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EXHIBIT 10.43
 
[*] indicates that a confidential portion of the text of this agreement has been
omitted.
 
 

 
LOAN AGREEMENT
 
 
Dated as of December 30, 2011

among

XOMA (US) LLC,
as Borrower,
 
XOMA LTD.,
as Parent,
 
and
 
Each Other Loan Party
From Time to Time Party Hereto

 
and
 
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
 
and
 
Each Other Lender
From Time to Time Party Hereto
 

 
 
 

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TABLE OF CONTENTS
 
1.
  DEFINITIONS
1
2.
  LOANS AND TERMS OF PAYMENT
1
  2.1  
Term Loan
1
  2.2  
Interest and Repayment
2
  2.3  
Prepayments
5
  2.4  
Late Fees
8
  2.5  
Default Rate
8
  2.6  
Lender Fees
8
 
2.7  
Maximum Lawful Rate
9
 
2.8  
Authorization and Issuance of the Warrants
9
3.
  [RESERVED]
9
4.
  CONDITIONS OF CREDIT EXTENSIONS
9
  4.1  
Conditions Precedent to Term Loan
9
5.
  REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES
12
  5.1  
Due Organization and Authorization
12
  5.2  
Required Consents
12
  5.3  
No Conflicts
13
  5.4  
Litigation
13
  5.5  
Financial Statements
14
  5.6  
Use of Proceeds; Margin Stock
14
  5.7  
Collateral
14
  5.8  
Compliance with Laws
15
  5.9  
Intellectual Property
15
  5.10  
Solvency
16
  5.11  
Taxes; Pension
16
  5.12  
Full Disclosure
16
  5.13  
Regulatory Compliance
17
  5.14  
Environmental Matters
19
6.
  AFFIRMATIVE COVENANTS
20
  6.1   Good Standing 20

 
 
 

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  6.2  
Notice to Agent and the Lenders
21
  6.3  
Financial Statements
22
  6.4  
Insurance
22
  6.5  
Taxes
23
  6.6  
Agreement with Landlord/Bailee
23
  6.7  
Real Property
23
  6.8  
Protection of Intellectual Property
23
  6.9  
Special Collateral Covenants
24
  6.10  
Further Assurances
26
  6.11  
Compliance with Law
26
  6.12  
Environmental Matters
26
7.
  NEGATIVE COVENANTS
27
  7.1  
Liens
27
  7.2  
Indebtedness
28
  7.3  
Dispositions
31
  7.4  
Change in Name, Location or Executive Office; Change in Business; Change in
Fiscal Year
32
  7.5  
Mergers or Acquisitions
32
  7.6  
Restricted Payments
32
  7.7  
Investments
33
  7.8  
Transactions with Affiliates
34
  7.9  
Compliance
35
  7.10  
Deposit Accounts and Securities Accounts
35
  7.11  
Amendments to Other Agreements
36
8.
  DEFAULT AND REMEDIES
36
  8.1  
Events of Default
36
  8.2  
Lender Remedies
38
  8.3  
Application of Proceeds
38
9.
  THE AGENT
39
  9.1  
Appointment of Agent
39
  9.2  
Agent’s Reliance, Etc
40
  9.3  
GECC and Affiliates
41
  9.4  
Lender Credit Decision
41
  9.5  
Indemnification
41

 
 
 

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  9.6  
Successor Agent
41
  9.7  
Setoff and Sharing of Payments
42
  9.8  
Advances; Payments; Non-Funding Lenders; Information; Actions in Concert
42
10.
  MISCELLANEOUS
44
  10.1  
Assignment
44
  10.2  
Notices
45
  10.3  
Process Agent
45
  10.4  
Correction of Transaction Documents
46
  10.5  
Performance
46
  10.6  
Payment of Fees and Expenses
46
  10.7  
Indemnity Provisions
46
  10.8  
Rights Cumulative
47
  10.9  
Entire Agreement; Amendments, Waivers
48
  10.10  
Binding Effect
49
  10.11  
Use of Logo
49
  10.12  
Waiver of Jury Trial
49
  10.13  
Governing Law and Jurisdiction.
50
  10.14  
Confidentiality
50
  10.15  
USA Patriot Act
51
  10.16  
Counterparts
51

 
 

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LOAN AGREEMENT
 
THIS LOAN AGREEMENT, dated as of December 30, 2011 (as amended, restated,
amended and restated, supplemented or otherwise modified from time to time, this
“Agreement”) is among GENERAL ELECTRIC CAPITAL CORPORATION (“GECC”), in its
capacity as agent for Lenders (as defined below) (together with its successors
and assigns in such capacity, “Agent”), the financial institutions who are or
hereafter become parties to this Agreement as lenders (together with GECC,
collectively the “Lenders”, and each individually, a “Lender”), XOMA (US) LLC, a
Delaware limited liability company (“Borrower”), XOMA Ltd., a Bermuda exempted
company and as such entity may be discontinued from Bermuda pursuant to Sections
132G and 132H of the Companies Act of 1981 of Bermuda and converted to a
Delaware corporation pursuant to Section 388 of the Delaware General Corporation
Law (“Parent”) and the other entities or persons, if any, who are or hereafter
become parties to this Agreement as guarantors (together with Parent, each a
“Guarantor” and collectively, the “Guarantors”, and together with Borrower, each
a “Loan Party” and collectively, the “Loan Parties”).
 
RECITALS
 
Borrower wishes to borrow funds from Lenders, and Lenders desire to make a term
loan, severally, but not jointly, to Borrower pursuant to the terms and
conditions of this Agreement.
 
AGREEMENT
 
Each of the parties hereto agree as follows:

1.             DEFINITIONS.
 
As used in this Agreement, all capitalized terms shall have the definitions as
provided herein.  Any accounting term used but not defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States of America, as in effect from time to time (“GAAP”) and all
calculations shall be made in accordance with GAAP.  The term “financial
statements” shall include the accompanying notes and schedules.  All other terms
used but not defined herein shall have the meaning given to such terms in the
Uniform Commercial Code as adopted in the State of New York, as amended and
supplemented from time to time (the “UCC”).
 
