Exhibit 10.24D

MANUFACTURING AND TECHNOLOGY TRANSFER AGREEMENT

This Manufacturing and Technology Transfer Agreement (this “Agreement”) is
effective as of July 1, 2008 (the “Effective Date”), by and between XOMA (US)
LLC, a Delaware limited liability company with offices at 2910 Seventh Street,
Berkeley, California 94710 (“XOMA”), and Novartis Vaccines and Diagnostics,
Inc., a Delaware corporation with offices at 4650 Horton Street, Emeryville,
California 94608 (“NVDI”). XOMA and NVDI are sometimes referred to herein
individually as a “Party” and collectively as “Parties.”

RECITALS

WHEREAS, the Parties have entered into that certain Amended and Restated
Research, Development and Commercialization Agreement effective as of the
Effective Date (the “Collaboration Agreement”);

WHEREAS, XOMA has substantial expertise in product development and manufacturing
of its own and its collaborators’ biopharmaceutical products and, in addition,
has invested in biopharmaceutical manufacturing facilities; and

WHEREAS, NVDI desires to engage XOMA to perform technology transfer and other
activities with respect to NVDI’s anti-[*] monoclonal antibody, known as [*] and
its anti-CD40 monoclonal antibody, known as HCD122, and to manufacture and
supply two (2) GLP Batches of [*] and XOMA desires to provide such services to
NVDI, on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants set forth below, NVDI and XOMA mutually agree as follows;

ARTICLE 1

DEFINITIONS

Capitalized terms used but not defined herein shall have the meanings set forth
in the Collaboration Agreement. As used in this Agreement, he following terms
will have the following meanings:

1.1 “[*] Scale” means the 2750 liter nominal volume fermentation bioreactor
production scale for the [*] Drug Substance manufacturing process that will
result from scale-up work carried out by XOMA as part of the Project.

1.2 “AAA” means the American Arbitration Association or its successor
organization.

1.3 “Affiliate” means any person or entity that, directly or indirectly, through
one or more intermediaries, owns, is owned by or is under common ownership with,
a Party, where “own,” “owned” and “ownership” refer to (a) direct or indirect
possession of at least fifty percent (50%) of the outstanding voting securities
of a corporation or a comparable ownership in any other type of entity; or
(b) the actual ability of an entity, person or group to control and direct the
management of the person or entity, whether by contract or otherwise.

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1.4 “Batch” means the quantity of [*] Drug Substance that is intended to have a
uniform character and quality, within specified limits, and that is produced
according to a single manufacturing order during the same cycle of manufacture.

1.5 “Confidential Information” of a Party means all confidential or proprietary
information of such Party that the other Party receives or learns under this
Agreement. Confidential Information shall include without limitation the
manufacturing processes transferred to, used by or improved by XOMA under this
Agreement. Confidential Information shall not include any information to the
extent that the receiving Party can demonstrate by competent evidence:

1.5.1. is now, or hereafter becomes, through no act or failure to act on the
part of the receiving Party in breach of Article 9, generally known or
available;

1.5.2. is known by the receiving Party at the time of receiving such
information, as shown by written records predating such receipt;

1.5.3. is furnished after the Effective Date to the receiving Party by a Third
Party, without breach of and not subject to any obligation of confidentiality;
or

1.5.4. is independently developed by the receiving Party without use of or
reference to Confidential Information of the other Party, as shown by
independent written records contemporaneous with such development.

1.6 “Control,” “Controls” and “Controlled” mean, with respect to a particular
item of information or Intellectual Property Right, that the applicable Party
owns or has a license to such item or right and has the ability to grant to the
other Party access to and a license or sublicense (as applicable) under such
item or rights as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.

1.7 “CPR” means the CPR Institute for Dispute Resolution or its successor
organization.

1.8 “Dedicated Equipment” has the meaning set forth in Section 2.9.1.

1.9 “Delivery” has the meaning set forth in Section 4.2.1.

1.10 “Facility” means XOMA’s appropriate facilities located in Berkeley and
Emeryville, California.

1.11 “FDA” means the U.S. Food and Drug Administration or any successor agency.

1.12 “FD&C Act” means the U.S. Food, Drug and Cosmetics Act and applicable
regulations and guidances promulgated thereunder, as amended from time to time.

 

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1.13 “FTE” has the meaning set forth in Section 5.1.

1.14 “GLP” means the then current standards for laboratory practice in relation
to biologicals, as set forth in the FD&C Act, and such standards of good
laboratory practice as are required by the FDA.

1.15 “Governmental Authority” means any supranational, national, regional, state
or local regulatory agency, department, bureau, or other governmental entity.

1.16 “Indemnitee” has the meaning set forth in Section 8.3.

1.17 “Indemnitor” has the meaning set forth in Section 8.3.

1.18 “Innovations” means inventions, discoveries, works of authorship, trade
secrets and other know-how or developments.

1.19 “Intellectual Property Rights” means Patents, copyrights, trademarks,
service marks, trade secrets, mask works and applications for the foregoing, in
any country, supra-national organization or territory of the world.

1.20 “[*] Drug Substance” means the anti-[*] monoclonal antibody known as [*] in
purified bulk form that has been manufactured and processed to the stage where
it meets the Master Production Records and is suitable for further processing to
yield Product.

1.21 “Losses” means losses, claims, suits, damages, costs, fees and expenses
(including without limitation reasonable attorneys’ fees).

1.22 “Master Production Records” or “MPRs” means the documentation generated by
XOMA that collectively defines the manufacturing methods, test methods,
specifications, materials, and other procedures, directions and controls
associated with the manufacture and testing of [*] Drug Substance. The Master
Production Records shall also include or incorporate by reference, without
limitation, such information as the specifications of raw materials, resins and
other consumables to be used in the manufacture of [*] Drug Substance, in
process and final [*] Drug Substance sampling standards, equipment and
instrumentation specifications and standard operating procedures, including,
without limitation, standard operating procedures for in-process quality control
testing and [*] Drug Substance packaging and aliquoting procedures.

1.23 “Monthly Report” means a detailed report which shall set forth the costs
for the Services performed during such calendar month.

1.24 “NVDI Indemnitees” means NVDI and its Affiliates and their respective
directors, officers, employees and agents.

1.25 “NVDI Innovations” means all Innovations that NVDI either Controls as of
the Effective Date or gains Control of independently of activities under this
Agreement, including all Intellectual Property Rights in any of the foregoing.

 

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1.26 “NVDI IP” means, to the extent Controlled by NVDI, Intellectual Property
Rights claiming or covering NVDI Innovations or NVDI-owned Project Innovations
that, in the absence of a license thereunder, would be infringed or
misappropriated by XOMA’s performance of its obligations under this Agreement.

1.27 “Patents” means (a) United States issued patents, re-examinations,
reissues, renewals, extensions, patent term restorations, and foreign
counterparts of each of the foregoing; and (b) pending applications for United
States patents and foreign counterparts thereof, whether issued or not.

1.28 “Process” means the process and technology used to manufacture and test [*]
Drug Substance under this Agreement.

1.29 “Product” means the finished dosage form of (a) NVDI’s [*] antibody product
candidate and/or (b) NVDI’s HCD122 antibody product candidate, as the context
requires.

1.30 “Project” means the product development (including preclinical and
production related activities, technology transfer and regulatory and clinical
oversight) and manufacturing relationship established by this Agreement.

1.31 “Project Innovations” shall mean all Innovations, whether or not
patentable, that are conceived in the course and as a result of the Services.

1.32 “Project Team” means a group constituted pursuant to Section 2.4 and
comprised of an appropriate number of representatives of each Party with
expertise appropriate to the current stage of the Project.

1.33 “Quality Agreement” means that certain Quality Agreement between the
Parties dated as of the Effective Date, a copy of which is attached hereto as
Appendix B and which is incorporated herein by this reference.

