waiver by Takeda of
the conditions to payment set forth in Section 4 of this Second Amendment, to
[*] and (ii) upon satisfaction of either condition under Sections 3A.4(c)(ii)(x)
or (y), to [*]

(b) On or before [*] after the Amendment Effective Date, XOMA shall deliver to
Takeda (i) [*] the Discovery Know-How relating thereto, including all materials
listed on Schedule 3A.1(a), the HE™ Know-How [*] the TES Know-How and the
Systems as evidenced by the Delivery and Receipt Acknowledgement in the form
attached as Exhibit B [*]

(c) [*]

(d) In connection with [*] and Licensed Technology other than BCE Technology,
XOMA shall provide Takeda with the corresponding services described in and under
the terms of Schedule 3A.1(d).

(e) Risk of loss or degradation to and of Transferred Materials shall shift to
Takeda upon Takeda’s signed confirmation of receipt of such materials.

(f) [*]

3A.2 Grants of Rights in Discovery Know-How and Patent Rights [*]

 

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(a) [*] XOMA on behalf of itself and each XOMA Company does hereby grant to
Takeda, a sole and exclusive, irrevocable, perpetual and, subject to the
applicable restrictions and limitations in this Second Amendment, assignable
license and right throughout the Territory to use [*] for any and all purposes
including to [*] modify and develop Discovery Products; and

(b) Without limiting the licenses granted under Article 6A, XOMA on behalf of
itself and each XOMA Company does hereby grant to Takeda a non-exclusive,
non-transferable, license and right throughout the Territory, without the right
to grant sublicenses to:

(x) use the Discovery Know-How, and practice the Discovery Patent Rights, in
each case at a Takeda or Designated Takeda Affiliate to [*] modify and develop
Discovery Products;

(y) use the BCE Technology in connection with the use of [*] for any and all
purposes including to [*] modify and develop Discovery Products, but not to [*]
any quantities of any compound or product, including an Antibody, in a
prokaryote except as reasonably necessary to conduct non-clinical research and
development activities using [*] including in vitro and small animal in vivo
research and development, and not for clinical development or for the
manufacture for sale of any compound or product, including an Antibody; and

(z) to the extent required (if any), use the Discovery Know-How, and practice
the Discovery Patent Rights to [*] use, sell, offer to sell, import or export
any Discovery Product.

Notwithstanding any provision of this Second Amendment to the contrary, the
rights and licenses provided for in this Section 3A.2 include, to the extent
required, a right and license to Takeda and its Affiliates, [*] to develop,
commercialize, market or distribute [*] or the practice of the other Article 3A
Patent Rights.

[*] the rights and licenses granted under Articles 3A and 6A in this Second
Amendment shall be subject to those limitations, restrictions and obligations of
any license or grant of rights from or other agreement with a Third Party which
Third Party limitations, restrictions and obligations are disclosed to Takeda
on, or were disclosed to Takeda prior to, the Amendment Effective Date.

(c) Each of the XOMA Companies hereby covenants that it shall not initiate or
permit any of its Affiliates or any Third Party over whom it has control to
initiate or knowingly assist in any way in the initiation or prosecution of, any
action against Takeda, any Takeda Affiliates, its and their employees,
directors, officers or agents, any Takeda Licensee or CRO authorized hereunder,
including Takeda’s distributors and selling agents, for the misappropriation,
infringement or other violation of any Patent Rights, Know-How or other
intellectual property rights directly or indirectly owned or controlled by such
XOMA Company at any time that, if owned or controlled by XOMA as of the
Amendment Effective Date [*] would have been within the scope of the licenses
granted to Takeda under Section 3A.2(b) or Article 6A.

(d) In the event that XOMA is or becomes unable to grant Takeda, or any
Designated Takeda Affiliate, any of the rights described under subsections
3A.2(a) or (b), and to the extent that a XOMA Affiliate, including [*] has the
necessary right, power and authority to grant Takeda, or any Designated Takeda
Affiliate, such rights, the applicable XOMA Affiliate hereby grants to Takeda,
or a Designated Takeda Affiliate, such rights to the extent and under the terms
contained herein.

(e) [*]

 

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(f) [*] If as part of the Collaboration, Takeda submits a Proposed Target and
specifically requests that XOMA use [*] to [*] an Antibody and XOMA agrees to do
so, then such Proposed Target shall be subject to the XOMA gate-keeping process
under Section 2.2.3.

(g) None of XOMA or its Affiliates shall (except for the sole benefit of Takeda
and its Affiliates) (i) [*] (ii) [*] or (iii) without Takeda’s prior written
consent, transfer [*] to any person or entity (other than Takeda or a Designated
Takeda Affiliate), except in conjunction with an assignment of this Agreement
under Section 14.2. Notwithstanding the foregoing, XOMA may retain a sufficient
quantity of [*] in storage solely for the purposes of [*]

(h) The Parties agree that XOMA may use “blinded” validation and qualification
data regarding [*] (so long as such use does not jeopardize the patentability of
any invention claimed by a patent or patent application filed by Takeda) for
purposes of demonstrating, presenting or otherwise promoting its technologies,
expertise, capabilities and/or applications of any thereof. XOMA shall submit
such blinded data to Takeda for approval at least [*] prior to disclosure, such
approval not to be unreasonably withheld or delayed. Once the presentation of
such data in a particular form has been approved by Takeda, no further approval
shall be required for subsequent uses of the same data in the same form.

(i) If and to the extent that XOMA owns or has the right to use, sell, license,
transfer or otherwise exploit copies of the Article 3A Know-How and the Systems,
the Source Code, the Software, the Know-How used by XOMA to construct [*] the
Article 3A Patent Rights and/or any other Patent Right, copyright or other item
of intellectual property that covers or claims the Transferred Materials and/or
their creation, construction or use, except as expressly set forth in
Section 3A.2(g) and elsewhere herein, nothing in this Second Amendment is
intended to limit or prevent XOMA from exercising such ownership or rights.

(j) [*]

3A.3 Takeda Inventions/Unblocking Covenant Not to Sue. Without limiting or
expanding the results under applicable patent law, the parties acknowledge that
Takeda shall be free to seek and obtain patent protection for any inventions of
Takeda [*] provided, however, that:

(a) Takeda covenants not to sue any XOMA Company under the Takeda Discovery
Patent Rights if any XOMA Company uses, for itself or on behalf of a XOMA
Collaboration Partner, the Licensed Technology and Discovery Patent Rights, as
such technology and patent rights exist as of the Amendment Effective Date [*]
(regardless of location). Takeda covenants not to sue any XOMA Collaboration
Partner under the Takeda Discovery Patent Rights if such XOMA Collaboration
Partner, or XOMA on behalf of such XOMA Collaboration Partner, uses the Licensed
Technology and Discovery Patent Rights, as such technology and patent rights
exist as of the Amendment Effective Date [*] within the scope of XOMA and such
XOMA Collaboration Partner’s collaboration (regardless of location).

(b) Takeda covenants not to sue XOMA under the Takeda Discovery Patent Rights if
XOMA uses the Licensed Technology and Discovery Patent Rights, as such
technology and patent rights may be improved after the Amendment Effective Date
by XOMA [*]

(c) Takeda covenants not to sue any XOMA Collaboration Partner under the Takeda
Discovery Patent Rights if such XOMA Collaboration Partner, or XOMA on behalf of
such XOMA Collaboration Partner, uses the Licensed Technology and Discovery
Patent Rights, as such technology and patent rights may be improved after the
Amendment Effective Date by XOMA [*] within the scope of XOMA and such XOMA
Collaboration Partner’s collaboration.

 

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None of the foregoing covenants shall extend to any Takeda Discovery Patent
Rights to the extent they claim Discovery Products.

3A.4 [*] (a) Takeda may, in its discretion at any time or times on or before [*]
order up to [*] of [*]. Prior to placing such an order, Takeda shall initiate
technical discussions with XOMA pursuant to which the Parties will set forth in
writing Takeda’s specifications [*] for [*] to be ordered. Such specifications
shall identify whether such [*] are to be [*] and include other elements such as
[*]. Upon agreement between the Parties on the technical capability of XOMA or
its Affiliates to deliver [*] embodying the specifications [*] Takeda will place
a firm purchase order and provide [*] for the construction of such [*]

(b) Once (i) the Parties have agreed on the technical capability of XOMA or its
Affiliates to deliver [*] embodying the specifications (including design
elements) referred to in Section 3A.4(a), (ii) XOMA has received [*] and
provided written confirmation that they are [*] (iii) Takeda or, as applicable,
a Designated Takeda Affiliate has placed a firm purchase order therefor, and
(iv) Takeda has paid the requisite fee pursuant to Section 7A.1(b)(i) or (ii),
as applicable, XOMA shall design, construct and have available for delivery to
Takeda such [*] meeting the Applicable Specifications not later than [*] from
the last to occur of clauses (i) through (iv).