2.             LOANS AND TERMS OF PAYMENT.
 
2.1           Term Loan.
 
(a)           Commitment.  Subject to the terms and conditions hereof, each
Lender, severally, but not jointly, agrees to make a term loan (the “Term Loan”)
to Borrower on the Closing Date (as defined below) in an aggregate principal
amount equal to such Lender’s commitment as identified on Schedule A hereto
(such commitment of each Lender as it may be amended to reflect assignments made
in accordance with this Agreement or terminated or reduced in accordance with
this Agreement, its  “Commitment”, and the aggregate of all such commitments,
the “Commitments”).  Notwithstanding the foregoing, the aggregate principal
amount of the Term Loan made hereunder shall not exceed $10,000,000 (the “Total
Commitment”).  Each Lender’s obligation to fund the Term Loan shall be limited
to such Lender’s Pro Rata Share (as defined below) of the Term Loan.  As of the
Closing Date, GECC shall be the only Lender, shall hold 100% of the Commitments
and, subject to the terms and conditions hereof, will fund 100% of the Term Loan
on the Closing Date.  After funding of the Term Loan all references in this
Agreement to the Commitments shall mean the outstanding principal amount of the
Term Loans.
 
 
 

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(b)           [Reserved]
 
(c)           Funding of Term Loan.  Upon the terms and subject to the
conditions set forth herein, each Lender, severally and not jointly, shall make
available to Agent its Pro Rata Share of the requested Term Loan, in lawful
money of the United States of America in immediately available funds, to the
Collection Account (as defined below) prior to 11:00 a.m. (New York time) on the
Closing Date.  Agent shall, unless it shall have determined that one of the
conditions set forth in Section 4.1 has not been satisfied, by 4:00 p.m. (New
York time) on such day, credit the amounts received by it in like funds (net of
any amounts due and payable to Agent) to Borrower by wire transfer to, unless
otherwise specified in a Disbursement Letter (as defined below), the following
deposit account of Borrower (or such other deposit account as specified in
writing by an authorized officer of Borrower and acceptable to Agent):
 
Bank Name: Wells Fargo Bank
Bank Address: One Kaiser Plaza, Suite 850
Oakland, CA 94612
ABA#: 121000248
Account #: 4375-679073
Beneficiary Name: XOMA (US) LLC
Ref: XOMA (US) LLC

(d)           Notes.  The Term Loan made by each Lender shall be evidenced by
this Agreement, and if requested by a Lender, a promissory note substantially in
the form of Exhibit A hereto (each a “Note” and, collectively, the “Notes”).
 
(e)           Agent May Assume Funding.  Unless Agent shall have received notice
from a Lender prior to the date of any particular Term Loan that such Lender
will not make available to Agent such Lender’s Pro Rata Share of the Term Loan,
Agent may assume that such Lender has made such amount available to it on the
date of the Term Loan in accordance with subsection (c) of this Section 2.1, and
may (but shall not be obligated to), in reliance upon such assumption, make
available a corresponding amount for the account of Borrower on such date.  If
and to the extent that such Lender shall not have so made such amount available
to Agent, such Lender and Borrower severally agree to repay to Agent forthwith
on demand such corresponding amount together with interest thereon, for each day
from the day such amount is made available to Borrower until the day such amount
is repaid to Agent, at (i) in the case of Borrower, a rate per annum equal to
the interest rate applicable thereto pursuant to Section 2.2(a), and (ii) in the
case of such Lender, a floating rate per annum equal to, for each day from the
day such amount is made available to Borrower until such amount is reimbursed to
Agent, the weighted average of the rates on overnight federal funds transactions
among members of the Federal Reserve System, as determined by Agent in its sole
discretion (the “Federal Funds Rate”) for the first Business Day and thereafter,
at the interest rate applicable to the Term Loan.  If such Lender shall repay
such corresponding amount to Agent, the amount so repaid shall constitute such
Lender’s loan included in the Term Loan for purposes of this Agreement.
 
2.2           Interest and Repayment.
 
(a)           Interest.  The Term Loan shall accrue interest in arrears from the
date made until the Term Loan is fully repaid at a fixed per annum rate of
interest equal to 11.71%.  All computations of interest and fees calculated on a
per annum basis shall be made by Agent on the basis of a 360-day year, in each
case for the actual number of days occurring in the period for which such
interest and fees are payable.  Each determination of an interest rate or the
amount of a fee hereunder shall be made by Agent and shall be conclusive,
binding and final for all purposes, absent manifest error.
 
 
2

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(b)           Payments of Principal and Interest.
 
(i)             Interest Payments.  Borrower shall pay accrued interest to
Agent, for the ratable benefit of the Lenders, in arrears on January 4, 2011 and
on the first day of each calendar month occurring thereafter (including January
4, 2011, each, a “Scheduled Payment Date”).
 
(ii)            Principal Payments.  Borrower shall pay principal to Agent, for
the ratable benefit of the Lenders, in forty-one (41) equal consecutive payments
of $238,095.24 on each Scheduled Payment Date and one final payment, in an
amount equal to the entire remaining principal balance of the Term Loan, on June
30, 2015.
 
(iii)           Payments Generally.  Notwithstanding the foregoing provisions of
this Section 2.2(b), all unpaid principal and accrued interest and other
outstanding Obligations with respect to the Term Loan is due and payable in full
to Agent, for the ratable benefit of Lenders, on the earliest of (A) June 30,
2015 (the “Scheduled Maturity Date”), and (B) the date that the Term Loan
otherwise becomes due and payable hereunder, whether by acceleration of the
Obligations pursuant to Section 8.2 or otherwise (the earlier of (A) and (B),
the “Term Loan Maturity Date”).  Each scheduled payment of interest or principal
hereunder is referred to herein as a “Scheduled Payment.”  Without limiting the
foregoing, all Obligations shall be due and payable on the Term Loan Maturity
Date.  “Obligations” means the Term Loan and all other debt, monetary
liabilities, obligations and liabilities of any kind whatsoever of Borrower or
any other Loan Party to any one or more of the Agent, any Lender, or any other
holder of Obligations arising under or in connection with the Transaction
Documents irrespective of whether the debts, liabilities or obligations (1) are
for principal, interest, fees, charges, losses, costs or expenses, prepayment of
premiums, indemnities, reimbursements or other sums; (2) accrue after the filing
of any petition in bankruptcy or after the commencement of any insolvency,
reorganization or similar proceedings, and whether or not allowed in such case
or proceeding; (3) are actual, prospective, contingent or otherwise; (4) are now
existing or arising in the future; (5) are at any time ascertained or
unascertained; (6) are owed or incurred by or on the account of any Loan Party
alone, or severally or jointly with any other person; (7) are owed to or
incurred for the account of Agent or any Lender alone, or severally or jointly
with any other person; or (8) comprise any combination of the above.
 
(c)           No Reborrowing.  Once the Term Loan is repaid or prepaid, it
cannot be reborrowed.
 