1.34 “Quarterly Invoice” has the meaning set forth in Section 5.2.

1.35 “Regulatory Approval” means all approvals, product and/or establishment
licenses, registrations or authorizations of all Regulatory Authorities
necessary for the manufacture, use, storage, import, export, transport and sale
of a biological product in a jurisdiction.

1.36 “Regulatory Authority” means a supranational, national or local regulatory
agency or other governmental entity with the authority to grant a Regulatory
Approval.

1.37 “SEC” means the U.S. Securities and Exchange Commission or any successor
agency.

1.38 “Services” means those services to be performed by XOMA hereunder pursuant
to the Work Plan.

 

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1.39 “Start Date” means, with respect to a scheduled production run, the date on
which a cell bank vial is scheduled in the Work Plan to be thawed for such
production run, provided that such date shall be adjusted to account for any
actual delays in the start of such production run.

1.40 “Third Party” means any person or entity other than the Parties or their
respective Affiliates.

1.41 “Third Party Claim” means any Third Party claim, demand, suit, action or
proceeding.

1.42 “Waste” means any “hazardous substance” and/or “hazardous material” as
provided under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), any “hazardous waste” as provided under the Resource
Conservation and Recovery Act (RCRA), and/or any other waste material, pollutant
and/or contaminant of any kind including, without limitation, any routine
process waste or any by-product arising from any activities conducted pursuant
to this Agreement.

1.43 “Work Plan” means the Work Plan attached hereto as Appendix A and
incorporated herein by this reference (as such Work Plan may be amended from
time to time by mutual written agreement of the Parties).

1.44 “XOMA Indemnitees” means XOMA and its Affiliates and their respective
directors, officers, employees and agents.

1.45 “XOMA Innovations” means all Innovations that XOMA either Controls as of
the Effective Date or gains Control of independently of activities under this
Agreement, including all Intellectual Property Rights in any of the foregoing.

1.46 “XOMA IP” means, to the extent Controlled by XOMA, Intellectual Property
Rights claiming or covering XOMA Innovations or XOMA-owned Project Innovations
that, in the absence of a license thereunder, would be infringed or
misappropriated by the development, manufacture, use or sale of [*] Drug
Substance or Product.

ARTICLE 2

OVERVIEW; GOVERNANCE.

2.1 Project; Schedule. XOMA and NVDI are entering into this Agreement with the
purpose of having XOMA perform technology transfer and other activities as
provided in the Work Plan and produce [*] in compliance with the Master
Production Records at [*] Scale for NVDI. Subject to the terms and conditions of
this Agreement, XOMA will carry out the Project in accordance with this
Agreement and the Work Plan. XOMA will commit to the Project appropriate
personnel (including without limitation those with expertise in technical
development, manufacturing, operations, quality control, quality assurance and
regulatory affairs) and conduct the Services at the Facility. NVDI will commit
such of its personnel with appropriate expertise to provide monitoring and, as
appropriate, technical consultation for the

 

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Project. XOMA and NVDI recognize the importance of timely execution of the
Project, and accordingly each Party will give priority to the Project, assign
adequate staffing and other resources and use all diligent, commercially
reasonable efforts to maximize the potential of achieving successful completion
of the Project (including without limitation timely provision of all
deliverables in accordance with the Work Plan), it being understood that the
efforts and resources used to date by XOMA satisfy such standard. More
specifically:

2.1.1. NVDI and XOMA each will give priority to completion, as promptly as
reasonably practicable, of the development and implementation of the Work Plan.
NVDI has delivered to XOMA certain materials and information and will deliver to
XOMA any further materials and information necessary for XOMA to undertake its
responsibilities hereunder, together with relevant details of any hazards and/or
characterization relating to the materials delivered or to be delivered by NVDI
to be used, and the storage and use of such materials. With this information,
XOMA has initiated and will continue the process development efforts.

2.1.2. Upon successful completion of cell banking, process development and
preparation for scale-up work, XOMA will produce [*] and in each case according
to the Work Plan. For the avoidance of doubt, the GLP batch under production in
November of 2008 shall count as one (1) [*]. In connection with the foregoing,
XOMA will also conduct related testing and deliver related regulatory
documentation to NVDI.

2.2 Work Plan.

2.2.1. Attached hereto as Appendix A is the Work Plan for the technology
transfer, manufacturing and other activities as provided therein in accordance
with the terms and conditions of this Agreement. The Parties acknowledge that
the initial Work Plan attached hereto at the time of execution of this Agreement
is a preliminary version included for guidance but not yet fully agreed to by
the Parties. The Parties agree to use commercially reasonable efforts to
finalize such initial Work Plan within [*] following full execution of this
Agreement. For the avoidance of doubt, once such initial Work Plan is agreed, it
may be further amended as provided herein.

2.2.2. Each Party agrees to perform its obligations under this Agreement in
accordance with the Work Plan and the Quality Agreement. The Project Team
members shall review the Work Plan and consult as to its continuing suitability
at their meetings pursuant to Section 2.4 and shall propose appropriate
revisions thereto. Any such revised Work Plan or amendment or supplement to the
Work Plan shall be in writing and shall become effective only upon execution by
both Parties.

2.3 Cooperation. Adherence to the schedules set out in the Work Plan is
contingent in part on each Party’s reasonably expedient reviews, decisions and
approvals of the requisite documents, data and paths, where such review and
approval is necessary, it being understood and agreed that, in order to maintain
adherence to the schedules set forth in the Work Plan (taking into consideration
the custom and practice of the industry as well as XOMA’s standard operating
procedures), this may require a prompt response from either NVDI or XOMA
following a request from the other Party.

 

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2.4 Project Team. As of the Effective Date, the Parties have formed a Project
Team. Each Party may replace or supplement its members on the Project Team and
will at all times ensure that its current Project Team members have expertise
appropriate to the current stage of the Project. Each Party shall use
commercially reasonable efforts to maintain the same Project Team manager
throughout the term of this Agreement unless such individual leaves the employ
of such Party. The Project Team will be responsible for reviewing progress of
the Project under the Work Plan and to discuss and decide on any potential
revisions to the Work Plan. The Project Team shall seek to make decisions by
consensus. The Project Team shall hold monthly meetings by teleconference or in
person unless otherwise agreed by Project Team members. At each such meeting, a
representative of XOMA shall be responsible for keeping the minutes of such
meeting and for circulating a draft of such minutes thereafter for approval by
the attendees.

2.5 Senior Management Oversight and Dispute Resolution. In the event that the
Project Team is unable to reach consensus regarding any matter, either Party
may, by written notice to the other Party, refer such matter to the CEOs of the
Parties (or to their respective senior executive designees) for attempted
resolution. If a Party refers any matter to the CEOs of the Parties (or such
designees) pursuant to this Section 2.5, then the CEOs of the Parties (or such
designees) will attempt in good faith to resolve such matter within [*]. If the
matter remains unresolved at the end of such [*] period, the matter may be
submitted for resolution pursuant to Section 11.3.

2.6 Master Production Records; Changes to Master Production Records and Work
Plan.

2.6.1. NVDI or XOMA may change the Master Production Records or the Work Plan
from time to time, with the review and approval of the other Party in advance as
to such changes, and such revised MPRs or Work Plan, as the case may be, shall
replace the previous MPRs or Work Plan, as applicable, and shall be deemed to be
part of this Agreement. The work of each Party hereunder will be performed in a
professional and workmanlike manner in accordance with the standards of
performance in the industry.

2.6.2. NVDI shall be responsible for any incremental costs incurred by XOMA as a
result of any changes to the MPRs or the Work Plan pursuant to Section 2.6.1. If
such changes significantly and adversely affect the ability of XOMA to
manufacture [*] Drug Substance in compliance with the MPRs or require
significant modifications to the Facility in order to permit XOMA to manufacture
[*] Drug Substance in accordance with the MPRs, then at XOMA’s election, the
Parties will renegotiate the terms of this Agreement so as to permit XOMA to
perform its obligations under this Agreement with substantially the same
proportional economic benefit for its efforts.