(c) Once a particular set of [*] has been validated by XOMA but prior to
delivery thereof to Takeda or, as applicable, a Designated Takeda Affiliate,
XOMA shall provide to Takeda or such Designated Takeda Affiliate such data as is
reasonably necessary to determine whether such [*] are in accordance with the
specifications referred to in Section 3A.4(a). Takeda or, as applicable, such
Designated Takeda Affiliate shall have [*] following receipt of such data by
Takeda or such Designated Takeda Affiliate to determine whether it agrees that
such [*] are in accordance with such specifications and to notify XOMA of such
determination, or it shall be deemed to have agreed that the [*] meet the
applicable specifications.

(i) If, within such [*] day period, Takeda or, as applicable, such Designated
Takeda Affiliate notifies XOMA that it does not agree that such [*] are in
accordance with such specifications, XOMA shall promptly provide such data to a
mutually acceptable independent Third Party, which shall review such data, under
confidentiality, for the sole purpose of making a final and binding
determination as to whether such [*] are in accordance with such specifications.
If, following its review, such Third Party determines that such [*] are not in
accordance with such specifications, then the third sentence of Section 7A.1(b)
shall apply and XOMA shall promptly destroy such [*]. The [*] period referred to
in Section 3A.4(b) shall be tolled for the period between XOMA’s provision of
data to the Third Party reviewer and the reviewer’s determination. The Party
against which the Third Party reviewer rules shall bear all costs of the Third
Party review.

(ii) If either (x) Takeda or, as applicable, the Designated Takeda Affiliate
agrees based on its review of the data that such [*] are in accordance with such
specifications or (y) the Third Party reviewer determines that such [*] are in
accordance with such specifications, then XOMA shall, under the same conditions
as the transfer and delivery of [*] and the Discovery Know-How relating thereto,
assign all right, title and interest in, and deliver [*] and the Discovery
Know-How relating thereto, to Takeda or at Takeda’s election, to a Designated
Takeda Affiliate.

3A.5 Designation of Additional Affiliates, Transfers to Additional Sites and
Limitations on Use and Modification.

 

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(a) Takeda shall be permitted to designate to XOMA in writing up to, at any one
time, [*] additional Takeda Affiliates to which the Transferred Materials may be
transferred and delivered or through which Takeda wishes to exercise rights or
perform obligations under this Agreement; provided, however, that Takeda shall
obtain, prior to any such transfer and delivery, a written acknowledgement,
separately enforceable by XOMA as a third-party beneficiary, by such Designated
Takeda Affiliate that it shall abide by any and all requirements of the
Agreement applicable to the transfer and use of the Transferred Materials. Upon
receipt by XOMA of such written designation and acknowledgement, the Agreement
shall be deemed amended to the extent necessary to include such Designated
Takeda Affiliate as being entitled to the rights and subject to the obligations
applicable to Takeda hereunder. Takeda shall be free to change such designation
to any Takeda Affiliate. Takeda hereby guarantees, without any requirement of
written demand by XOMA, the performance of and compliance with the Agreement by
Takeda SF and any other Designated Takeda Affiliate.

(b) Subject to Section 3A.5(a), (i) Takeda may move the Transferred Materials to
any other Takeda site (including its Affiliates’) of its selection that is and
will remain under its control and has reasonable safeguards designed to protect
the Transferred Materials from theft, vandalism or unauthorized use, and
(ii) Takeda may transfer to any CRO that, to Takeda’s knowledge, has reasonable
safeguards designed to protect such materials from theft, vandalism,
unauthorized use, alteration or modification, the following materials solely for
the corresponding purposes: (x) [*]or (y) [*] and TES Technology specific to
such research program and data outputs for the performance of such research
program.

(c) The parties agree that the transfers provided for by this Article 3A arise
out of and are part of the existing collaboration and that the use of the
Transferred Materials and the practice of the Article 3A Patent Rights and any
other Patent Rights to which rights are assigned or granted pursuant to this
Article 3A may, subject to the applicable provisions of the Agreement, be used
by Takeda or, as applicable, a Designated Takeda Affiliate for any other purpose
including the [*] development and subsequent commercial sale of any composition
of matter in the Field. Nothing in this subsection shall restrict Takeda from
being able to [*]. Notwithstanding the foregoing, the following restrictions
shall apply to the Transferred Materials:

(i) Takeda shall not, and shall not permit its Affiliates and CROs to, alter or
modify [*]. The Transferred Materials may not be further transferred or disposed
of by Takeda to a Third Party (other than to a CRO as provided in
Section 3A.5(b)); provided, however, that [*]

(ii) Neither Takeda nor, as applicable, any Designated Takeda Affiliate shall
use the Transferred Materials or practice the Article 3A Patent Rights and any
other Patent Rights to which rights are assigned or granted by a XOMA Company
pursuant to this Article 3A on behalf of any Third Party [*] or otherwise engage
in activities not directly associated with Takeda’s or Takeda Affiliate’s own
internal [*] research and development programs; provided, however, that, so long
as the other limitations of this Article 3A are satisfied, Takeda or, as
applicable, a Designated Takeda Affiliate may use the Transferred Materials or
practice the Article 3A Patent Rights and any other Patent Rights assigned or
granted by a XOMA Company pursuant to this Article 3A with respect to any
Discovery Product, Antibody or Antibody Product as to which Takeda or a
Designated Takeda Affiliate has either in-licensed or acquired rights from a
Third Party where such in-license or grant of rights is for the exclusive
development of such Discovery Product, Antibody or Antibody Product or variants
thereof by Takeda, either alone or in collaboration with such Third Party.

3A.6 [*]

 

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(c) The Agreement is hereby supplemented by adding the following Article 6A
following existing Article 6:

ARTICLE 6A

ADDITIONAL LICENSES

6A.1 [*]

6A.2 [*]

6A.3 Informatics Systems License. Subject to the terms of this Second Amendment
and Schedule 6A.3, XOMA hereby grants to Takeda, in the Field in the Territory
during the Systems License Term, a non-exclusive right and license, without the
right to sublicense, under the Systems to make, have made, use, sell, offer to
sell, import and export any products and (solely to the extent required for
exercising the foregoing rights) to reproduce (but not for commercial
distribution purposes), modify, publicly perform, and publicly display the
Systems and all copyrights therein. Notwithstanding the foregoing, in no event
shall Takeda publicly disseminate without XOMA’s prior written consent
non-public Systems source code or created work based on Systems source code,
such as screen shots, flow charts, object code and/or algorithms, with the
exception of data produced by execution of the source code.

6A.4 TES Technology License. Subject to the terms of this Second Amendment, XOMA
hereby grants to Takeda, in the Field in the Territory during the TES License
Term, a perpetual, non-exclusive right and license, without the right to
sublicense, under the TES Technology to make, have made, use, sell, offer to
sell, import and export any Antibody Products.

6A.5 HE™ Technology License. Subject to the terms of this Second Amendment, XOMA
hereby grants to Takeda, in the Field in the Territory during the HE™ License
Term, a perpetual, non-exclusive right and license, without the right to
sublicense, under the HE™ Technology to make, have made, use, sell, offer to
sell, import and export any Antibody Products, and (solely to the extent
required for exercising the foregoing rights) as to software included therein,
to reproduce for Takeda’s purposes, modify, publicly perform, and publicly
display such software and all copyrights therein. Notwithstanding the foregoing,
in no event shall Takeda publicly disseminate without XOMA’s prior written
consent non-public software source code or created work based on software source
code, such as screen shots, flow charts, object code and/or algorithms, with the
exception of data produced by execution of the source code.

6A.6 BCE Technology License for HE™. Subject to the terms of this Second
Amendment, XOMA hereby grants to Takeda a non-exclusive right and license during
the BCE 6A.6 License Term, without the right to sublicense, to use the BCE
Technology solely to conduct activities related to selection of a lead product
candidate from among a group of variant sequences derived using the HE™
Technology as provided in, and as limited by, the scope of the license grants in
Section 6A.5 but not to make or have made any quantities of any compound or
product, including an Antibody, in a prokaryote except as reasonably necessary
to conduct non-clinical research and development activities using [*] including
in vitro and small animal in vivo research and development, and not for clinical
development or for the manufacture for sale of any compound or product,
including an Antibody.