(d)           Payments.  All payments (including prepayments) to be made by any
Loan Party under any Transaction Document shall be made by wire transfer or ACH
transfer in immediately available funds (which shall be the exclusive means of
payment hereunder) in U.S. dollars, without setoff or counterclaim to the
Collection Account (as defined below) before 3:00 p.m. (New York time) on the
date when due.  All payments received by Agent after 3:00 p.m. (New York time)
on any Business Day or at any time on a day that is not a Business Day may, in
Agent’s sole discretion, be deemed to be received on the next Business
Day.  Whenever any payment required under this Agreement would otherwise be due
on a date that is not a Business Day, such payment shall instead be due on the
next Business Day, and additional fees or interest, as the case may be, shall
accrue and be payable for the period of such extension.  As used herein, the
term “Collection Account” means the following account of Agent (or such other
account as Agent shall identify to Borrower in writing):
 
 
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Bank Name: Deutsche Bank
Bank Address: New York, NY
ABA Number: 021 001 033
Account Number: 50271079
Account Name: GECC HH Cash Flow Collections
Ref: XOMA (US) LLC/CFN HFS2968

(e)           Withholdings and Increased Costs.  All payments shall be made free
and clear of any taxes, withholdings, duties, impositions or other similar
charges imposed by any governmental authority (collectively, “Taxes”) (other
than (1) any Taxes imposed on or measured by net income or overall gross income
or receipts, franchise Taxes, and branch profits or similar Taxes, in each case
imposed as a result of any present or former connection between the Agent and/or
the applicable Lender and the taxing jurisdiction (other than a connection
arising solely from the Transaction Documents, including as a result of the
Agent or such Lender having executed, delivered, become a party to, performed
its obligations under, received payments under, received or perfected a security
interest under, or engaged in any other transaction pursuant to, the Transaction
Documents); (2) any U.S. federal withholding Tax imposed on amounts payable to
or for the account of any Lender pursuant to any Requirement of Law in effect on
the date on which such Lender acquires its applicable interest in the Term Loan
(or changes its lending office), except to the extent that such Lender (or
Lender’s assignor, if any) was entitled, immediately prior to such change in
lending office (or assignment), to additional amounts in respect of such
withholding tax and (3) any U.S. federal withholding tax imposed pursuant to
Section 1471 through 1474 of the Internal Revenue Code of 1986, as amended, and
any amended or successor version that is substantially comparable (collectively,
“Excluded Taxes”), such that Agent and Lenders will receive the entire amount of
any Obligations (net only of Excluded Taxes), regardless of source of
payment.  If Agent or any Lender shall have reasonably determined that the
introduction of or any change in, after the date hereof, any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order (other
than with respect to (1) any Taxes imposed on or with respect to any payment
under any Transaction Documents or (2) any Excluded Taxes) reduces the rate of
return on Agent or such Lender’s capital as a consequence of its obligations
hereunder or increases the cost to Agent or such Lender of agreeing to make or
making, funding or maintaining the Term Loan, then Borrower shall from time to
time upon demand by Agent or such Lender (with a copy of such demand to Agent)
promptly pay to Agent for its own account or for the account of such Lender, as
the case may be, additional amounts sufficient to compensate Agent or such
Lender for such reduction or for such increased cost.  A certificate as to the
amount of such reduction or such increased cost submitted by Agent or such
Lender (with a copy to Agent) to Borrower shall be conclusive and binding on
Borrower, absent manifest error, provided that, neither Agent nor any Lender
shall be entitled to payment of any amounts under this Section 2.2(e) unless it
has delivered such certificate to Borrower within 180 days after the occurrence
of the changes or events giving rise to the increased costs to, or reduction in
the amounts received by, Agent or such Lender; provided further that
notwithstanding anything herein to the contrary, (a) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (b) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case of this clause (b) pursuant to Basel III, shall in each case be deemed
to be introduced or changed after the date hereof, regardless of the date
enacted, adopted or issued.  This provision shall survive the termination of
this Agreement.  Any Lender claiming any additional amounts payable pursuant to
this Section 2.2(e) shall use its reasonable efforts (consistent with its
internal policies and Requirements of Law (as defined below)) to designate a
different lending office for funding or booking the Commitments and Term Loans
if, in the sole judgment of such Lender, such designation would reduce any such
additional amounts (or any similar amount that may thereafter accrue) in the
future, would not subject such Lender to any unreimbursed cost or expense and
would not be otherwise disadvantageous to such Lender.  Borrower hereby agrees
to pay all costs and expenses incurred by any Lender in connection with such
designation.
 
 
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(f)            Loan Records.  Each Lender shall maintain in accordance with its
usual practice accounts evidencing the Obligations of Borrower to such Lender
resulting from such Lender’s Pro Rata Share of the Term Loan, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.  Agent shall maintain in accordance with its usual
practice a register on its books to record the Term Loan and any other
extensions of credit made by Lenders hereunder, and all payments thereon made by
Borrower.  The entries made in such register shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
Obligations recorded therein; provided, however, that no error in such register
and no failure of any Lender or Agent to maintain any such register shall affect
the obligations of Borrower to repay the Obligations in accordance with their
terms.  The parties shall treat the registered Lender as the Lender for all
purposes of this Agreement, notwithstanding any notice to the contrary.
 
2.3           Prepayments.
 
(a)            Voluntary Prepayments.  Borrower may voluntarily prepay, upon
five (5) Business Days’ prior written notice to Agent (which notice may be
conditioned upon the closing of a related acquisition or refinancing
transaction), the Term Loan in full, but not in part.
 
(b)           Mandatory Prepayments.
 
(i)            If any Loan Party shall at any time or from time to time make or
agree to make a Transfer pursuant to Section 7.3(b), and the aggregate amount of
net proceeds received by the Loan Parties and their Subsidiaries in connection
with such Transfer and all other Transfers occurring during such fiscal year
exceeds $100,000, then (i) Borrower shall promptly notify Agent of such proposed
Transfer (including the amount of estimated net proceeds to be received by a
Loan Party and/or such Subsidiary in respect thereof) and (ii) promptly upon
receipt by a Loan Party and/or such Subsidiary of such net proceeds of such
Transfer, the Borrower shall deliver, or cause to be delivered, such net
proceeds to Agent as a prepayment of the Term Loan (unless otherwise waived in
writing by the Requisite Lenders), which prepayment shall be applied to the
remaining installments of the Term Loan in inverse order of
maturity.  Notwithstanding the foregoing and provided no Default or Event of
Default has occurred and is continuing, such prepayment shall not be required to
the extent a Loan Party or such Subsidiary reinvests such net proceeds of such
Transfer in productive assets (other than inventory) of a kind then used or
usable in the business of the Loan Parties or such Subsidiary, within ninety
(90) days after the date of such Transfer; provided that the Borrower notifies
Agent of such Loan Party’s or such Subsidiary’s intent to reinvest and of the
completion of such reinvestment at the time such proceeds are received and when
such reinvestment occurs, respectively.
 