2.7 NVDI Representatives. NVDI shall be allowed to have, at its cost, such
number of representatives [*] escorted by XOMA personnel, with reasonable access
to the Facility during the manufacture of [*] Drug Substance for the purpose of
observing, reporting on, and consulting as to such manufacturing efforts. Prior
to receiving such access, NVDI representative(s) will enter into XOMA’s standard
form of confidentiality agreement, which will be commercially reasonable and
will permit XOMA personnel to disclose information learned to NVDI. XOMA will
reasonably cooperate in enabling (e.g., providing necessary training to allow
for compliance with XOMA procedures) NVDI representatives to carry out their
responsibilities and will make adequate temporary desk space and other
reasonable resources available to these representatives during the periods they
are working at the Facility.

 

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2.8 Other Manufacturing Relationships. The manufacturing relationship set forth
in this Agreement will be non-exclusive.

2.9 Additional Equipment.

2.9.1. Dedicated Equipment Purchases. The Parties acknowledge that certain
equipment has been obtained for the Project and do not expect that additional
equipment will be needed. In the unlikely event that additional equipment is
needed, XOMA shall purchase for delivery to the Facility all equipment that is
to be dedicated to the Project, as either set forth in the Work Plan or
otherwise approved in writing in advance by NVDI, which approval shall not be
unreasonably withheld or delayed (any such additional equipment, the “Dedicated
Equipment”). NVDI will reimburse XOMA for the cost of Dedicated Equipment
purchases (including, without limitation, reimbursement for the time and efforts
of XOMA personnel, and the costs for delivery, installation and qualification)
in accordance with the Work Plan or as otherwise approved in writing in advance
by NVDI and NVDI will have ownership of the Dedicated Equipment. XOMA will
operate and maintain the Dedicated Equipment as per approved procedures once
such equipment is commissioned and in operation. NVDI shall be liable for repair
of all damage and risk of any loss to Dedicated Equipment unless caused by
XOMA’s negligence, willful misconduct or breach of this Agreement. NVDI shall be
responsible for any delays to the Work Plan caused in whole or in part by delays
in the delivery, testing, qualification or validation of Dedicated Equipment. If
any piece of Dedicated Equipment is not or no longer used for the Project or for
other NVDI products, then XOMA at its option will either transfer such Dedicated
Equipment to NVDI or keep such Dedicated Equipment and reimburse NVDI for the
depreciated cost thereof. NVDI will pay any costs of the physical transfer of
such Dedicated Equipment to NVDI.

2.9.2. General Equipment Purchases. It may also be necessary to obtain
additional equipment of general utility to XOMA for the development or scale-up
of the Process or the manufacture of [*] Drug Substance. Upon mutual agreement
of the Parties that additional equipment is needed for the Project, XOMA will
purchase for its own account and for delivery to the Facility any such
additional equipment. XOMA and NVDI will share the cost of purchasing this
equipment in a [*] arrangement. However, NVDI’s portion of the purchase cost
will be subtracted from future revenues to XOMA for work performed under this
Agreement. XOMA will have ownership of such equipment from the date of purchase.

2.10 Handling of Materials; Wastes. At NVDI’s expense, XOMA or a designated
Third Party contractor shall handle, label, package, store, transport and
dispose of all Wastes generated through performance of the manufacturing and
processing activities hereunder in material compliance with all federal, state
and local laws, rules, and regulations applicable to such handling, labeling,
packaging, storage, transport and disposal. Each Party shall promptly notify the
other of any health hazards or potential health hazards of which it is or
becomes aware concerning exposure to or handling of the [*] Drug Substance or
Wastes.

 

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ARTICLE 3

TECHNOLOGY TRANSFER AND OTHER ACTIVITIES; PRODUCTION.

3.1 Technology Transfer to XOMA. To the extent not already completed, the
Parties will complete as quickly as practicable the transfer from NVDI to XOMA
of all relevant materials and information related to the Project. NVDI shall be
responsible for obtaining all relevant technology, other necessary information
and assistance from relevant Third Parties, if needed. Throughout the course of
the Project, NVDI will make scientific and technical staff available as
necessary and reasonably useful to assist XOMA’s efforts.

3.2 Technology Transfer to NVDI; Manufacture. In accordance with the provisions
and timelines in the Work Plan, XOMA will perform technology transfer and other
activities as provided therein and manufacturing at [*] and will take such
actions and generate such data and documentation as are necessary to meet the
MPRs.

ARTICLE 4

TESTING, DELIVERY AND REGULATORY MATTERS.

4.1 Raw Materials Services; In-Process Testing. XOMA has provided and will
continue to provide in accordance with the Work Plan the ordering, testing,
inventorying and releasing services for raw materials used in the manufacture of
[*] Drug Substance under this Agreement and in-process testing for continued
manufacture of [*] Drug Substance under this Agreement. XOMA shall obtain raw
materials, resins, buffers, consumables and other like materials for manufacture
of [*] Drug Substance under this Article 4. XOMA shall not be responsible for
delays in the purchase and/or delivery of any such materials that occur outside
of the reasonable control of XOMA and despite XOMA using commercially reasonable
efforts to avoid such delays. All such materials shall be invoiced to NVDI by
XOMA at one hundred percent (100%) of XOMA’s cost.

4.2 Delivery; Risk of Loss; Storage Fees.

4.2.1. On or prior to the applicable date of delivery of [*] Drug Substance to
NVDI or its designee, XOMA will deliver such [*] Drug Substance to NVDI or its
designee F.O.B. the Facility, along with samples and copies of Batch production
records. XOMA will test each Batch of [*] Drug Substance pursuant to the Master
Production Records and will include with each Batch of [*] Drug Substance a
certificate of analysis confirming that such Batch has been tested according to
the MPRs. XOMA shall package for shipment each Batch of [*] Drug Substance in
accordance with NVDI’s written instructions, and NVDI shall bear all packaging,
shipping and insurance charges. Delivery of [*] Drug Substance by XOMA shall be
deemed to have taken place upon the earlier to occur of (i) delivery to a
carrier at the Facility or (ii) [*] after release by XOMA (“Delivery”). [Draft
note to XOMA: Has this been resolved?] Title and risk of loss shall transfer to
NVDI upon Delivery. XOMA shall accept no liability or responsibility and risk
associated with the loss of any Batch of [*] Drug Substance once this transfer
has occurred. XOMA shall retain representative samples of [*] Drug Substance for
record keeping, testing and regulatory purposes, including in accordance with
applicable laws, rules and regulations.

 

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XOMA shall bear the risk of loss prior to Delivery, except to the extent such
loss is due to circumstances beyond its reasonable control, including without
limitation earthquakes, governmental regulation, fire, flood, labor
difficulties, interruption of supply of key raw materials, civil disorder, and
acts of God. XOMA shall provide for the storage of any Batch, upon release of
such Batch at the Facility in accordance with guidelines to be agreed to by the
Parties at the Facility for up to [*]; provided, that any additional storage
beyond such [*] period will be charged to NVDI at XOMA’s customary rates. Unless
otherwise agreed in writing by the Parties, XOMA shall not be required to store
any Batch for more than [*] after release of such Batch pursuant to this
Section 4.2; provided that, XOMA will notify NVDI in writing before disposing of
any Batch, and shall continue storage of the affected Batch for a reasonable
period of time (not to exceed [*]) sufficient to allow NVDI to arrange for
alternate disposition of the Batch. NVDI shall pay applicable storage costs for
any portion of the Batch remaining. XOMA shall not be required to deliver any
Batch to the carrier until the carrier informs XOMA that it has obtained all
appropriate approvals and consents of any Governmental Authority necessary for
the transportation or shipment of such Batch.