The grants provided for in this Section 6A include, to the extent required, a
right and license to [*] use, sell, offer to sell, import or export any
(1) Discovery Product and (2) any Antibody or Antibody Product derived from or
arising out of, directly or indirectly, the use of the other Transferred
Materials or the practice of the other Article 3A Patent Rights.

 

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6A.7 Third Party Licenses.

(a) For the avoidance of doubt, the license grants in this Second Amendment are
intended to include all Third Party licenses and covenants not to sue relating
to the Licensed Technology or [*] directly or indirectly owned or controlled by
XOMA, to the extent such Third Party licenses and covenants not to sue are
permitted by their terms to be so included. [*] In the event that XOMA is or
becomes unable to grant Takeda, or any Designated Takeda Affiliate, any of the
rights described under this Article 6A, and to the extent that a XOMA Affiliate
[*] has the necessary right, power and authority to grant Takeda, or any
Designated Takeda Affiliate, such rights, the applicable XOMA Affiliate hereby
grants to Takeda, or a Designated Takeda Affiliate, such rights to the extent
and under the terms contained herein.

(b) [*]

(c) The first sentence of Section 6.3 of the Agreement is hereby amended to add
the words “or Discovery Product” after the words “Collaboration Product.”

(d) [*]

(d) The Agreement is hereby supplemented by adding the following Article 7A
following existing Article 7:

ARTICLE 7A

ADDITIONAL FINANCIAL TERMS

7A.1 Second Amendment Financial Terms. In further consideration for XOMA’s full
and timely performance under the Agreement, including the transfers and
deliveries required, and licenses granted under this Second Amendment:

(a) Second Amendment Fee. Subject to satisfaction by XOMA or waiver by Takeda of
the conditions to payment set forth in Section 4 of this Second Amendment,
Takeda shall have up to [*] after the later of (i) [*] and (ii) receipt of the
materials by Takeda SF pursuant to Section 3A.1 to [*] pay to XOMA a one-time
fee equal to $29,000,000.

(b) [*]

(c) Second Amendment Milestones.

(x) Subject to Section 7A.1(c)(y) below, for each Royalty-Bearing Discovery
Product and irrespective of the country or other jurisdiction in which the event
described hereafter occurs, Takeda shall pay XOMA a one time payment of (i) [*]
(ii) [*] and (iii) [*]. For the avoidance of doubt, in no event shall more than
$3,250,000 in Second Amendment Milestone Payments be owed with respect to any
Royalty-Bearing Discovery Product. For the purposes of this Section 7A.1(c) and
Sections 1.87B and 1.87C, the references to a “Collaboration Product” in the
defined terms “Phase 1 Trial,” “Phase 3 Trial” and “BLA,” in the Agreement shall
be refer to “Royalty-Bearing Discovery Product” instead.

(y) [*]

(d) Royalty Payments. Subject to the next two sentences and Section 7A.1(f)
below, (a) Takeda shall pay XOMA a royalty of (i) for each Royalty-Bearing
Discovery Product A, [*]

 

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of Net Sales of such Royalty-Bearing Discovery Product A, and (ii) for each
Royalty-Bearing Discovery Product B [*] of Net Sales of such Royalty-Bearing
Discovery Product B; in each case of clause (i) and (ii) on a country-by-country
basis until [*]. After expiration of royalty obligations hereunder, the licenses
granted hereunder shall be fully paid-up. For the purposes of this
Section 7A.1(d), the references to “Collaboration Product” in the defined terms
“First Commercial Sale” and “Net Sales” in the Agreement shall be refer to
“Royalty-Bearing Discovery Product” instead. For the avoidance of doubt, if
Takeda sells, assigns or transfers any Royalty-Bearing Discovery Product as part
of a larger corporate transaction, or grants the right to sell such
Royalty-Bearing Discovery Product, to any person or entity, the purchase price
and any upfront license fees paid by such person or entity for such
Royalty-Bearing Discovery Product shall not be included for purposes of
calculating Net Sales on such Royalty-Bearing Discovery Product.

(e) Royalty and Milestone [*] for Diagnostic Products. For any Royalty-Bearing
Discovery Products that are used for diagnostic purposes, each of the milestones
under Section 7A.1(c) and royalties payable under Section 7A.1(d) shall be [*]

(f) [*]

(g) [*]

7A.2 Relation to Collaboration Product Fees. For avoidance of doubt, no amounts
shall be owed under Article 7 of this Agreement on any Antibody or Antibody
Product that is a Discovery Product; nor shall any amounts be owed under this
Article 7A on any Collaboration Product. Notwithstanding the foregoing, if after
submission by Takeda and acceptance by XOMA any Discovery Product shall enter
the Collaboration as a Collaboration Product, only the amounts owed under
Article 7 shall be due on such product after such product becomes a
Collaboration Product.

7A.3 Additional Reporting and Record-Keeping Obligations. Section 7.5.1 of the
Agreement is amended so as to insert the words “or Section 7A.1(c)” after the
reference to Section 7.3 in the second line. Section 7.5.2 of the Agreement
shall be amended so as to insert the words “or Section 7A.1(d)” after each
reference to Section 7.4 and the words “or Royalty-Bearing Discovery Products,
as applicable,” after each reference to “Collaboration Products.” Takeda shall
keep accurate books and accounts in sufficient detail to permit XOMA to verify
the accuracy of amounts owed and payable under this Second Amendment.

7A.4 Second Amendment Withholding Taxes. For clarity, Section 7.10 shall apply
to any payments due under this Article 7A. The Parties further agree that, as of
the Amendment Effective Date, Takeda may be required and, if so, shall withhold
a withholding tax, as determined under Law, on the amount due to XOMA under
Section 7A.1(a).

(e) Section 9.4 is amended by adding to such Section the following sentence:
“This Section 9.4 shall apply only to the Collaboration Agreement without giving
effect to the Second Amendment.”

(f) Section 9.6 is amended to insert the words “or any Patent Rights in respect
of or arising out of the use of the Transferred Materials” after “Controlled by
either Party”.

(g) Section 10.1.2 is amended to insert the words “or, in the case of a
disclosure by Takeda, Discovery Product” after the words “Collaboration Product”
in the penultimate sentence.

(h) [*]

 

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(i) In Article 12 (Indemnity):

(i) Section 12.1 is hereby amended to change the title to “Takeda Original
Collaboration Agreement Indemnity Obligations” and add the following after the
last sentence: “The indemnification obligation under this Section 12.1 shall
apply only to the Collaboration Agreement without giving effect to the Second
Amendment.”;

(ii) Section 12.2 is hereby amended to change the title to “XOMA Original
Collaboration Agreement Indemnity Obligations” and add the following after the
last sentence: “The indemnification obligation under this Section 12.2 shall
apply only to the Collaboration Agreement without giving effect to the Second
Amendment.”;

(iii) Section 12.3 is hereby amended to read in its entirety as follows:

“12.3 Limitation on Indemnity Obligations. None of the parties, their Affiliates
or their respective employees and agents shall be entitled to the indemnities
set forth in Article 12, to the comparative extent the claim, loss, damage or
expense for which indemnification is sought was caused by grossly negligent,
reckless or fraudulent acts, misrepresentations or acts of willful misconduct of
such party, Affiliate, employee or agent; provided, however, that each of the
XOMA Companies agrees, represents and warrants that the use by Takeda or a
Designated Takeda Affiliate of [*] in accordance with this Second Amendment to
[*] modify and develop Discovery Products on its own behalf shall not in and of
itself constitute a grossly negligent, reckless or fraudulent act,
misrepresentation or act of misconduct of Takeda or such Designated Affiliate.”

(iv) Section 12.4 is hereby amended to replace all references to “Article 12”
with “Sections 12.1 or 12.2”.