 
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(ii)           If any Loan Party or any of its Subsidiaries shall at any time or
from time to time (x) make or agree to make an exclusive license for the use of
any Loan Party’s or its Subsidiaries’ Intellectual Property (other than (1) the
XMET Intellectual Property (as defined below), (2) pursuant to the [*]
Disposition or (3) licenses that could not result in a legal transfer of title
of the licensed property but that are exclusive in respects other than territory
or that are exclusive as to territory only as to discreet geographical areas
outside of the United States), or (y) grant any negative pledges on any
Intellectual Property or any of its other assets permitted under clause (e) of
the second sentence of Section 7.1, then simultaneously with such license
becoming effective or such negative pledge being granted, as the case may be,
unless otherwise waived in writing by the Lenders, the Borrower shall either (A)
prepay the Term Loan and all other Obligations in full or (B) have deposited
cash collateral for the Obligations in an amount equal to the then outstanding
principal balance of the Term Loan in a deposit account under the full dominion
and control of the Agent pursuant to a cash collateral agreement in form and
substance satisfactory to the Agent.  If any Loan Party or any of its
Subsidiaries shall at any time or from time to time create, incur, assume or
permit to exist any Lien on any Intellectual Property or any of its other assets
permitted under clause (g) of the first sentence of Section 7.1, then
simultaneously with such Lien being created, incurred, assumed or permitted to
exist, the Borrower shall prepay the Term Loan and all other Obligations in full
unless the Lenders shall have waived such prepayment in writing.
 
(iii)           If any Loan Party or any of its Subsidiaries shall at any time
or from time to time (x) make or agree to make an exclusive license for the use
of any XMET Intellectual Property (other than licenses that could not result in
a legal transfer of title of the licensed property but that are exclusive in
respects other than territory or that are exclusive as to territory only as to
discreet geographical areas outside of the United States), or (y) grant any
Liens on any XMET Assets permitted under clause (i) of the first sentence of
Section 7.1 or any negative pledges on any XMET Assets permitted under clause
(g) of the second sentence of Section 7.1, then simultaneously with such license
becoming effective or such Lien or negative pledge being granted, as the case
may be, unless otherwise waived in writing by the Lenders, the Borrower shall
prepay the Term Loan in an amount equal to the amount set forth in the table
below opposite the month in which such license becomes effective or such Lien or
negative pledge is granted.  “XMET Assets” means (A) the XMET Intellectual
Property, (B) all statistical data and regulatory filings solely related to the
insulin receptor antibodies which form the Loan Parties’ “XMet” program and (C)
all raw materials and inventory created, developed, acquired or manufactured
solely with respect to the insulin receptor antibodies which form the Loan
Parties’ “XMet” program (1) on or prior to entering into an XMET License
Agreement, or (2) thereafter with funding from third parties pursuant to the
XMET License Agreement.  “XMET Intellectual Property” means any Intellectual
Property related to the insulin receptor antibodies which form the Loan Parties’
“XMet” program.  “XMET License Agreement” means an agreement between one or more
Loan Parties and a third party collaboration partner containing a license
permitted under Section 7.3(c) with respect to the XMET Intellectual Property.
 
 
6

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Month
Prepayment Amount
December 2011
$2,500,000.00
January 2012
$2,440,476.19
February 2012
$2,380,952.38
March 2012
$2,321,428.57
April 2012
$2,261,904.76

May 2012
$2,202,380.95
June 2012
$2,142,857.14
July 2012
$2,083,333.33
August 2012
$2,023,809.52
September 2012
$1,964,285.71
October 2012
$1,904,761.90
November 2012
$1,845,238.10
December 2012
$1,785,714.29
January 2013
$1,726,190.48
February 2013
$1,666,666.67
March 2013
$1,607,142.86
April 2013
$1,547,619.05
May 2013
$1,488,095.24
June 2013
$1,428,571.43
July 2013
$1,369,047.62
August 2013
$1,309,523.81
September 2013
$1,250,000.00
October 2013
$1,190,476.19
November 2013
$1,130,952.38
December 2013
$1,071,428.57
January 2014
$1,011,904.76
February 2014
$952,380.95
March 2014
$892,857.14
April 2014
$833,333.33
May 2014
$773,809.52
June 2014
$714,285.71
July 2014
$654,761.90
August 2014
$595,238.10
September 2014
$535,714.29
October 2014
$476,190.48
November 2014
$416,666.67
December 2014
$357,142.86
January 2015
$297,619.05
February 2015
$238,095.24
March 2015
$178,571.43
April 2015
$119,047.62
May 2015
$59,523.81
June 2015
$0.00

(c)           Prepayment Obligation.  Upon the date of any prepayment of the
Term Loan permitted or required under this Agreement, Borrower shall pay to
Agent, for the ratable benefit of the Lenders, a sum equal to (i) the
outstanding principal amount of the Term Loan being prepaid and all accrued
interest thereon, plus (ii) to the extent that the Term Loan is prepaid in full,
the Final Payment Fee, plus (iii) subject to the final sentence of this clause
(c), the Prepayment Premium as yield maintenance for the loss of a bargain and
not as a penalty.   The “Prepayment Premium” shall mean, with respect to any
Term Loan being prepaid, an amount equal to (A) 3% of the principal amount of
such Term Loan being prepaid, if such prepayment is made on or before the one
year anniversary of the Term Loan, (B) 2% of the principal amount of such Term
Loan being prepaid, if such prepayment is made after the one year anniversary of
the Term Loan but on or before the two year anniversary of the Term Loan, and
(C) 1% of the principal amount of such Term Loan being prepaid, if such
prepayment is made after the two year anniversary of the Term Loan but before
the Scheduled Maturity Date.
 
 
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Notwithstanding the foregoing, the Borrower shall not be required to pay the
Prepayment Premium in connection with any prepayment of the Term Loan under the
following circumstances:
 
(x)            the prepayment of the Term Loan is required under clause (b)
above; or
 
(y)           (i) any Loan Party desires to incur Indebtedness in connection
with a bona fide corporate collaboration in the ordinary course of business and
consistent with past practice, (ii) no Default or Event of Default has occurred
and is continuing, and (iii) the incurrence of such Indebtedness is approved by
the board of directors of the applicable Loan Party, but such Indebtedness does
not otherwise satisfy the requirements of Section 7.2(i) and the Requisite
Lenders do not approve the incurrence of such Indebtedness within fifteen (15)
Business Days (or such shorter period of time as Agent shall agree) after
receipt by Agent of a written request for such consent, together with a
reasonably detailed description of such Indebtedness and copies of such
documents related thereto as Agent shall request, then within thirty (30) days
after the Requisite Lenders reject such incurrence of Indebtedness and upon
three (3) Business Days’ prior written notice to Agent.
 