4.2.2. XOMA hereby agrees to obtain and carry general liability insurance with
coverage in an amount equal to or greater than the aggregate amount of expected
payments under this Agreement. Upon written request, XOMA shall provide NVDI a
certificate evidencing such insurance.

4.3 Regulatory Matters. Upon NVDI’s decision to file regulatory documentation
for Drug Substance or Product with the FDA or other Regulatory Authorities in
accordance with the Collaboration Agreement, and upon NVDI’s request and at
NVDI’s expense, XOMA will, in accordance with the applicable regulatory
requirements, provide the necessary documentation according to the Work Plan.

ARTICLE 5

PRICES AND PAYMENT.

5.1 Price for Services, Batches and Technology Transfer. In consideration for
XOMA’s performance of its obligations under this Agreement and the Work Plan,
and subject to the terms and conditions of this Agreement, NVDI shall pay to
XOMA an amount equal to the sum of (a) XOMA’s fully burdened costs, measured,
where applicable, by its standard full-time equivalent (“FTE”) rates as set
forth in the Work Plan for the functions providing the Services plus (b) [*]
with respect to Services provided on or after the Effective Date and prior to
November 1, 2008, ten percent (10%) or (ii) with respect to Services provided on
or after November 1, 2008, twenty percent (20%). The Parties expressly
acknowledge that the dollar amounts for expected time and materials set forth in
the Work Plan are estimates. NVDI must approve in writing any deviations of [*]
or more from either the aggregate amount in the Work Plan for manufacturing
Services or the aggregate amount in the Work Plan for technology transfer
Services.

5.2 Quarterly Invoices. Upon execution of this Agreement in full, and on a
calendar quarterly basis thereafter, XOMA shall send to NVDI an invoice in an
amount equal to the sum of (a) (in case of the first invoice only) XOMA’s fees
for (i) the work undertaken on or after the

 

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Effective Date through such date of full execution, (ii) the actual costs of
materials, other than materials procured under the Original Agreement as such
term is defined in the Collaboration Agreement, procured before the Effective
Date but used or to be used in connection with the Project after the Effective
Date and (iii) the actual costs of materials procured on or after the Effective
Date through such date of full execution and (b) (in the case of the first
invoice and every invoice thereafter) the projected fees and expenses of XOMA
set forth in the Work Plan with respect to the Services to be performed and
Batches to be Delivered by XOMA in such quarter as adjusted pursuant to
Section 5.7 (each a “Quarterly Invoice”).

5.3 Equipment Reimbursement. NVDI will reimburse XOMA one hundred percent
(100%) of the cost of Dedicated Equipment purchased pursuant to Section 2.9.1
after receipt of each invoice and applicable documentation for such costs.

5.4 Third Party Costs. Charges for Third Party raw materials, goods and services
directly related to work performed under this Agreement, including the costs of
obtaining raw materials, will be reimbursed by NVDI at one hundred percent
(100%) of XOMA’s cost.

5.5 [*]

5.6 Agreed Changes. From time to time, either Party may propose certain changes
to the Work Plan and/or the Process by which [*] Drug Substance is manufactured
and tested under this Agreement. Upon receipt of any such request, the Parties
will enter into good faith negotiations regarding the assessment of the
implications and costs arising from a change to the Work Plan or Process. Any
such changes mutually agreed by the Parties will be set forth in an amendment to
the Work Plan attached hereto. No change to the Work Plan and/or the Process
will be effective unless and until mutually agreed in such an amendment.

5.7 Monthly Reports and True-Up. Within twenty (20) days from the start of each
calendar month starting with the first full month after the execution of this
Agreement in full, XOMA shall send to NVDI a Monthly Report for the previous
calendar month. The amounts set forth in each Monthly Report shall be compared
to the sums paid to XOMA under the then most recent Quarterly Invoice. The sum
of any differences between XOMA’s actual costs as reflected in the three most
recent Monthly Reports and the amount paid by NVDI under the most recent
Quarterly Invoice shall be added to the next Quarterly Invoice.

5.8 Payment. NVDI will pay undisputed amounts due XOMA under this Article 5
within [*] after receipt of each invoice from XOMA; provided, however, that
payment pursuant to the first invoice referenced in Section 5.2(a) shall be due
within ten (10) days after receipt thereof. All payments to be made under this
Agreement shall be made in United States dollars in the United States to a bank
account designated by XOMA. All properly invoiced and undisputed amounts not
paid within [*] after receipt of the invoice shall accrue interest at a rate
equal to the lesser of [*] or the highest interest rate permitted under
applicable law.

5.9 Financial Records. XOMA will keep reasonably complete and accurate books and
accounts of record in connection with the manufacture and use by it of [*] Drug
Substance hereunder in sufficient detail to permit accurate determination of
whether XOMA has properly invoiced amounts under this Article 5. Such records
shall be maintained for a period of [*] from

 

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the end of each year in which sales occurred or expenses were incurred. NVDI, at
its expense, through a certified public accountant, shall have the right to
access such books and records for the sole purpose of verifying the reports
regarding amounts due; such access shall be conducted after reasonable prior
notice by NVDI during XOMA’s normal business hours and shall not be more
frequent than once during each calendar year. Such accountant shall execute a
reasonable confidentiality agreement with XOMA which shall require such
accountant not disclose to NVDI or any other party any confidential information
of XOMA (subject to customary exclusions) except as necessary to determine
amounts properly invoiced under this Agreement. If such accountant determines
that XOMA’s error resulted in NVDI paying more than properly due in respect of
any Batch or calendar quarter, then XOMA will promptly reimburse such amount.

ARTICLE 6

TECHNOLOGY AND INFORMATION.

6.1 Technology Transfer.

6.1.1. Use of Transferred Technology. NVDI shall be entitled to maintain and use
any documents delivered to it by XOMA hereunder within the scope of its
license(s) in Section 6.3 for itself, its Affiliates or Third Parties.

6.1.2. Transfer of Process. Upon NVDI’s request and at NVDI’s expense, XOMA will
transfer the Process and the Dedicated Equipment (if any) to NVDI in accordance
with the Work Plan. If this Agreement is terminated for reason other than NVDI’s
uncured material breach prior to XOMA’s Delivery of [*] then upon NVDI’s request
and at NVDI’s expense, XOMA will provide any undelivered [*] Drug Substance and
cell line materials to NVDI along with Process specific documentation generated
up until the date of termination. Without limiting the generality of the
foregoing, when transferring the Process and Dedicated Equipment, XOMA shall
promptly transfer and/or deliver to NVDI (i) any [*] Drug Substance developed by
XOMA, (ii) any raw materials and resins purchased specifically in connection
with performance of the Services, (iii) any necessary documentation reasonably
related to the Process, (iv) any assays used in connection with the development
of the Process, and (v) any master or working cell bank and cell materials
related to the [*] Drug Substance, including documentation requested by Novartis
QA for release of those cell banks. Furthermore, XOMA shall provide to NVDI all
reasonably useful data and information in its possession regarding work
performed by it pursuant to this Agreement [*]. For purposes of clarity, in the
event of termination of this Agreement for reason other than NVDI’s uncured
material breach, it is the intention of the Parties that NVDI be able to
recommence the development of the Process itself with as little interruption as
reasonably possible, and therefore, that pursuant to this paragraph, NVDI shall
have access to and the right to use any and all information, processes,
intellectual property and materials developed by XOMA in the course of the
Services reasonably required to do so. In connection with such technology
transfer, upon reasonable notice, XOMA will permit reasonable access to the
Facility during normal business hours to employees of NVDI to learn about the
relevant process and technology. Prior to obtaining access, such employees will
enter into XOMA’s standard form of confidentiality agreement, which will be
commercially reasonable and will permit such employees to disclose information
learned to NVDI. While at the Facility such employees shall follow

 

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XOMA’s policies and procedures and shall use commercially reasonable efforts to
avoid interrupting or interfering with the work of other XOMA personnel. NVDI
will pay XOMA for such technology transfer work as provided in Sections 5.1, 5.3
and 5.4. If reasonably requested by NVDI, XOMA personnel will visit Novartis
facilities to consult and advise on technology transfer matters at NVDI’s
expense at XOMA’s applicable FTE rates.