(v) The following new Sections 12.4A through D are added to the Agreement:

12.4A Takeda Second Amendment Indemnity Obligations. Subject to Section 12.3
hereof, Takeda agrees to defend, indemnify and hold XOMA, its Affiliates and its
and their respective employees, directors, officers and agents harmless from any
and all actions, claims, losses, liabilities, damages or expenses (including
reasonable experts’ and attorneys’ fees and costs) (“Claims”) of Third Parties
if and to the extent arising as a result of: (a) actual or asserted violations
of any applicable law or regulation by Takeda, its sublicensees and their
respective Affiliates by virtue of which any Discovery Products manufactured,
distributed or sold by Takeda, its sublicensees or their respective Affiliates
pursuant to this Agreement shall be alleged or determined to be adulterated,
misbranded, mislabeled or otherwise not in compliance with any applicable law or
regulation; (b) claims for bodily injury, death or tangible property damage
attributable to the manufacture, distribution, sale or use of any Discovery
Products by Takeda, its sublicensees or their respective Affiliates; (c) a
recall of a Discovery Product manufactured, distributed or sold by Takeda, its
sublicensees or their respective Affiliates ordered by a governmental agency; or
(d) Takeda’s breach of any of its representations, warranties or covenants
hereunder.

12.4B XOMA Second Amendment Indemnity Obligations. Subject to Section 12.3
hereof, each XOMA Company jointly and severally agrees to defend, indemnify and
hold Takeda, its Affiliates and its and their respective employees, directors,
officers and agents harmless from all Claims of Third Parties if and to the
extent arising as a result of: (a) actual or asserted violations of any
applicable law or regulation by any XOMA Company, its sublicensees and their
respective Affiliates by virtue of which any Discovery Products manufactured,
distributed or sold by any XOMA Company, its sublicensees or their respective
Affiliates pursuant to this Agreement shall be alleged or determined to be
adulterated, misbranded, mislabeled or otherwise not in compliance with any
applicable law or regulation; (b) claims for bodily

 

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injury, death or tangible property damage attributable to the manufacture,
distribution, sale or use of any Discovery Products by any XOMA Company, its or
their sublicensees or their respective Affiliates; (c) a recall of a Discovery
Product manufactured, distributed or sold by a XOMA Company, its sublicensees or
their respective Affiliates ordered by a governmental agency; or (d) any XOMA
Company’s breach of any of its representations, warranties or covenants
hereunder.

12.4C [*]

12.4D Procedure.

(a) Each party agrees to promptly notify the other party of any [*] received or
known by it or its Affiliates.

(b) If a Party or any of its Affiliates or their respective employees,
directors, officers, or agents (collectively, the “Second Amendment Indemnitee”)
intends to claim indemnification under Sections 12A through D, the Second
Amendment Indemnitee shall promptly notify the other party (the “Second
Amendment Indemnitor”) of any Claims, [*] or discovery of fact in respect of
which the Second Amendment Indemnitee intends to claim such indemnification.

(c) The Second Amendment Indemnitor shall assume the defense of any such Claim,
at the sole cost of the Second Amendment Indemnitor, so long as the Second
Amendment Indemnitor diligently pursues the defense of the Claim.

(d) If the Second Amendment Indemnitor assumes defense of a Claim, the Second
Amendment Indemnitor shall use counsel selected by the Second Amendment
Indemnitor and reasonably acceptable to the Second Amendment Indemnitee;
provided, however, that an Second Amendment Indemnitee shall have the right to
retain its own counsel, with the fees and expenses to be paid by the Second
Amendment Indemnitor, if representation of such Second Amendment Indemnitee by
the counsel retained by the Second Amendment Indemnitor would be inappropriate
due to actual or potential differing interests between such Second Amendment
Indemnitee and any other party represented by such counsel in such proceedings.

(e) If the Second Amendment Indemnitor assumes defense of a Claim, the Second
Amendment Indemnitor shall have the right to settle or compromise any claims for
which it is providing indemnification under this Article 12, provided that the
consent of the Second Amendment Indemnitee (which shall not be unreasonably
withheld or delayed) shall be required in the event any such settlement or
compromise would adversely affect the interests of the Second Amendment
Indemnitee.

(f) If the Second Amendment Indemnitor does not so assume the defense of such
Claim, the Second Amendment Indemnitee may conduct such defense with counsel of
the Second Amendment Indemnitee’s choice, at Second Amendment Indemnitor’s
expense, but may not settle such Claim without the written consent of the Second
Amendment Indemnitor (which shall not be unreasonably withheld or delayed).

(g) A Second Amendment Indemnitee’s omission to deliver notice to the Second
Amendment Indemnitor will not relieve the Second Amendment Indemnitor of any
liability that it may have to any Second Amendment Indemnitee under this Article
12. If Second Amendment Indemnitor denies that it has an indemnification
obligation with respect to any Claim, then the Second Amendment Indemnitee shall
be entitled to defend such claim using counsel of its own selection at Second
Amendment Indemnitor’s expense.

 

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(h) The Second Amendment Indemnitee under this Article 12, its employees and
agents, shall cooperate fully with the Second Amendment Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification. The Second Amendment Indemnitor under this Article 12,
its employees and agents, shall cooperate fully with the Second Amendment
Indemnitee and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification.”

(j) Article 13 (Expiration and Termination) of the Agreement is hereby amended
to add or modify, as applicable, the following Sections:

13.1 Term of Agreement is amended to read in its entirety as follows: “Term of
Agreement. The term of this Agreement shall commence on the Effective Date and
shall continue until the later of (a) the payment by Takeda and receipt by XOMA
of the last amount to be paid by Takeda to XOMA pursuant to the terms hereof,
(b) the cessation of all Research and Development activities with respect to all
Program Antibodies, Collaboration Targets and/or Collaboration Products, as
applicable, pursuant to the terms hereof, or (c) the termination of all rights
and licenses granted under Articles 3A and 6A, pursuant to the terms hereof.”

13.3 Change of Control is amended to add the following sentence at the end: “In
the event of a Change of Control of XOMA, Takeda shall have the right, but not
the obligation, to terminate Section 3A.3.”

13.5 Effect of an Event of Default is amended to read in its entirety as
follows: “Effect of an Event of Default Not Relating to Second Amendment. In the
event of an Event of Default based upon either Party’s material breach of the
provisions of Articles 2 through 10 (to the extent such material breach does not
relate to rights or obligations granted by or arising from Articles 3A, 6A or
7A), 11, or Sections 12.1, 12.2 or 12.4 (but not including Articles 3A, 6A, 7A,
Sections 12.4A through 12.4D, or Sections 2 through 4 of the Second Amendment),
the non-defaulting Party shall have the right, at its option exercisable in its
sole discretion, in addition to any other rights or remedies available to it at
law or in equity and subject to the limitations set forth in Sections 3.8, 11.4
and 14.8 hereof, to (a) if the Event of Default directly relates to less than
all Collaboration Targets, Program Antibodies and Collaboration Products, by
written notice to the other Party, deem that such Party has abandoned work on
the Collaboration Target(s), Program Antibodies and Collaboration Product(s) to
which such Event of Default directly relates, or (b) if the Event of Default
directly relates to all Collaboration Targets, Program Antibodies and
Collaboration Products, by written notice to the other Party, deem that such
Party has terminated Articles 2 through 8 of the Agreement (but not including
Articles 3A, 6A or 7A and the Sections referenced therein and necessary to give
effect thereto).”

13.5A Effect of an Event of Default Relating to Second Amendment. (a) If there
is an Event of Default based upon Takeda’s material breach of any of the
provisions of Articles 3A, 6A, 7A, 9 or 10 (to the extent such material breach
relates to rights or obligations granted by or arising from Articles 3A, 6A or
7A), Sections 12.4A through 12.4D, or Sections 2 through 4 of the Second
Amendment, then:

(i) if the Event of Default directly relates to less than all [*] and Licensed
Technologies, then XOMA shall be entitled to terminate the licenses and rights
granted, and XOMA’s executory obligations under, Section 3A.2(b) (but not
Section 3A.1 and, to the extent it relates to Article 3A Know-How delivered to
Takeda, Section 3A.2(c)) and/or Article 6A, as applicable, as to those and only
as to those [*] or Licensed Technologies, as the case may be, to which such
Event of Default directly relates; provided, (A) that the licenses to the BCE
Technology in Sections 3A.2(b)(y), 6A.2 and 6A.6 shall be terminable only in the
event and to the extent the licenses in Sections 3A.2(b)(x) (Discovery), 6A.1
(TAE) and 6A.5 (HE), respectively, are terminable

 

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as provided in this Section 13.5A, (B) that Takeda’s covenants under
Section 3A.3 as to such licenses and rights, and as to Takeda Discovery Patent
Rights arising from such licenses and rights, shall be terminated concurrently
with XOMA’s termination of such licenses and rights, and (C) with respect to any
[*] to which such Event of Default directly relates, XOMA’s termination of
Takeda’s rights (including any license under Section 3A.2(a)) to such [*] shall
enjoin Takeda from further use of such [*] but shall not require Takeda to
destroy or surrender possession of such [*]; or

(ii) if the Event of Default directly relates to all [*] and Licensed
Technologies, then XOMA shall have the right to terminate the licenses and
rights granted, and XOMA’s executory obligations under, Articles 3A (but not
Section 3A.1 and, to the extent it relates to Article 3A Know-How delivered to
Takeda, Section 3A.2(c)) and 6A in their entirety, provided, (A) Takeda’s
covenants under Section 3A.3 shall be terminated concurrently with XOMA’s
termination of such licenses and rights, and (B) with respect to [*] XOMA’s
termination of Takeda’s rights (including any license under Section 3A.2(a)) to
[*] shall enjoin Takeda from further use of [*] but shall not require Takeda to
destroy or surrender possession of [*];

provided further, that Takeda’s right to [*] use and sell any Discovery Products
(and its corresponding payment obligations under Article 7A with respect
thereto, subject to the offset and payment reduction provisions therein), shall
survive any termination by XOMA under this Section 13.5A.