2.4           Late Fees.  If Agent does not receive any Scheduled Payment or
other payment under any Transaction Document from any Loan Party within five (5)
days after its due date, then, at Agent’s election, such Loan Party agrees to
pay to Agent for the ratable benefit of all Lenders, a late fee equal to (a)
5.0% of the amount of such unpaid payment or (b) such lesser amount that, if
paid, would not cause the interest and fees paid by such Loan Party under this
Agreement to exceed the Maximum Lawful Rate (as defined below) (the “Late Fee”).
 
2.5           Default Rate.  The Term Loan and other Obligations shall bear
interest, at the election of Agent or the Requisite Lenders (as defined below)
(or automatically while any Event of Default (as defined below) under Section
8.1(g) exists), from and after the occurrence and during the continuation of an
Event of Default, at a rate equal to the lesser of (a) 5.0% above the rate of
interest applicable to such Obligations as set forth in Section 2.2(a)
immediately prior to the occurrence of the Event of Default and (b) the Maximum
Lawful Rate (the “Default Rate”).  The application of the Default Rate shall not
be interpreted or deemed to extend any cure period or waive any Default or Event
of Default or otherwise limit Agent’s or any Lender’s right or remedies
hereunder.  All interest payable at the Default Rate shall be payable on demand.
 
2.6           Lender Fees.
 
(a)           Closing Fee.  On the Closing Date, Borrower shall pay to Agent,
for the benefit of Lenders in accordance with their Pro Rata Shares, a
non-refundable closing fee in an amount equal to $100,000, which fee shall be
fully earned when paid.
 
(b)           Final Payment Fee. On the date upon which the outstanding
principal amount of the Term Loan is repaid in full, or if earlier, is required
to be repaid in full (whether by scheduled payment, voluntary prepayment,
acceleration of the Obligations pursuant to Section 8.2 or otherwise), Borrower
shall pay to Agent, for the ratable accounts of Lenders, a fee equal to 5% of
the original principal amount of the Term Loan (the “Final Payment Fee”), which
Final Payment Fee shall be deemed to be fully-earned on the date the Term Loan
is made.
 
 
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2.7           Maximum Lawful Rate.  Anything herein, any Note or any other
Transaction Document (as defined below) to the contrary notwithstanding, the
obligations of Loan Parties hereunder and thereunder shall be subject to the
limitation that payments of interest shall not be required, for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by Agent and Lenders would be
contrary to the provisions of any law applicable to Agent and Lenders limiting
the highest rate of interest which may be lawfully contracted for, charged or
received by Agent and Lenders, and in such event Loan Parties shall pay Agent
and Lenders interest at the highest rate permitted by applicable law (“Maximum
Lawful Rate”); provided, however, that if at any time thereafter the rate of
interest payable hereunder or thereunder is less than the Maximum Lawful Rate,
Loan Parties shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent and Lenders is equal to
the total interest that would have been received had the interest payable
hereunder been (but for the operation of this paragraph) the interest rate
payable since the making of the Term Loan as otherwise provided in this
Agreement, any Note or any other Transaction Document.
 
2.8           Authorization and Issuance of the Warrants.  Parent has duly
authorized the issuance to Lenders (or their respective affiliates or designees)
of stock purchase warrants substantially in the form of the warrant attached
hereto as Exhibit E (collectively, the “Warrants”) evidencing Lenders’ (or their
respective affiliates or designees) right to acquire their respective Pro Rata
Share of up to 263,158 common shares of Parent at an exercise price of $1.14 per
share.  The exercise period shall expire five (5) years from the date such
Warrants are issued.
 
3.            [RESERVED].
 
4.            CONDITIONS OF CREDIT EXTENSIONS
 
4.1           Conditions Precedent to Term Loan.  No Lender shall be obligated
to make its Pro Rata Share of the Term Loan, or to take, fulfill, or perform any
other action hereunder, until (i) the following have been delivered to Agent
(the date on which the Lenders make the Term Loan after all such conditions
shall have been satisfied in a manner satisfactory to Agent and the Lenders or
waived in accordance with this Agreement, the “Closing Date”):
 
(a)           a counterpart of this Agreement duly executed by each Loan Party,
each Lender and Agent;
 
(b)           a certificate executed by the Secretary of Borrower, the form of
which is attached hereto as Exhibit B-1 (the “US Secretary’s Certificate”),
providing verification of incumbency and attaching (i) such Loan Party’s board
resolutions approving the transactions contemplated by this Agreement and the
other Transaction Documents and (ii) such Loan Party’s governing or constituent
documents;
 
(c)           a certificate executed by a Director of XOMA Ireland Limited, an
Irish private limited company (“XOMA Ireland”), the form of which is attached
hereto as Exhibit B-2 (each and collectively, the “Irish Director’s
Certificate”), providing certain verifications and certificates and attaching
(i) such Loan Party’s board resolutions approving the transactions contemplated
by this Agreement and the other Transaction Documents and (if applicable) powers
of attorney under which such documents are signed and (ii) such Loan Party’s
governing or constituent documents;
 
(d)           a certificate executed by the Secretary or a Director of each of
Parent and XOMA Technology Ltd., a Bermuda exempted company (“XOMA Technology”,
together with Parent, the “Bermuda Entities”), the form of which is attached
hereto as Exhibit B-3 (each and collectively, the “Bermuda Secretary’s
Certificate”, and together with the US Secretary’s Certificate and the Irish
Director’s Certificate, the “Secretary Certificates”), providing certain
verifications and certificates and attaching (i) such Loan Party’s board
resolutions approving the transactions contemplated by this Agreement and the
other Transaction Documents and (if applicable) powers of attorney under which
such documents are signed and (ii) such Loan Party’s governing or constituent
documents;
 
 
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(e)           copies of UCC financing statements, other public notice filings,
collateral assignments, and termination statements, with respect to the
Collateral as Agent shall request (for the purposes of this Agreement,
“Collateral” means any and all assets of any Loan Party now owned or hereafter
acquired, upon which a Lien is purported to be created by any Transaction
Document; provided, however that in no event shall a mortgage be required on the
leasehold interests of Borrower under its leases with respect to the Space Lease
Locations (as defined below in Section 6.13));
 
(f)            certificates of insurance evidencing the insurance coverage, and
satisfactory additional insured and lender loss payable endorsements, in each
case as required pursuant to Section 6.4 herein;
 