6.2 Information.

6.2.1. Access. NVDI shall have reasonable access during normal business hours to
copies of Batch records and any other documentation relating to manufacture of
[*] Drug Substance by XOMA under this Agreement and shall be free, subject to
Article 9, to copy and use such documentation as reasonably required for any
normal regulatory or business use relating to [*] Drug Substance or Product.

6.2.2. Regulatory Authorities. If XOMA receives notice of any visit or
inspection by any Regulatory Authority of any part of the Facility solely
engaged in the manufacture of [*] Drug Substance or otherwise relating solely to
the manufacture of [*] Drug Substance, XOMA will promptly notify NVDI of such
visit or inspection and will permit an employee of NVDI to be present and
participate in such visit or inspection. XOMA shall provide to NVDI a copy of
any report and other written communications received from such Regulatory
Authority in connection with such visit or inspection, and any written
communications received from any Regulatory Authority, or sent to any Regulatory
Authority by XOMA, relating to [*] Drug Substance or the production of [*] Drug
Substance, as soon as practicable and in any event within [*] after receipt and
will to the extent practicable consult with NVDI concerning the response to each
such communication. Any additional costs incurred by XOMA as a result of such
visit or inspection shall be charged to NVDI at XOMA’s applicable FTE rates.

6.3 Licenses.

6.3.1. Development and Manufacturing License to XOMA. Subject to the terms and
conditions of this Agreement, NVDI hereby grants to XOMA a non-exclusive,
royalty-free, paid-up, non-transferable (except pursuant to Section 11.7),
non-sublicensable license under all NVDI IP to practice NVDI Innovations and
NVDI-owned Project Innovations solely to the extent necessary or useful for
performance of XOMA’s obligations under this Agreement.

6.3.2. Project Innovations License to XOMA. Subject to the terms and conditions
of this Agreement, NVDI hereby grants to XOMA a non-exclusive, royalty-free,
paid-up, non-transferable (except pursuant to Section 11.7), non-sublicensable
license under NVDI IP to practice NVDI-owned Project Innovations at the Facility
solely for the purpose of manufacturing products that do not contain any [*]
Drug Substance.

6.3.3. XOMA Innovations License to NVDI. Subject to the terms and conditions of
this Agreement, XOMA hereby grants to NVDI a non-exclusive, worldwide,
royalty-free, paid-up, non-transferable (except pursuant to Section 11.7),
non-sublicensable license under XOMA IP to practice XOMA Innovations and
XOMA-owned Project Innovations solely to the extent necessary to make, have
made, use, import, offer for sale, sell and have sold [*] Drug Substance or
Product.

 

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6.4 Ownership of Innovations and Intellectual Property.

6.4.1. NVDI Innovations. Subject only to the licenses in Section 6.3, NVDI shall
retain all right, title and interest in and to all NVDI Innovations.

6.4.2. XOMA Innovations. Subject only to the licenses in Section 6.3, XOMA shall
retain all right, title and interest in and to all XOMA Innovations.

6.4.3. Project Innovations.

(a) Inventorship of discoveries or inventions included within Project
Innovations and authorship of works of authorship included within Project
Innovations shall be determined in accordance with the patent and copyright laws
of the United States of America, respectively.

(b) Without further payment to XOMA, NVDI shall own all right, title and
interest in and to all Project Innovations in and to [*] Drug Substance or
Product (other than Intellectual Property Rights in those methods and processes
generally applied to the scale-up, development and/or manufacturing of
immunoglobulins, the ownership of which shall follow inventorship determined
pursuant to Section 6.4.3(a) above, whether made, conceived, reduced to
practice, authored, or otherwise generated or developed solely by XOMA
personnel, solely by NVDI personnel, or jointly by XOMA and NVDI personnel, and
all Intellectual Property Rights arising therefrom. XOMA will provide to NVDI a
non-exclusive license to use all Project Innovations owned by XOMA and
Intellectual Property Rights arising therefrom for the purpose of manufacturing
[*] Drug Substance or Product.

6.5 Patenting of Project Innovations. NVDI will have first right, but not the
obligation, to control the preparation, filing and prosecution of Patents
claiming Project Innovations, other than those owned solely by XOMA, and of
maintenance of Patents issuing thereon. XOMA shall reasonably cooperate with
NVDI at NVDI’s cost and shall provide to NVDI whatever assignments and other
documents that may be needed in connection therewith. NVDI will be fully
responsible for the costs and expenses of such actions.

6.6 Infringement of Patents.

6.6.1. Each Party shall promptly notify the other Party of any infringement,
misappropriation or other unauthorized use of an Intellectual Property Right
licensed under this Agreement in the field of the development, manufacture, use
and/or sale of [*] Drug Substance or Product that comes to such Party’s
attention. The notice shall set forth the facts of such infringement,
misappropriation or use in reasonable detail.

6.6.2. NVDI shall have the sole right, but not the obligation, to institute,
prosecute, and control, at its expense, any action or proceeding against the
Third Party infringer of a Patent claiming a Project Innovation other than those
owned solely by XOMA. If NVDI institutes an action against such infringer, XOMA
will give NVDI, at NVDI’s expense, reasonable assistance and authority to
control, file, and prosecute the suit as necessary at NVDI’s expense. NVDI shall
retain any damages or other monetary awards that it recovers in pursuing any
action under this Section 6.6.2.

 

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6.6.3. XOMA shall have the sole right, but not the obligation, to institute,
prosecute, and control, at its expense, any action or proceeding against a Third
Party infringer of a Patent claiming a Project Innovation owned solely by XOMA.
If XOMA institutes an action against such infringer, NVDI will give XOMA, at
XOMA’s expense, reasonable assistance in connection therewith. XOMA shall retain
any damages or other monetary awards that it recovers in pursuing any action
under this Section 6.6.3, except that any portion of such damages or awards that
are attributable to lost sales, lost profits or a reasonable royalty with
respect to [*] Drug Substance or Product shall belong to NVDI.

6.6.4. Each Party has the sole right to enforce any Intellectual Property Rights
owned solely by such Party.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES; DISCLAIMER.

7.1 [*] Drug Substance Warranties and Remedy. XOMA warrants that for each Batch
of [*] Drug Substance delivered pursuant to Section 4.2: (i) each Batch was
manufactured and analyzed in conformance with the Master Production Records; and
(ii) XOMA will provide title to such Batch to NVDI free and clear of any
encumbrances. NVDI’s sole remedies and XOMA’s entire liability with respect to
this warranty are set forth in Sections 8.2 and 8.6. The warranties in this
Section 7.1 are the only warranties made by XOMA with respect to Batches
delivered under this Agreement and may only be modified or amended by a written
instrument signed by a duly authorized officer of XOMA and accepted by NVDI.

7.2 General Representations and Warranties. Each Party hereby represents and
warrants to the other Party that:

7.2.1. Existence and Power. It is a corporation (in the case of NVDI) or a
limited liability company (in the case of XOMA) duly organized, validly existing
and in good standing under the laws of the state or country in which it is
incorporated or organized, as applicable, and has full corporate or company
power and authority and the legal right to own and operate its property and
assets and to carry on its business as it is now being conducted and as
contemplated to be conducted in this Agreement, including, without limitation,
the right to grant the licenses granted hereunder.