(b) In the event of an Event of Default based upon any of the XOMA Company’s
material breach of any of the provisions of Articles 3A, 6A, 7A, 9 or 10 (to the
extent such material breach relates to rights or obligations granted by or
arising from Articles 3A, 6A or 7A), Sections 12.4A through 12.4D, or Sections 2
through 4 of the Second Amendment, Takeda shall be entitled to [*] terminate any
part or all of the provisions of Articles 3A, 6A, 7A, 9 or 10 (to the extent
such material breach relates to rights or obligations granted by or arising from
Articles 3A, 6A or 7A), Sections 12.4A through 12.4D, or Sections 2 through 4 of
the Second Amendment.

(c) Without limiting the other provisions of this Section 13.5A, in the event of
an Event of Default based upon Section 13.4(b), Takeda (in the event one of the
XOMA Companies is the defaulting Party) or the XOMA Companies (in the event
Takeda is the defaulting Party), as the case may be, shall have the right, at
its option exercisable in its sole discretion but subject to Section 5 of this
Second Amendment, in addition to any other rights or remedies available to it at
law or in equity, to terminate Section 3A.2(b), and Articles 6A and 7A (and the
Sections referenced therein and necessary to give effect thereto).

13.7 Takeda’s Rights After Termination for an Event of Default by XOMA is
amended so that (i) the words “this Agreement is” in the first sentence are
replaced by the words “Articles 2 through 8 of the Agreement (but not including
Articles 3A, 6A or 7A and the Sections referenced therein and necessary to give
effect thereto) are”, and (ii) any reference to an “Event of Default by XOMA”
therein shall be replaced with “Event of Default by XOMA based upon XOMA’s
material breach of Articles 2 through 10 (to the extent such material breach
does not relate to rights or obligations granted by or arising from Articles 3A,
6A or 7A), 11, or Sections 12.1, 12.2 or 12.4 (but not including Articles 3A,
6A, 7A, Sections 12.4A through 12.4D, or Sections 2 through 4 of the Second
Amendment)”.

13.8 Effect of Expiration or Termination of Agreement is amended to read in its
entirety as follows: “Effect of Termination Under Section 13.5. The termination
of a given R&D Program or Articles 2 through 8 of the Agreement (but not
including Articles 3A, 6A or 7A and the Sections referenced therein and
necessary to give effect thereto), as provided in Section 13.5 shall not relieve
the Parties of any obligation accruing under such R&D Program or Articles prior
to such termination. In no way limiting

 

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the generality of the foregoing, (a) Sections 2.1.3.1, 2.4, 2.6, 4.3, 5.1.2,
6.1.1, and 7.8-7.13 shall survive the termination of Articles 2 through 8 (but
not including Articles 3A, 6A or 7A and the Sections referenced therein and
necessary to give effect thereto), and (b) in the event of any termination to
which either Section 13.6 or 13.7 applies, the provisions of Sections 7.4 and
7.5.2 shall survive such termination.”

13.8A Effect of Termination Under Section 13.5A. The termination of Articles 3A,
6A, 7A, 9 or 10 (to the extent such material breach relates to rights or
obligations granted by or arising from Articles 3A, 6A or 7A), Sections 12.4A
through 12.4D, or Sections 2 through 4 of the Second Amendment, as provided in
Section 13.5A shall not relieve the Parties of any payment obligation accruing
under such Articles or Sections prior to such termination. Following termination
of the licenses and rights granted and executory obligations under Article 3A or
6A as provided under Section 13.5A, the recipient of such rights shall
thereafter cease using such rights; provided, however, that Takeda’s right to
[*] use and sell any Discovery Products (and its corresponding payment
obligations under Article 7A with respect thereto, [*] and Sections 3A.2(g),
3A.2(i), 3A.2(j) and 6A.7(b) shall survive any such expiration or termination.

13.8B Effect of Expiration of Agreement. Articles 1 and 9 through 14, Sections
2.4, 2.6, 3A.2(g), 3A.2(i), 3A.2(j), 4.3, 5.1.2, 6.1.1, 6A.7(b) and 7.8-7.13,
and Sections 2 and 3 of the Second Amendment shall survive the expiration of
this Agreement.

(k) Sections 14.7 (Consent to Jurisdiction) and 14.8 (Dispute Resolution) of the
Agreement are hereby amended to add the XOMA Companies to each reference to
“XOMA” or “the Parties” therein.

(l) Section 14.8 (Dispute Resolution) of the Agreement is hereby amended to add
Section 14.8.4 as follows:

“14.8.4 The application of the United Nations Convention on Contracts for the
International Sale of Goods is expressly excluded.”

(m) The Agreement is hereby amended to replace Schedule 1.46 (Human Engineering™
Patent Rights) with Schedule 1.46 attached hereto.

Section 2. [*]

Section 3. Representations and Warranties; Covenants.

(a) As of the Amendment Effective Date and only as to this Second Amendment,
Takeda makes the representations and warranties set forth in Sections 11.1.1
through 11.1.6 and 11.1.8 of the Agreement.

(b) As of the Amendment Effective Date and only as to this Second Amendment,
each XOMA Company represents and warrants to and covenants with Takeda that:

 

(i) it is duly organized, validly existing and in good standing under the laws
of its jurisdiction of formation or incorporation;

 

(ii) it has the corporate and full legal right, authority and power to enter
into this Second Amendment, and, as applicable, to extend the rights and
licenses granted to Takeda in this Second Amendment;

 

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(iii) it has taken all necessary corporate action to authorize the execution,
delivery and performance of this Second Amendment;

 

(iv) upon the execution and delivery of this Second Amendment, this Second
Amendment shall constitute a valid and binding obligation of such XOMA Company
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting Parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);

 

(v) the execution of this Second Amendment and performance of its obligations
under this Second Amendment will not conflict with such XOMA Company’s charter
documents or result in a breach of any agreements, contracts or other
arrangements to which it is a party or violate any court or administrative order
by which it is bound;

 

(vi) neither it nor any of its employees or consultants working on the
collaboration with Takeda have been debarred pursuant to the FDC Act or are
currently excluded, debarred, suspended or otherwise ineligible to participate
in Federal health care program and such XOMA Company shall promptly notify
Takeda of any change in this warranty and representation;

 

(vii) all license agreements, covenants not to sue and other arrangements that
such XOMA Company has with Third Parties relating to intellectual property that
XOMA will utilize or reasonably anticipates utilizing to perform its obligations
under this Second Amendment have been disclosed to Takeda in writing;

 

(viii) [*]

 

(ix) [*]

 

(x) [*]

 

(xi) to its reasonable knowledge, during the course of Takeda’s due diligence
investigation in connection with entering into this Second Amendment conducted
prior to the Amendment Effective Date, such XOMA Company neither (a) disclosed
to Takeda any written material that contained a material misstatement regarding
(i) any agreement between such XOMA Company and a Third Party relating to
Relevant Second Amendment Third Party IP, or (ii) such XOMA Company’s ability to
perform its obligations under this Second Amendment; nor (b) failed to disclose
to Takeda any written material in such XOMA Company’s possession that would
reasonably be expected to be material to (i) any agreement between such XOMA
Company and a Third Party relating to Relevant Second Amendment Third Party IP,
or (ii) any Relevant Second Amendment Third Party IP;

 

(xii) [*]

 

(xiii) [*]

 

(xiv) [*]

 

(xv) [*]

 

(xvi) [*]

 

-19-

--------------------------------------------------------------------------------

(xvii) [*]

 

(xviii) [*]

 

(xix) it is and shall remain in compliance in all material respects with any and
all applicable laws and regulations relating to this Second Amendment and its
ability to perform its obligations hereunder; and

 

(xx) [*]

Section 4. Conditions to Payment Obligation. The obligations of Takeda to
consummate the transaction contemplated by this Second Amendment and to make any
payments to XOMA under this Second Amendment are subject to the satisfaction of
the following conditions:

 

(i) as of the Amendment Effective Date, XOMA executing and providing copies to
Takeda of any and all executed agreements between a XOMA Company and XOMA
granting to XOMA any and all rights necessary for XOMA to grant its respective
rights and licenses contained herein to Takeda; and

 

(ii) as of the Amendment Effective Date, XOMA and Takeda executing a services
agreement substantially in the form annexed hereto as Exhibit C.