(g)           current lien, judgment, bankruptcy and tax lien search results
(including equivalent Irish searches with respect to XOMA Ireland and Bermuda
searches with respect to the Bermuda Entities) demonstrating that there are no
other Liens (as defined below) on the Collateral, other than Permitted Liens (as
defined below) and Liens being terminated on or prior to the Closing Date;
 
(h)           a Warrant in favor of each Lender (or its affiliate or designee);
 
(i)            a certificate of status/good standing/compliance of each Loan
Party from the jurisdiction of such Loan Party’s organization (with respect to
any jurisdiction outside of the United States, to the extent applicable) and a
certificate of foreign qualification from each jurisdiction where such Loan
Party’s failure to be so qualified could reasonably be expected to have a
Material Adverse Effect (as defined below), in each case as of a recent date
acceptable to Agent;
 
(j)            an Access Agreement (as defined below in Section 6.6) for any
third party location other than the Space Lease Locations where any of the
following are located: (i) any Loan Party’s principal place of business, (ii)
any Loan Party’s books or records or (iii) Collateral with an aggregate value in
excess of $400,000;
 
(k)           a mortgage, deed of trust or other document granting a Lien in
favor of the Agent for the benefit of the Lenders as security for the
Obligations (a “Mortgage”) over the real property owned by Parent located at 901
Heinz Ave., Berkeley, CA 94710, together with each document (including title
policies or marked-up unconditional insurance binders (in each case, together
with copies of all documents referred to therein), maps, ALTA (or TLTA, if
applicable) as-built surveys (in form and as to date that is sufficiently
acceptable to the title insurer issuing title insurance to the Agent for such
title insurer to deliver endorsements to such title insurance as reasonably
requested by the Agent), flood zone searches and/or certificates, zoning
reports, environmental assessments and reports, environmental indemnity
agreements, appraisals required to comply with the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended (“FIRREA”), and
evidence regarding recording and payment of fees, insurance premiums and taxes)
that the Agent may reasonably request, to create, register, perfect, maintain,
evidence the existence, substance, form or validity of or enforce a valid lien
on such real property in favor of the Agent as security for the Obligations,
subject only to such Liens as the Agent may approve (all such documents referred
to herein as “Mortgage Supporting Documents”);
 
 
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(l)            opinions of legal counsel, in form and substance satisfactory to
Agent;
 
(m)          one or more completed perfection certificates from each Loan Party,
duly executed by such Loan Party (each and collectively, the “Perfection
Certificate”), a form of which Agent previously delivered to Borrower;
 
(n)           one or more Account Control Agreements (as defined below), in form
and substance reasonably acceptable to Agent, duly executed by the applicable
Loan Parties and the applicable depository or financial institution, for each
deposit and securities account to the extent required pursuant to Section 7.10;
 
(o)           a guaranty, pledge and security agreement governed by New York law
(the “US Security Agreement”), in form and substance satisfactory to Agent,
executed by Parent and each of its Subsidiaries except XOMA Development
Corporation, a Delaware corporation (“XOMA Development”), XOMA (Bermuda) Ltd., a
Bermuda exempted company (“XOMA Bermuda”), XOMA CDRA LLC, XOMA LS Limited and
XOMA Limited (UK);
 
(p)           a Debenture granted by each of the Bermuda Entities (the “Bermuda
Debentures”) and a charge over the shares in XOMA Technology granted by the
Parent (the “Bermuda Share Charge”) each governed by Bermuda law (the “Bermuda
Security Agreements”), in form and substance satisfactory to Agent, executed by
the Bermuda Entities;
 
(q)           (i) a Debenture granted by XOMA Ireland in favor of the Agent for
the benefit of the Lenders (“Irish Debenture”), (ii) an Irish Share Charge
granted by Parent dated on or about the Closing Date in favor of the Agent for
the benefit of the Lenders (“Irish Charge”), (iii) an Irish Companies
Registration Office Form C1 with respect to the Irish Debenture, (iv) an Irish
Companies Registration Office Form C1 with respect to the US Security Agreement,
(v) an Irish Companies Registration Office Form 8E with respect to the US
Security Agreement (vi) an Irish Companies Registration Office Form 8E with
respect to the Irish Charge, (vi) any document of title for any Collateral that
is pledged, mortgaged or subject to a fixed charge under the Transaction
Documents (including any stock or share certificate) and blank share transfers
for any Irish Shares forming part of the Collateral, (vii) executed but undated
letters of resignation from each of the directors, alternate directors and
Secretary of XOMA Ireland, (viii) the share certificate which validly and
correctly evidences Parent’s 100% shareholding in XOMA Ireland, executed under
seal, in each case in form and substance satisfactory to Agent, executed by
Parent and XOMA Ireland and (ix) all notices of assignment required to be served
by the Company under the Irish Debenture together with all signed and dated
acknowledgements to such notices of assignment;
 
(r)            all certificates representing all securities being pledged
pursuant to the US Security Agreement and Bermuda Security Agreements together
with related undated powers or endorsements duly executed in blank;
 
(s)           an amendment to the limited liability company agreement of
Borrower, in form and substance acceptable to Agent;
 
(t)            a disbursement instruction letter, in form and substance
satisfactory to Agent and the Lenders, executed by each Loan Party, Agent and
each Lender (the “Disbursement Letter”);
 
 
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(u)           a Master Intercompany Promissory Note, in form and substance
satisfactory to Agent and Lenders, executed by each Loan Party (the “Master
Intercompany Note”) and endorsed to Agent; and
 
(v)           all other documents and instruments as Agent or any Lender may
reasonably deem necessary or appropriate to effectuate the intent and purpose of
this Agreement (together with the Agreement, the Notes, the Warrants, the
Account Control Agreements, the Access Agreements, the Perfection Certificate,
the Mortgage, the US Security Agreement, Irish Debenture, Irish Charge, Bermuda
Security Agreements, the Secretary Certificates, the Disbursement Letter, and
all other agreements, instruments, documents and certificates executed and/or
delivered to or in favor of the Agent or any Lender from time to time in
connection with this Agreement or the transactions contemplated hereby, the
“Transaction Documents”);
 
(ii)           Agent and Lenders shall have received the fees required to be
paid by Borrower, and Borrower shall have reimbursed Agent and Lenders for all
of their fees, costs and expenses for which an invoice has been presented at
least one Business Day prior to the Closing Date; and
 
(iii)           (a) all representations and warranties in Section 5 below shall
be true as of the date of the Term Loan; (b) no Event of Default or any other
event, which with the giving of notice or the passage of time, or both, would
constitute an Event of Default (such event, a “Default”), has occurred and is
continuing or would result from the making of the Term Loan; and (c) Agent shall
have received a certificate from an authorized officer of each Loan Party
confirming each of the foregoing.
 