7.2.2. Authority and Binding Agreement. As of the Effective Date, (i) it has the
corporate or company power and authority and the legal right to enter into this
Agreement and perform its obligations hereunder; (ii) it has taken all necessary
corporate or company action on its part required to authorize the execution and
delivery of the Agreement and the performance of its obligations hereunder; and
(iii) the Agreement has been duly executed and delivered on behalf of such
Party, and constitutes a legal, valid and binding obligation of such Party and
is enforceable against it in accordance with its terms.

7.2.3. Title. As of the Effective Date, it has sufficient legal and/or
beneficial title under its Intellectual Property Rights necessary to perform
activities contemplated under this Agreement and to grant the licenses that it
is obligated to grant under this Agreement.

 

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7.3 Disclaimer. THE REPRESENTATIONS AND WARRANTIES IN SECTION 7.1 AND 7.2 ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AND EACH PARTY
EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES, INCLUDING WITHOUT LIMITATION
ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, TITLE, CUSTOM OR TRADE.

ARTICLE 8

INDEMNIFICATION; LIMITATION OF LIABILITY.

8.1 NVDI Indemnity. NVDI will indemnify, hold harmless and defend the XOMA
Indemnitees from and against any and all Losses resulting from any Third Party
Claim, to the extent arising out of (a) any breach of NVDI’s representations,
warranties, covenants or other obligations under this Agreement, the
Collaboration Agreement or the Quality Agreement; (b) the use (including,
without limitation, in human clinical trials), further manufacture or
modification, transport, storage, handling, possession, distribution, marketing,
or disposal of the [*] Drug Substance after delivery by XOMA; (c) any
infringement or misappropriation of Third Party Intellectual Property Rights; or
(d) any willful misconduct by any NVDI Indemnitee with respect to NVDI’s
activities under this Agreement.

8.2 XOMA Indemnity. XOMA agrees to indemnify, hold harmless and defend the NVDI
Indemnitees from and against any and all Losses resulting from any Third Party
Claim to the extent arising out of (a) any breach of XOMA’s representations,
warranties, covenants or other obligations under this Agreement, the
Collaboration Agreement or the Quality Agreement; (b) XOMA’s transportation,
storage, use, handling or disposal of hazardous materials used in or generated
by XOMA’s activities under this Agreement (excluding the [*] Drug Substance);
(c) any personal injury arising from performance of this Agreement by XOMA; or
(d) any willful misconduct by any XOMA Indemnitee with respect to XOMA’s
activities under this Agreement.

8.3 Procedure. A Party that intends to claim indemnification under this Article
8 (the “Indemnitee”) shall promptly notify the other Party (the “Indemnitor”) of
any claim, demand, action or other proceeding for which the Indemnitee intends
to claim such indemnification. The Indemnitor shall have the right to
participate in, and to the extent the Indemnitor so desires, to assume the
defense thereof with counsel selected by the Indemnitor; provided, however, that
the Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitor, if representation of the Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between the Indemnitee and any other Party
represented by such counsel in such proceeding. The indemnity obligations under
this Article 8 shall not apply to amounts paid in settlement of any claim,
demand, action or other proceeding if such settlement is effected without the
prior express written consent of the Indemnitor, which consent shall not be
unreasonably withheld, conditioned or delayed. The failure to deliver notice to
the Indemnitor within a reasonable time after notice of any such claim or
demand, or the commencement of any such action or other proceeding, if
prejudicial to its ability to defend such claim, demand, action or other
proceeding, shall relieve such Indemnitor of any liability to the Indemnitee
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prejudice, but the omission so to deliver notice to the Indemnitor shall not
relieve it of any liability that it may have to the Indemnitee otherwise than
under this Article 8. The Indemnitor may not settle or otherwise consent to an
adverse judgment in any such claim, demand, action or other proceeding that
imposes any obligation or burden on the Indemnitee without the prior express
written consent of the Indemnitee, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnitee, its employees and agents shall
reasonably cooperate with the Indemnitor and its legal representatives in the
investigation and defense of any claim, demand, action or other proceeding
covered by this Article 8.

8.4 Separate Defenses. If the Parties cannot agree as to the application of
Sections 8.1 and 8.2 to a particular Loss or Third Party Claim, the Parties may
conduct separate defenses of the relevant Third Party Claim. Each Party further
reserves the right to claim indemnity from the other Party in accordance with
Sections 8.1 and 8.2 upon resolution of the underlying Third Party Claim,
notwithstanding the provisions of Section 8.3 requiring the indemnified Party to
tender to the indemnifying Party the ability to defend such Third Party Claim.

8.5 Expenses. Neither Party shall be required to pay over to the other Party
amounts called for under this Article 8 until the resolution of the Third Party
Claim from which the right to such payment arose, except that litigation costs,
fees, and expenses will be paid in arrears on a calendar quarterly basis,
subject to reimbursement upon the agreement of the Parties or a final
determination by a court of competent jurisdiction that the indemnity under this
Article 8 did not apply to the Third Party Claim giving rise to such costs, fees
and expenses.

8.6 Limitation of Liability.

8.6.1. IN NO EVENT SHALL EITHER PARTY OR ITS RESPECTIVE AFFILIATES BE LIABLE TO
THE OTHER PARTY FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE, OR OTHER
INDIRECT DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR
OTHERWISE, EXCEPT FOR A WILLFUL FAILURE BY A PARTY OR ITS SUCCESSOR TO PERFORM
IN ACCORDANCE WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION FOLLOWING A
CHANGE IN CONTROL OF SUCH PARTY.

8.6.2. THE LIMITATIONS OF LIABILITY IN SECTION 8.6.1 ARE INTENDED TO LIMIT THE
LIABILITY OF THE APPLICABLE PARTY OR PARTIES AND SHALL APPLY NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY OR WARRANTY. THE PARTIES
HERETO ACKNOWLEDGE THAT THE TERMS OF THIS SECTION 8.6 REFLECT THE ALLOCATION OF
RISK SET FORTH IN THIS AGREEMENT AND THAT THE PARTIES WOULD NOT ENTER INTO THIS
AGREEMENT WITHOUT THESE LIMITATIONS OF LIABILITY. THE LIMITATIONS OF LIABILITY
OF THIS SECTION 8.6 SHALL NOT APPLY TO THE EXTENT PROHIBITED BY APPLICABLE LAW.

8.6.3. Without limiting the foregoing, the Parties acknowledge the risks
inherent in biologics manufacturing, and XOMA expressly disclaims responsibility
or liability for such inherent risks. Notwithstanding any other provisions of
this Agreement to the contrary, NVDI hereby assumes all liability for failed
production lots, except to the extent that, as supported by a subsequent failed
lot investigation, it is finally determined that the failure was a direct result
of XOMA’s gross negligence or willful misconduct in its performance of the
production run yielding such failed production lot.

 

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ARTICLE 9

CONFIDENTIALITY.

9.1 Confidential Information; Exceptions. Each Party will, and will use
commercially reasonable efforts to ensure that its employees will: (a) maintain
all Confidential Information of the other Party in trust and confidence; (b) not
disclose any Confidential Information of the other Party to any Third Party
(except that a Party may disclose such Confidential Information to those of its
employees, agents, independent contractors, Affiliates, or sublicensees who
require such information in order to perform under this Agreement and who are
subject to binding obligations of confidentiality and limited use at least as
restrictive as those of this Article 9); (c) not disclose or use any
Confidential Information of the other Party for any purposes other than those
necessary or permitted for performance under this Agreement; (d) not use any
Confidential Information of the other Party for any purpose or in any manner
that would constitute a violation of any applicable governmental laws, rules,
regulations, or orders, including without limitation the export control laws of
the United States; and (e) not reproduce any Confidential Information of the
other Party in any form except as required to perform in accordance with this
Agreement. Each Party will use at least the same standard of care as it uses to
protect its own Confidential Information of a similar nature to prevent
unauthorized disclosures or uses of Confidential Information of the other Party,
but in any event each Party will use no less than commercially reasonable care
to achieve such objectives. Each Party will promptly notify the other Party upon
discovery of any unauthorized use or disclosure of the Confidential Information
of the other Party.