Section 5. Bankruptcy. All rights and licenses granted under this Second
Amendment by XOMA to Takeda are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of Title XI of the United States Code (the
“Bankruptcy Code”), licenses of rights to “intellectual property” as defined
under Section 101(35A) of the Bankruptcy Code. The Parties further agree that in
the event of the commencement of a bankruptcy proceeding by or against one Party
under the Bankruptcy Code, Takeda (if such proceeding is commenced against a
XOMA Company) or XOMA (if such proceeding is commenced against Takeda), to the
extent permitted under applicable Laws, shall be entitled to complete access to
any such intellectual property pertaining to the rights granted in the licenses
hereunder of the Party by or against whom a bankruptcy proceeding has been
commenced and all embodiments of such intellectual property. [*]

Section 6. Press Release. The Parties hereby agree to the release of a press
release in the form attached hereto as Exhibit D upon full execution of this
Second Amendment, and the fact of the execution of this Second Amendment, as
well as the terms that are expressly described in such press release, shall be
deemed to be in the public domain. In all other respects, Section 10.4 of the
Agreement shall apply to the terms and conditions of this Second Amendment.

Section 7. Effect of Amendment. Together with the Agreement (including all
Schedules thereto), this Second Amendment constitutes the entire agreement
between the Parties in connection with the subject matter hereof and thereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties. Except as
expressly provided for herein, all terms and conditions of the Agreement shall
remain in full force and effect. To the extent that the terms of this Second
Amendment conflict or are inconsistent with the terms of the Agreement, the
terms of this Second Amendment shall control.

Section 8. Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of California, without
reference to the conflicts of law principles thereof.

 

-20-

--------------------------------------------------------------------------------

Section 9. Counterparts. This Second Amendment 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.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

-21-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned parties have agreed to the foregoing as of
the date first written above.

TAKEDA PHARMACEUTICAL COMPANY LIMITED

By:       Name:   Dr. Shigenori Ohkawa   Title:  

Member of the Board, General Manager

of Pharmaceutical Research Division

 

XOMA (US) LLC By:       Name:   Fred Kurland   Title:   Vice President, Finance
and Chief Financial Officer

[*]

 

-22-

--------------------------------------------------------------------------------

Schedule 1.8A

Systems Specifications

[*]

--------------------------------------------------------------------------------

Schedule 1.8D

XOMA Patent Rights – Bacterial Expression

 

A. Title: Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and
Use

Inventors:     Robinson, Liu, Horwitz, Wall, Better

 

1) Based on PCT/US86/02269, which is a continuation-in-part of U.S. Application
No. 06/793,980 filed November 1, 1985 (abandoned).

 

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

Australia

   65981/86    AU 606,320

Denmark

   3385/87    DK 175680

Canada

   521,909    Abandoned

Europe

   86906676.1    0247091 Abandoned

Europe

   92115754.1    Abandoned

Japan

   505887/1986    Abandoned

Taiwan

   75105650    51922

*United States

   06/793,980    Abandoned

*United States

   U.S. National Phase of PCT/US86/02269    Abandoned

 

* Cases abandoned in favor of a continuing application.

 

2) Based on PCT/US88/02514, which corresponds to U.S. Application
No. 07/077,528, which is a continuation-in-part PCT/US86/02269 (abandoned),
which is a continuation-in-part of U.S. Application No. 06/793,980 (abandoned).

 

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

Australia

   23244/88    AU 632,462

Canada

   572,398    CA 1,341,235

Denmark

   192/90    DK 174824

Denmark

   200301155    DK 175654

Denmark

   200301156    DK 175581

Europe

   EP 88907510.7    EP 0371998

Austria

   EP 88907510.7    AT 0102249

Belgium

   EP 88907510.7    BE 0371998

France

   EP 88907510.7    FR 0371998

Germany

   EP 88907510.7    DE 3888186.1

Italy

   EP 88907510.7    IT 0371998

Luxembourg

   EP 88907510.7    LU 0371998

Netherlands

   EP 88907510.7    NL 0371998

Sweden

   EP 88907510.7    SE 0371998

Switzerland/Liechtenstein

   EP 88907510.7    CH 0371998

United Kingdom

   EP 88907510.7    GB 0371998

Europe

   EP 93100041.8    EP 0550400

Austria

   EP 93100041.8    AT0140266E

Belgium

   EP 93100041.8    BE 0550400

--------------------------------------------------------------------------------

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

France

   EP 93100041.8    FR 0550400

Germany

   EP 93100041.8    DE 3855421.6

Italy

   EP 93100041.8    IT 0550400

Luxembourg

   EP 93100041.8    LU 0550400

Netherlands

   EP 93100041.8    NL 0550400

Sweden

   EP 93100041.8    SE 0550400

Switzerland/Liechtenstein

   EP 93100041.8    CH 0550400

United Kingdom

   EP 93100041.8    GB 0550400

Europe

   EP 95119798.7    EP 0731167

Austria

   EP 95119798.7    AT 0197315

Belgium

   EP 95119798.7    BE 0731167

France

   EP 95119798.7    FR 0731167

Germany

   EP 95119798.7    DE 3856440.8

Italy

   EP 95119798.7    IT 0731167

Luxembourg

   EP 95119798.7    LU 0731167

Netherlands

   EP 95119798.7    NL 0731167

Sweden

   EP 95119798.7    SE 0731167

Switzerland/Liechtenstein

   EP 95119798.7    CH 0731167

United Kingdom

   EP 95119798.7    GB 0731167

Japan

   506481/88    JP 2991720

*United States

   07/077,528   

 

* Cases abandoned in favor of a continuing application.

 

3) Based on U.S. Application No. 07/501,092 filed March 29, 1990, which is a
continuation-in-part of U.S. Application No. 07/077,528 (Modular Assembly of
Antibody Genes, Antibodies Prepared Thereby and Use; Robinson, Liu, Horwitz,
Wall, Better) and of U.S. Application No. 07/142,039 (Novel Plasmid Vector with
Pectate Lyase Signal Sequence; Lei, Wilcox).

 

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

*United States

   07/501,092    Abandoned

*United States

   07/870,404    Abandoned

*United States

   07/987,555    Abandoned

*United States

   08/020,671    Abandoned

United States

   08/235,225    US 5,618,920

United States

   08/299,085    US 5,595,898

United States

   08/450,731    US 5,693,493

United States

   08/466,203    US 5,698,417

United States

   08/467,140    US 5,698,435

United States

   08/472,691    US 6,204,023

*United States

   09/722,315    Abandoned

*United States

   09/722,425    Abandoned

*United States

   10/040,945    Abandoned

United States

   11/582,563    Abandoned

 

* Cases abandoned in favor of a continuing application.

 

-2-

--------------------------------------------------------------------------------

B. Title: Novel Plasmid Vector with Pectate Lyase Signal Sequence (PelB)

Inventors:     Lei, Wilcox

Based on U.S. Application No. 07/142,039 filed January 11, 1988 and
PCT/US89/00077.

 

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

Australia

   29377/89    AU 627443

Canada

   587,885    CA 1,338,807

Europe

   EP 89901763.6    EP 0396612

Austria

   EP 89901763.6    AT 0140731

Belgium

   EP 89901763.6    BE 0396612

France

   EP 89901763.6    FR 0396612

Germany

   EP 89901763.6    DE 689 26 882

Italy

   EP 89901763.6    IT 0396612

Luxembourg

   EP 89901763.6    LU 0396612

Netherlands

   EP 89901763.6    NL 0396612

Sweden

   EP 89901763.6    SE 0396612

Switzerland/Liechtenstein

   EP 89901763.6    CH 0396612

United Kingdom

   EP 89901763.6    GB 0396612

Japan

   501661/89    JP 2980626

*United States

   07/142,039    Abandoned

United States

   08/472,696    US 5,846,818

United States

   08/357,234    US 5,576,195

 

* Cases abandoned in favor of a continuing application.