5.            REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.
 
Each Loan Party, jointly and severally, represents, warrants and covenants to
the Agent and each Lender that:
 
5.1           Due Organization and Authorization.  Each Loan Party’s exact legal
name is as set forth in the Perfection Certificate and each Loan Party is, and
will remain, duly organized, existing and in good standing under the laws of the
jurisdiction of its organization (with respect to any jurisdiction outside of
the United States, to the extent applicable) as specified in the Perfection
Certificate (or, with respect to any Loan Party organized in a jurisdiction
outside of the United States on the Closing Date which discontinues and
relocates after the Closing Date to a jurisdiction within the United States
pursuant to the Parent Redomestication or a Subsidiary Redomestication (as such
terms are defined below in Section 7.4), under the laws of such new jurisdiction
of organization, has its chief executive office at the location specified in the
Perfection Certificate, and is, and will remain, duly qualified and licensed in
every jurisdiction wherever necessary to carry on its business and operations,
except where the failure to be so qualified and licensed could not reasonably be
expected to have a Material Adverse Effect (defined below in Section 5.4).  This
Agreement and the other Transaction Documents have been duly authorized,
executed and delivered by each Loan Party and constitute legal, valid and
binding agreements enforceable in accordance with their terms.  The execution,
delivery and performance by each Loan Party of each Transaction Document
executed or to be executed by it is in each case within such Loan Party’s
powers.  As of the Closing Date, neither the [*] Subsidiary nor the [*]
Subsidiary (each as defined below in Section 7.7) has been formed.
 
5.2           Required Consents.  No filing, registration, qualification with,
or approval, consent or withholding of objections from, any governmental
authority or instrumentality or any other entity or person is required with
respect to the entry into, or performance by any Loan Party of, any of the
Transaction Documents, except any obtained on or before the Closing Date
(including but not limited to the Form C1 in the Irish Companies Registration
Office in respect of the Irish Debenture and the Form 8E in the Irish Companies
Registration Office in respect of the Irish Charge).
 
 
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5.3           No Conflicts.  The entry into, and performance by each Loan Party
of, the Transaction Documents will not (a) violate any of the organizational
documents of such Loan Party, (b) violate any material law, rule, regulation,
order, award or judgment applicable to such Loan Party, or (c) result in any
breach of or constitute a default under, or result in the creation of any lien,
security interest, mortgage, charge, assignment, pledge, claim or encumbrance of
any kind (any of the foregoing, a “Lien”) on any of such Loan Party’s property
(except for Liens in favor of Agent, on behalf of itself and Lenders) pursuant
to, any indenture, mortgage, deed of trust, bank loan, credit agreement, any
agreement between any Loan Parties or Subsidiaries of Loan Parties on the one
hand and (A) Novartis Vaccines and Diagnostics, Inc. (f/k/a Chiron Corporation)
(“Novartis”) or any of its affiliates or (B) Les Laboratoires Servier
(“Servier”) or Institut de Recherches Servier or any of their respective
affiliates on the other hand, or any other Material Agreement (as defined below)
to which such Loan Party is a party.  As used herein, “Material Agreement” means
(i) the agreements between certain Loan Parties or Subsidiaries of Loan Parties
and (A) Novartis or any of its affiliates and (B) Servier or Institut de
Recherches Servier or any of their respective affiliates, in each case listed on
Schedule B hereto, (ii) the Medpace Agreement, (iii) any agreement or contract
to which such Loan Party is a party and which either resulted in the receipt or
payment of amounts in the aggregate exceeding $250,000 (or $500,000 with respect
to any employment agreement) in the prior calendar year or could reasonably be
expected to result in the receipt or payment of amounts in the aggregate
exceeding $250,000 (or $500,000 with respect to any employment agreement) in the
current calendar year or any year thereafter through and including the 2015
calendar year (but excluding calendar years ending thereafter), and (iv) any
agreement or contract to which such Loan Party is a party the termination of
which could reasonably be expected to have a Material Adverse Effect.  A list of
all Material Agreements as of the Closing Date is set forth on Schedule B.  All
material agreements of the Loan Parties or Subsidiaries of the Loan Parties on
the Closing Date with Novartis, Servier or Institut de Recherches Servier or any
of their respective affiliates are set forth on Schedule B.   As of the Closing
Date, the Borrower has provided to the Agent, or made available to the Agent
through an electronic dataroom, a true and correct copy of all Material
Agreements and all amendments and modifications thereto.
 
5.4           Litigation.  There are no actions, suits, proceedings or
investigations pending against or, to the knowledge of any Loan Party, affecting
any Loan Party before any court, federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or, to the knowledge of any Loan Party, any basis thereof,
which could reasonably be expected to have a Material Adverse Effect, or which
questions the validity of the Transaction Documents, or the other documents
required thereby or any action to be taken pursuant to any of the foregoing, nor
does any Loan Party have reason to believe that any such actions, suits,
proceedings or investigations are threatened.  As used in this Agreement, the
term “Material Adverse Effect” means a material adverse effect on (a) the
operations, business, assets, properties, or condition (financial or otherwise)
of Borrower, individually, or the Loan Parties taken as a whole, (b) the ability
of the Borrower individually to perform any of its obligations under any
Transaction Document to which it is a party or the ability of the other Loan
Parties taken as a whole to perform any of their obligations under any
Transaction Document to which any of them are party, (c) the legality, validity
or enforceability of any Transaction Document, (d) the rights and remedies of
Agent or any Lender under any Transaction Document or (e) the validity,
perfection or priority of any Lien in favor of Agent, on behalf of itself and
the Lenders, on any of the Collateral.
 
5.5           Financial Statements. All annual and quarterly financial
statements delivered to Agent and Lenders pursuant to Section 6.3 have been
prepared in accordance with GAAP (subject, in the case of unaudited financial
statements, to the absence of footnotes and normal year end audit adjustments),
and all monthly financial statements delivered to the Agent and Lenders pursuant
to Section 6.3 have been prepared in accordance with historical practices and
are consistent in form to those financial statements previously provided to
Agent. Since the date of the most recent audited financial statements, no event
has occurred which has had or could reasonably be expected to have a Material
Adverse Effect.
 
 
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5.6           Use of Proceeds; Margin Stock.  The proceeds of the Term Loan
shall be used for working capital and general corporate purposes.  No Loan Party
and no Subsidiary of any Loan Party is engaged in the business of purchasing or
selling margin stock (within the meaning of Regulations T, U and X of the Board
of Governors of the Federal Reserve System) (“Margin Stock”) or extending credit
for the purpose of purchasing Margin Stock.  As of the Closing Date, no Loan
Party and no Subsidiary of any Loan Party owns any Margin Stock.
 