The Parties agree that the material financial, commercial, scientific and
technical terms of the Agreement will be considered Confidential Information of
both Parties. Notwithstanding the foregoing, either Party may disclose such
terms to bona fide potential corporate partners, potential investors or merger
or acquisition partners, and to commercial lenders, financial underwriters,
investment bankers and legal and financial advisors, provided that all such
disclosures shall be made only to such Parties under commercially reasonable
obligations of confidentiality no less protective than the obligations set forth
in this Article 9.

9.2 Authorized Disclosure. Notwithstanding any other provision of this
Agreement, each Party may disclose Confidential Information of the other Party:

9.2.1. to the extent and to the persons and entities required by an applicable
governmental law, rule, regulation or order; provided, however, that the
receiving Party shall first have given prompt notice to the other Party hereto
as soon as reasonably practicable to enable it to seek any available exemptions
from or limitations on such disclosure requirement and shall reasonably
cooperate, at the other Party’s expense, in such efforts by the other Party;

9.2.2. to the extent and to the persons and entities required by rules of the
National Association of Securities Dealers;

 

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9.2.3. as necessary to file or prosecute patent applications relating to Project
Innovations, prosecute or defend litigation or otherwise establish rights or
enforce obligations under this Agreement, but only to the extent that any such
disclosure is necessary;

9.2.4. to permitted sublicensees, successors and assigns under this Agreement;

9.2.5. in the case of NVDI, to Regulatory Authorities, for the purpose of
obtaining Regulatory Approval for Product and to Third Parties for the purpose
of contract manufacturing of Product; and

9.2.6. to identified Third Parties with the prior, express, specific, written
permission of the disclosing Party.

9.3 Publicity. Neither Party will issue any publicity release or announcement
containing information about this Agreement without the advance written consent
of the other Party (which consent shall not be unreasonably withheld or
delayed), except as such release or announcement may be required by law, in
which case the Party making the release or announcement shall, before making any
such release or announcement, afford the other Party a reasonable opportunity to
review and comment upon such release or announcement to the extent practicable.

9.4 Requests for Confidential Treatment. The Parties acknowledge that the rules
and regulations promulgated by the SEC may require that a Party disclose the
non-confidential material terms of this Agreement and file a copy hereof with
the SEC. The Parties will use commercially reasonable efforts to secure
confidential treatment under applicable laws, rules and regulations for
financial, commercial and scientific and technical terms that are trade secrets
of either Party, will agree, prior to submission to the SEC of a confidential
treatment request (without delaying the timeliness of such submission), upon the
terms for which each Party will seek confidential treatment, and will coordinate
in good faith with respect to any such requests and any responses to any SEC
comments on or responses to such requests, provided, however, that after using
such efforts each Party will be free to make disclosures that it reasonably
believes, based on the advice of outside counsel, are required by applicable
law, rule or regulation or that the SEC will otherwise require.

9.5 Return of Confidential Information. Upon any expiration or termination of
this Agreement, each Party will, upon request of the other Party, use diligent
efforts (including without limitation a diligent search of files and computer
storage devices) to return or destroy all Confidential Information of the other
Party and all copies, summaries, compilations, extracts or other derivatives
thereof, except to the extent such Confidential Information is necessary to
exercise any license or other right surviving termination of this Agreement.
Additionally, each Party will be allowed to keep one archival copy, or a
required quantity, of any Confidential Information of the other Party for record
keeping purposes only or as required by applicable law, rule or regulation.

9.6 Injunctive Relief. The Parties expressly acknowledge and agree that any
breach or threatened breach of this Article 9 may cause immediate and
irreparable harm to the Party whose Confidential Information is at issue, which
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damages. Each Party therefore agrees that in the event of such breach or
threatened breach and in addition to any remedies available at law, the Party
whose Confidential Information is at issue shall have the right to seek
equitable and injunctive relief, without bond, in connection with such a breach
or threatened breach.

9.7 Survival. The terms of this Article 9 shall survive for [*].

9.8 Collaboration Agreement. For the avoidance of doubt, all Confidential
Information of NVDI received by XOMA after full execution of this Agreement will
be deemed governed by the provisions of this Article 9 as opposed to Article 6
of the Collaboration Agreement.

ARTICLE 10

TERM AND TERMINATION.

10.1 Term. The initial term of this Agreement will commence on the Effective
Date and unless sooner terminated under Sections 10.2 or 10.3 shall expire upon
the second anniversary thereof.

10.2 Termination by Either Party for Breach. If a Party materially breaches this
Agreement, and (i) such breach is of a payment obligation hereunder, then the
other Party may terminate this Agreement upon [*] prior written notice to the
first Party specifying such breach if the breaching Party fails to cure the
breach within such [*], (ii) such breach is of an obligation hereunder other
than a payment obligation and is reasonably curable within [*], then the other
Party may terminate this Agreement upon [*] prior written notice to the first
Party specifying such breach if the breaching Party fails to cure the breach
within such [*], or (iii) such breach is of an obligation hereunder other than a
payment obligation and is not reasonably curable within [*], the other Party may
give the breaching Party written notice specifying such breach and may then
terminate this Agreement upon an additional [*] written notice if the breaching
Party either fails to provide by the end of the initial [*] period a reasonable
written plan to cure such breach as promptly as reasonably practicable or fails
to carry out such plan diligently and cure such breach.

10.3 Termination by NVDI. NVDI may terminate this Agreement [*].

If NVDI terminates this Agreement pursuant to this Section 10.3, NVDI will
reimburse XOMA within [*] of termination of this Agreement for all appropriate
costs under this Agreement (as set forth in Article 5) incurred by XOMA to the
date of notice of termination by NVDI for Services performed and for commitments
made in accordance with this Agreement that cannot be canceled, for resources
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XOMA incurs in transferring the technology to NVDI at NVDI’s request pursuant to
Section 6.1.2. For the avoidance of doubt and without limiting the foregoing,
XOMA’s reimbursable costs referred to in the immediately preceding sentence of
this Section 10.3 shall include, without limitation, its fully burdened costs of
completing the [*] run. Except as set forth above in this Section 10.3, XOMA
shall refund to NVDI within [*] of termination of this Agreement, any prepaid
amounts (including, without limitation, any or all of the amount paid under the
most recent Quarterly Invoice) not earned by XOMA prior to the date of such
termination.

10.4 Surviving Obligations. Termination or expiration of this Agreement shall
not affect any rights or obligations of either Party which may have accrued up
to the effective date of such termination or expiration. The provisions of
Sections 5.8, 5.9, 6.1, 6.2.2, 6.3.2, 6.3.3, 6.4, 6.5, 6.6.2, 6.6.3, 6.6.4, 10.3
and 10.4 and Articles 1, 7, 8, 9 and 11 shall survive the termination or
expiration of this Agreement.

ARTICLE 11

MISCELLANEOUS.

11.1 Notice. All notices hereunder shall be in writing and shall be deemed given
upon (a) personal delivery, (b) facsimile transmission with electronic
confirmation of transmission, if sent during the recipient’s normal business
hours, or otherwise on the recipient’s next normal business day, (c) receipt
after delivery by nationally-recognized bonded courier when sent for next
business day delivery, or (d) receipt after sending by certified or registered
mail, postage prepaid and return receipt requested personally, to the following
addresses or fax numbers of the respective Parties:

If to XOMA:

XOMA (US) LLC

2910 Seventh Street

Berkeley, California 94710

Attention: Legal Department

Fax No.: (510) 649-7571

If to NVDI:

Novartis Vaccines and Diagnostics, Inc.