 

C. Title: Methods and Cells for Expression of Recombinant Protein Products (Ara)

Inventor:     Better

Based on PCT/US01/08754, which claims priority to U.S. Provisional Application
Nos. 60/192,129 filed March 24, 2000 and 60/192,238 filed March 27, 2000

 

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

Australia

   2001249265    AU 2001249265

Canada

   2,404,046    2,404,046

Europe

   01922467.4    EP 1268823

Austria

   01922467.4    AT 1268823

Belgium

   01922467.4    BE 1268823

Cyprus

   01922467.4    CY 1268823

Denmark

   01922467.4    DK 1268823

Finland

   01922467.4    FI 1268823

France

   01922467.4    FR 1268823

Germany

   01922467.4    DE 60131261.9-08

Greece

   01922467.4    GR 1268823

Ireland

   01922467.4    IE 1268823

Italy

   01922467.4    IT 1268823

Luxembourg

   01922467.4    LU 1268823

Monaco

   01922467.4    MC 1268823

 

-3-

--------------------------------------------------------------------------------

COUNTRY

  

APPLICATION NO.

  

PATENT NO.

Netherlands

   01922467.4    NL 1268823

Portugal

   01922467.4    PT 1268823

Spain

   01922467.4    ES 1268823

Sweden

   01922467.4    SE 1268823

Switzerland

   01922467.4    CH 1268823

Turkey

   01922467.4    TR 1268823

United Kingdom

   01922467.4    GB 1268823

[*]

     

*United States

   60/192,129    Abandoned

*United States

   60/192,238    Abandoned

United States

   09/811,933    US 6,803,210

United States

   10/963,414    Abandoned

 

* Cases abandoned in favor of a continuing application.

 

[*]

 

-4-

--------------------------------------------------------------------------------

Schedule 1.29C

Discovery Patent Rights

[*]

--------------------------------------------------------------------------------

Schedule 1.46

Human Engineering™ Technology

 

A. Materials/Know-How

[*]

 

B. Patent Rights

Title: Methods and Materials for Preparation of Modified Antibody Variable
Domains and Therapeutic Uses Thereof

Inventors:     Studnicka

Based on PCT/US92/10906 [WO 93/11794 filed 12/14/92], which is a
continuation-in-part of U.S. Serial No. 07/808,464 filed December 13, 1991
(abandoned).

 

COUNTRY

  

SERIAL NO.

  

PATENT NO.

*United States

   07/808,464    Abandoned

United States

   08/107,669    5,766,886

United States

   08/472,788    5,770,196

United States

   08/477,531    5,821,123

United States

   08/082,842    5,869,619

United States

   09/097,980    Abandoned

United States

   09/245,202    Abandoned

United States

   10/325,696    Abandoned

United States

   10/340,189    Abandoned

United States

   11/133,775    Abandoned

Canada

   2,103,887    2,103,887

[*]

     

Europe

   EP 93901238.1    EP0571613

Austria

   EP 93901238.1    Abandoned

Belgium

   EP 93901238.1    BE 0571613

France

   EP 93901238.1    FR 0571613

Germany

   EP 93901238.1    DE 69233204

Ireland

   EP 93901238.1    IE 0571613

Italy

   EP 93901238.1    IT 0571613

Netherlands

   EP 93901238.1    NL 0571613

Spain

   EP 93901238.1    ES 2202310

Switzerland/Liechtenstein

   EP 93901238.1    CH 0571613

United Kingdom

   EP 93901238.1    GB 0571613

Europe (Divisional)

   02021775.8    Abandoned

Japan

   5-511171    4,157,160

Japan*

   2005-6625    Abandoned

[*]

     

 

* Cases abandoned in favor of a continuing application.

 

[*]

--------------------------------------------------------------------------------

Schedule 1.89A

Systems

 

A. Materials/Know-How

[*]

 

B. Patent Rights

[*]

[*]

--------------------------------------------------------------------------------

Schedule 1.93C

Transient Expression System Technology

 

A. Materials/Know-How

[*]

 

B. Patent Rights

Title: Methods and materials for transient expression of a recombinant protein

Inventor: Masahisa Handa, Arnold H. Horwitz, Robyn Cotter, Eddie Bautista

Based on PCT/US2005/043922 (WO 2006/060769 A2) filed 5 December 2005 which
corresponds to U.S. Provisional Application No. 60/633,056 filed 3 December 2004

 

Country

  

Application #

  

Filed

  

Status

US Prov

   60/633,056    12/3/2004    expired

US

   11/295,006    12/5/2005    Abandoned

[*]

        

--------------------------------------------------------------------------------

Schedule 1.95B

[*] Materials Specifications

[*]

--------------------------------------------------------------------------------

Schedule 3A.1(a)

[*] Quantities and Additional Information

[*]

--------------------------------------------------------------------------------

Schedule 3A.1(d)

Services Relating to

[*] Systems, TES Technology and HE™ Technology

(i) Services: Upon the request of Takeda, XOMA agrees to perform the services
described in Exhibit A to this Schedule 3A.1(d) (“Services”). XOMA warrants that
it has and/or will retain employees and/or consultants with the skills, ability
and training necessary to, and that it shall, render the Services in a timely
and professional manner consistent with industry standards in accordance with
the terms of this Schedule 3A.1(d) including Exhibit A. Subject to the
foregoing, the manner and means by which XOMA chooses to complete the Services
are in XOMA’s sole discretion and control.

(ii) Compensation: In consideration of the Services to be rendered hereunder,
Takeda agrees to pay XOMA the compensation set forth in Exhibit A to this
Schedule 3A.1(d).

(iii) Expenses: Takeda will reimburse XOMA for all reasonable travel, lodging
and other expenses of XOMA’s employees and consultants rendering the Services
documented to the reasonable satisfaction of Takeda.

(iv) Other Services: XOMA (including its employees rendering the Services) may
conduct activities with and provide services to, and its consultants rendering
the Services may perform services for or be employed by, Third Parties so long
as doing so does not cause XOMA to breach its obligations under this Schedule
3A.1(d) or the Agreement.

(v) Term: The Parties shall have no further rights or obligations with respect
to this Schedule 3A.1(d) (other than those accrued prior to such termination)
upon the earliest of (i) termination of Article 3A of the Agreement in
accordance with its terms, (ii) termination of this Schedule 3A.1(d) by either
Party upon a material breach by the other Party that is not cured within thirty
(30) days of such other Party becoming aware of such breach, effective
immediately upon written notice to the breaching Party, or (iii) termination by
Takeda of this Schedule 3A.1(d), at its discretion, upon prior written notice to
XOMA.

(vi) Confidential Information: Article 10 of the Agreement shall apply to any
Confidential Information disclosed, received or created by either party in
connection with this Schedule 3A.1(d).

--------------------------------------------------------------------------------

EXHIBIT A TO SCHEDULE 3A.1(d)

Statement of Work

 

I. DESCRIPTION OF THE SERVICES TO BE PERFORMED:

 

  1. [*]

 

  2. [*]

 

  3. Technical support for the Systems

 

  4. Technical support for the TES Technology

 

  5. Technical support for the HE™ Technology

 

II. COMPENSATION:

[*]

--------------------------------------------------------------------------------

Schedule 6A.3

Additional Provisions Relating to Software License

1. Definitions. For purposes of this Schedule 6A.3, the following terms shall
have the respective meanings indicated below:

1.1 “Applicable Patent Rights” shall mean (a) in the case where XOMA is the
grantor of rights, claims of patents that (i) are now or hereafter acquired,
owned by or assigned to XOMA and (ii) cover subject matter contained in the
Source Code or the Software, and (b) in the case where Takeda is the grantor of
rights, claims of patents that (i) are now or hereafter acquired, owned by or
assigned to Takeda and (ii) cover subject matter contained in the Covered Code
or the Covered Software.

1.2 “Covered Code” shall mean the Source Code and any Modifications to the
Source Code made by Takeda or any person or entity acting on Takeda’s behalf.

1.3 “Covered Software” shall mean the Software and any Modifications to the
Software made by Takeda or any person or entity acting on Takeda’s behalf.

1.4 “Larger Work” shall mean a work which combines the Covered Code or the
Covered Software or portions thereof with code not governed by the terms of this
Schedule 6A.3.

1.5 “Modifications” shall mean any addition to, deletion from and/or other
change to the substance and/or structure of the Source Code or the Software.
When code is released as a series of files, a Modification is (a) any addition
to or deletion from the contents of a file containing the Covered Code or the
Covered Software and/or (b) any new file or other representation of computer
program statements that contains any part of the Covered Code or the Covered
Software.

1.6 “Software” shall mean the software, programs and/or computer instruction
sets, other than the Source Code, consisting of the versions thereof existing
and deployed at XOMA as of the Amendment Effective Date and more fully described
in item A.1 of Schedule 1.46 and item A.1 of Schedule 1.89A and any changed or
modified versions thereof that correct significant defects contained in the
Software as of the Amendment Effective Date (“Corrected Software”). Expressly
excluded from the definition of Software are (a) other programs, software and/or
computer instructions that XOMA derives from such programs, software and/or
computer instructions or develops, acquires or obtains the right to sublicense
during the term of this Schedule 6A.3, as well as (b) any changed, modified or
enhanced versions of the Software (other than Corrected Software).

1.7 “Source Code” shall mean the human readable form of the Software that is
suitable for modification, including all modules it contains, plus any
associated data files, interface definition files, scripts used to control
compilation and installation of an executable computer instruction.

2. Corrected Software; Terms and Conditions.

2.1 Corrected Software. If, within the first [*] following the Amendment
Effective Date, XOMA develops, licenses or acquires any Corrected Software, XOMA
shall promptly provide Takeda with a copy thereof. All Corrected Software shall
be deemed, in accordance with the terms and conditions of this Schedule 6A.3 and
without payment of additional consideration, to be included in the definition of
Software.

--------------------------------------------------------------------------------

2.2 Terms and Conditions. (a) Any reproduction, use or dissemination of any
Covered Code or Covered Software, including without limitation, any
Modifications thereof, shall be limited to activities undertaken by Takeda and
Designated Takeda Affiliates’ employees who are subject to the confidentiality
and intellectual property provisions of the Agreement. Notwithstanding the
foregoing sentence, Takeda and Designated Takeda Affiliates may employ or use
Third Parties to make Modifications or use the Covered Code or the Covered
Software for purposes reasonably related to Takeda’s legitimate use as provided
for by the Agreement, including this Schedule 6A.3. Takeda shall not grant any
such Third Party the right to access the Software or the Source Code unless and
until such Third Party executes a written confidentiality agreement that
provides, in addition to the other terms and conditions of such agreement, that
(a) the Third Party will abide, for XOMA’s and Takeda’s benefit, by the
limitations provided for in this Schedule 6A.3 and the Agreement, (b) all work
will be undertaken by such Third Party in a manner so as to establish that any
such work is done as a “work made for hire” and (c) such Third Party will assign
any patent rights to Takeda such that they become Applicable Patent Rights.

(b) Takeda shall retain and reproduce in all copies of the Covered Code and the
Covered Software (i) the copyright and other proprietary notices and disclaimers
of XOMA as they appear in the Source Code and the Software, respectively,
(ii) all notices in the Source Code and/or the Software that refer to this
Schedule 6A.3, and (iii) to the extent it does not already exist, the notice
provided for below:

“Portions Copyright (c) 2005-2009 XOMA Ltd. All Rights Reserved.

“This file contains Source Code or Software or Modifications thereof as defined
in and that are subject to a software license and related terms between Takeda
Pharmaceutical Company Limited and XOMA (US) LLC. You may not use this file
except in compliance with that license and those terms. Please obtain a copy of
the software license and related terms between Takeda and XOMA by contacting
Research Information & Alliances, Strategic Research Planning Department,
Pharmaceutical Research Division, of Takeda Pharmaceutical Company Limited, and
read it before using this file.

“Unless otherwise stated, these materials are distributed on an ‘AS IS’ basis,
WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND XOMA HEREBY
DISCLAIMS ALL SUCH WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUIET ENJOYMENT OR
NON-INFRINGEMENT. Please see the software license and related terms between
Takeda and XOMA for the specific language governing rights and limitations under
that license and those terms.”

(c) For any Modifications, Takeda must cause the modified files to carry notices
stating that Takeda changed the files and the date of such change.

(d) Takeda will use commercially reasonable and diligent efforts to protect
XOMA’s proprietary interests in and to the Software, the Source Code and XOMA’s
Applicable Patent Rights, including, as appropriate, ensuring that there is
password protection of any computer or network containing any copies of the
Covered Code or the Covered Software. In addition, Takeda will prohibit its
employees from disclosing to unauthorized Third Parties the Covered Code or the
Covered Software except under the conditions required by this Schedule 6A.3 and
the acknowledgement that the Software and the Source Code constitute
Confidential Information of XOMA under the Agreement.

 

-2-

--------------------------------------------------------------------------------

3. Takeda Exclusive Rights. Takeda shall own all Modifications to the Source
Code or the Software created by Takeda pursuant to this Schedule 6A.3 and shall
have no obligation to share or provide copies or updates thereof to XOMA.

4. Representations and Warranties Regarding Software and Source Code.

4.1 Representations and Warranties. XOMA represents and warrants that the Source
Code and the Software were made by XOMA employees and constitute a “work made
for hire,” and were not authored or distributed to Takeda in violation of any
agreements between XOMA and any Third Party, including any “open source”
licenses.

4.2 Limitations on Warranties and Support. The Covered Code or the Covered
Software may contain in whole or in part pre-release, untested or not fully
tested works, may contain errors that could cause failures or loss of data, and
may be incomplete or contain inaccuracies. Takeda expressly acknowledges and
agrees that use of the Covered Code or the Covered Software, or any portion
thereof, is at Takeda’s sole and entire risk. UNLESS OTHERWISE STATED, THE
SOURCE CODE AND THE SOFTWARE ARE PROVIDED “AS IS” AND WITHOUT WARRANTY, UPGRADES
OR SUPPORT OF ANY KIND. UNLESS OTHERWISE STATED, XOMA, ITS LICENSOR(S) AND
CONTRIBUTORS (COLLECTIVELY REFERRED TO AS “XOMA” FOR THE PURPOSES OF SECTIONS 4
AND 5) EXPRESSLY DISCLAIM ALL WARRANTIES AND/OR CONDITIONS, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES AND/OR CONDITIONS OF
MERCHANTABILITY, OF SATISFACTORY QUALITY, OF FITNESS FOR A PARTICULAR PURPOSE,
OF ACCURACY, OF QUIET ENJOYMENT AND OF NONINFRINGEMENT OF THIRD PARTY RIGHTS.
XOMA DOES NOT WARRANT AGAINST INTERFERENCE WITH TAKEDA’S ENJOYMENT OF THE
COVERED CODE AND THE COVERED SOFTWARE, THAT THE FUNCTIONS CONTAINED IN THE
COVERED CODE OR THE COVERED SOFTWARE WILL MEET TAKEDA’S REQUIREMENTS, THAT THE
OPERATION OF THE COVERED CODE OR THE COVERED SOFTWARE WILL BE UNINTERRUPTED OR
ERROR-FREE, OR THAT DEFECTS IN THE COVERED CODE OR THE COVERED SOFTWARE WILL BE
CORRECTED. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY XOMA OR ANY XOMA
REPRESENTATIVE SHALL CREATE A WARRANTY. Takeda acknowledges that neither the
Covered Code nor the Covered Software is intended for use in the operation of
nuclear facilities, aircraft navigation, communication systems or air traffic
control machines, in which case the failure of the Covered Code or the Covered
Software could lead to death, personal injury or severe physical or
environmental damage.

5. Termination. The rights granted under this Schedule will terminate upon
termination of the Systems License Term.

6. Government End Users. Each of the Covered Code and the Covered Software is a
“commercial item” as defined in FAR 2.101. Government software and technical
data rights in the Covered Code or the Covered Software include only those
rights customarily provided to the public as defined in this Schedule 6A.3. This
customary commercial license in technical data and software is provided in
accordance with FAR 12.211 (Technical Data) and 12.212 (Computer Software) and,
for Department of Defense purchases, DFAR 252.227-7015 (Technical Data —
Commercial Items) and 227.7202-3 (Rights in Commercial Computer Software or
Computer Software Documentation). Accordingly, all U.S. Government End Users
acquire the Covered Code or the Covered Software with only those rights set
forth herein.

 

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