4650 Horton Street

Emeryville, CA 94608

Attention: Company Secretary

Telephone: (510) 655-8730

Fax No.: (510) 654-5366

A Party may change its address or fax number for notice by giving notice under
this Section 11.1.

 

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11.2 Use of Names. Neither Party shall use the name, trade name, trademark, or
other designation of the other Party (including contraction, abbreviation or
simulation of any of the foregoing) in advertising, publicity or other
promotional activities. Under no circumstances shall either Party state or imply
in any promotional material, publication or other published announcement that
the other Party has tested or approved any product.

11.3 Formal Dispute Resolution.

11.3.1. Mediation. Solely with respect to any dispute between the Parties (other
than any dispute which arises out of or relates to validity, enforceability,
infringement and/or misappropriation of any Intellectual Property Rights), the
Parties shall negotiate in good faith and use reasonable efforts to resolve any
such dispute. In the event that the Parties do not fully resolve any such
dispute within [*] then either Party may declare an impasse and initiate
mediation administered by the CPR in accordance with its mediation procedure.
The mediation proceeding shall be conducted at the location of the Party not
originally requesting the resolution of the dispute. The Parties agree that they
shall share equally the cost of the mediation filing and hearing fees and the
cost of the mediator. Each Party must bear its own attorney’s fees and
associated costs and expenses. For the avoidance of doubt, nothing in connection
with such mediation shall be binding on either Party, except for the provisions
regarding sharing of costs set forth in this Section 11.3.1.

11.3.2. Arbitration. For disputes not resolved pursuant to Section 11.3.1 within
the time period provided, except (a) disputes relating to intellectual property
owned in whole or in part by XOMA or NVDI, or (b) claims for equitable relief,
upon [*] written notice, either Party may initiate arbitration by giving notice
to that effect to the other Party and by filing the notice with the 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, by a panel
of three (3) neutral arbitrators, who shall be selected by the Parties using the
procedures for arbitrator selection of the AAA.

(a) The Parties acknowledge that this Agreement evidences a transaction
involving interstate commerce. Insofar as it applies, the United States
Arbitration Act shall govern the interpretation of, enforcement of, and
proceedings pursuant to the arbitration clause in this Agreement. Except insofar
as the United States Arbitration Act applies to such matters, the agreement to
arbitrate set forth in this Section 11.3.2 shall be construed, and the legal
relations among the Parties shall be determined in accordance with, the
substantive laws of California.

(b) The panel shall render its decision and award, including a statement of
reasons upon which such award is based, within [*] 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,
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 11.4.

(c) Except as provided under the United States Arbitration Act and with respect
to the infringement, validity and/or enforceability of patent rights, no action
at law or in equity based upon any dispute that is subject to arbitration under
this Section 11.3.2 shall be instituted.

 

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(d) All expenses of any arbitration pursuant to this Section 11.3.2, 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.

(e) For the purposes of this Section 11.3.2, the Parties agree to accept the
jurisdiction of the federal courts located in the Northern District of
California for the purposes of enforcing the agreements reflected in this
Section 11.3.2

11.3.3. Intellectual Property Disputes. The Parties will submit any dispute
arising out of or relating to the validity, enforceability, infringement and/or
misappropriation of any Intellectual Property Right that has not been resolved
pursuant to Section 2.5 to a court of competent jurisdiction.

11.4 Jurisdiction and Governing Law. For any disputes not subject to arbitration
or resolved by mediation, California law (excluding conflict of laws principles)
governs and the Parties are free to institute litigation or seek any other
remedy available to them. For the purposes of any litigation instituted by the
parties under this Article 11, the Parties accept the jurisdiction of the state
courts geographically located in the Northern District of California or the
federal courts within the Northern District of California.

11.5 Rights in Bankruptcy. All rights and licenses granted under or pursuant to
this Agreement are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual
property” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties
agree that NVDI, as a licensee under Section 6.3.3 and a transferee under
Sections 6.1 and 6.4.3 of such Intellectual Property Rights under this
Agreement, and XOMA, as a licensee under Section 6.3.2, each shall retain and
may fully exercise all of its rights and elections under the U.S. Bankruptcy
Code. The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against a Party under the U.S. Bankruptcy Code, the
other Party shall be entitled to a complete duplicate of (or complete access to,
as appropriate) any such intellectual property as to which it is a licensee or
transferee and all embodiments of such intellectual property, and same, if not
already in its possession, shall be promptly delivered to such other Party
(a) upon any such commencement of a bankruptcy proceeding upon such other
Party’s written request therefore, unless the first Party elects to continue to
perform all of its obligations under this Agreement, or (b) if not delivered
under (a) above, upon rejection of this Agreement by or on behalf of the first
Party upon written request therefor by the other Party.

11.6 Waiver. The failure on the part of NVDI or XOMA to exercise or enforce any
rights conferred upon it hereunder shall not be deemed to be a waiver of any
such rights nor operate to bar the exercise or enforcement thereof at any time
or times hereafter.

11.7 Assignment; Binding Effect. Neither Party will assign its rights or duties
under this Agreement to another without the prior express written consent of the
other Party, which shall not be unreasonably withheld; provided, however, that
either Party may assign this Agreement to (a) its Affiliates, or (b) a successor
by merger, acquisition, or sale of all or substantially all of such Party’s
business assets in the field to which this Agreement relates, without the other
Party’s consent, provided that such successor will expressly assume in writing
the obligation to perform in accordance with the terms and conditions of this
Agreement.

 

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Any purported assignment not in compliance with this Section 11.7 shall be void.
This Agreement shall be binding upon each Party’s successors and permitted
assignees.

11.8 Independent Parties. Neither Party is an employee or a legal representative
of the other Party for any purpose. Neither Party shall have the authority to
enter into any contracts in the name of or on behalf of the other Party.

11.9 Force Majeure. Neither Party shall be liable to the other for its failure
to perform any of its obligations under this Agreement during any period in
which such performance is delayed because rendered impracticable or impossible
due to circumstances beyond its reasonable control, including without limitation
earthquakes, governmental regulation, fire, flood, labor difficulties,
interruption of supply of key raw materials, civil disorder, and acts of God,
provided that the Party experiencing the delay promptly notifies the other Party
of the delay and uses and continues to use commercially reasonable efforts to
overcome such delay.

11.10 Severability. If any item or provision of this Agreement shall to any
extent be invalid or unenforceable, it shall be severed from this Agreement, and
the remainder of this Agreement shall not be affected thereby, and each term and
provision of this Agreement shall be valid and shall be enforced to the fullest
extent permitted by law.

11.11 Governing Law. This Agreement shall be construed in accordance with the
laws of the State of California and/or the United States of America which are
applicable to contracts negotiated, executed and performed within the State of
California in the United States of America. In addition, the Parties agree to
comply with all applicable laws, rules and regulations of the State of
California and the United States of America, including all export and import
laws, and to do nothing to cause XOMA or NVDI to violate any such laws, rules
and/or regulations.

11.12 Entire Agreement; Modification. This Agreement, including all Appendices
referenced herein (including, without limitation, the Quality Agreement),
constitutes the entire agreement and understanding of the Parties and supersedes
any prior agreements or understandings relating to the subject matter hereof.
Any modification of this Agreement shall be effective only to the extent it is
reduced to writing and signed by both Parties.

 

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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and
delivered by its duly authorized officer or representative as of the Effective
Date.

 

NOVARTIS VACCINES AND DIAGNOSTICS, INC.     XOMA (US) LLC By:         By:      
Name:       Name: Robert S. Tenerowicz   Title:       Title: Vice President,
Operations

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Appendix A

[*]

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Appendix B

[*]