5.7           Collateral.  Each Loan Party is, and will remain, the sole and
lawful owner, and in possession of, the Collateral, and has the sole right and
lawful authority to grant the security interest described in this
Agreement.  The assets of each Loan Party and of each Subsidiary of each Loan
Party are, and will remain, free and clear of all Liens, except for (a) Liens in
favor of Agent, on behalf of itself and the Lenders, to secure the Obligations,
(b) Liens (i) with respect to the payment of taxes, assessments or other
governmental charges or (ii) of suppliers, carriers, materialmen, warehousemen,
workmen or mechanics and other similar Liens, in each case imposed by law and
arising in the ordinary course of business, and securing amounts that are not
yet due or that are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or other
appropriate provisions are maintained on the books of the applicable Loan Party
in accordance with GAAP and which do not involve, in the reasonable judgment of
Agent, any risk of the sale, forfeiture or loss of any of the Collateral (a
“Permitted Contest”), (c) Liens existing on the date hereof and set forth on
Schedule B hereto, (d) Liens securing Indebtedness (as defined in Section 7.2
below) permitted under Section 7.2(c) below, provided that (i) such Liens exist
prior to the acquisition of, or attach substantially simultaneous with, or
within 20 days after, the acquisition, repair, improvement or construction of
such property financed by such Indebtedness, and (ii) such Liens do not extend
to any property of a Loan Party other than the property (and proceeds thereof)
acquired or built, or the improvements or repairs, financed by such
Indebtedness, (e) licenses described in Section 7.3(c) below, (f) pledges or
cash deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance or other types of social security
benefits (but not including any lien imposed by ERISA) that secure amounts that
are not yet due or payable, (g) statutory bankers’ liens or rights of set off in
deposit or securities accounts in favor of the financial institution at which
such deposit or securities account is located, provided that to the extent an
Account Control Agreement is required for such deposit or securities account,
such liens or rights of set off have been waived or subordinated in a manner
satisfactory to Agent therein, (h) zoning restrictions, easements, rights of
way, encroachments or other restrictions on the use of, and other minor defects
or irregularities in title with respect to, any real property of any Loan Party
or its Subsidiaries so long as the same do not materially impair the value or
use of such real property by such Loan Party or such Subsidiary, (i) purported
Liens evidenced by the filing of precautionary UCC financing statements relating
solely to operating leases of personal property entered into in the ordinary
course of business to the extent such lease is not otherwise prohibited
hereunder, (j) Liens arising from judgments, decrees or attachments that do not
constitute an Event of Default hereunder, (k) Liens of landlords (i) arising by
statute or (ii) under any lease entered into in the ordinary course of business,
in each case on fixtures and movable tangible property located on the real
property leased or subleased from such landlord, securing amounts that are not
yet due or that are being contested pursuant to a Permitted Contest and which
are subordinated to the security interests of the Agent and Lenders granted
under the Transaction Documents pursuant to an Access Agreement (or, with
respect to clause (i) only, under any lease for which no Access Agreement is
required hereunder), (l) Liens incurred in the extension, renewal or refinancing
of Indebtedness secured by Liens described in clause (d) above, provided that
any such extension, renewal or replacement Liens shall be limited to the
property encumbered by the existing Lien and the principal amount of the
Indebtedness being extended, renewed or refinanced may not be increased, and (m)
Liens expressly permitted under the first sentence of Section 7.1 below (all of
such Liens described in the foregoing clauses (a) through (m) are referred to
herein as “Permitted Liens”).
 
 
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5.8           Compliance with Laws.
 
(a)           Each Loan Party is and will remain in compliance in all material
respects with all laws, statutes, ordinances, rules and regulations applicable
to it.
 
(b)           Without limiting the generality of the immediately preceding
clause (a), each Loan Party further agrees that it and each of its Subsidiaries
is and will remain in compliance in all material respects with all U.S. economic
sanctions laws, Executive Orders and implementing regulations as promulgated by
the U.S. Treasury Department's Office of Foreign Assets Control, and all
applicable anti-money laundering and counter-terrorism financing provisions of
the Bank Secrecy Act and all regulations issued pursuant to it.  No Loan Party
nor any of its Subsidiaries, Affiliates or joint ventures (i) is a person or
entity designated by the U.S. Government on the list of the Specially Designated
Nationals and Blocked Persons (the “SDN List”) with which a U.S. person or
entity cannot deal with or otherwise engage in business transactions, (ii) is a
person or entity who is otherwise the target of U.S. economic sanctions laws
such that a U.S. person or entity cannot deal or otherwise engage in business
transactions with such person or entity, or (iii) is controlled by (including
without limitation by virtue of such person being a director or owning voting
shares or interests), or acts, directly or indirectly, for or on behalf of, any
person or entity on the SDN List or a foreign government that is the target of
U.S. economic sanctions prohibitions such that the entry into, or performance
under, this Agreement or any other Transaction Document would be prohibited
under U.S. law.
 
(c)           Each Loan Party and each of its Subsidiaries is in compliance with
(i) the Trading with the Enemy Act of 1917, Ch. 106, 40 Stat. 411, as amended,
and each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, (ii) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, P.L. 107-56, as amended (the “Patriot Act”), and
(iii) other federal or state laws relating to “know your customer” and
anti-money laundering rules and regulations.  No part of the proceeds of the
Term Loan will be used directly or indirectly for any payments to any government
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977.
 
(d)           Each Loan Party has met the minimum funding requirements of the
United States Employee Retirement Income Security Act of 1974 (as amended,
“ERISA”) with respect to any employee benefit plans subject to ERISA.  No Loan
Party is an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940.
 
5.9           Intellectual Property.  The Intellectual Property (defined below)
is and will remain free and clear of all Liens, except for Liens described in
clauses (a), (b)(i), (c) and (e) of Section 5.7 and clauses (b), (c), (e), (g)
and (h) of the first sentence of Section 7.1.  No Loan Party has nor will it
enter into any agreement or financing arrangement in which a negative pledge in
such Loan Party’s Intellectual Property (other than the Excluded Negative Pledge
Assets as defined below) is granted to any party.  As of the Closing Date no
Loan Party has any interest in, or title to any Intellectual Property except as
disclosed in the Perfection Certificate.  Each Loan Party owns or has rights to
use all Material Intellectual Property, without any actual infringement or
claimed infringement that has been asserted against and received in writing by
such Loan Party upon the rights of third parties.  “Intellectual Property” means
any and all copyrights, trademarks, servicemarks, patents, design rights,
software, trade secrets and intangible rights of a Loan Party and any
applications, registrations, products, awards, judgments, amendments, renewals,
extensions and improvements related thereto.  “Material Intellectual Property”
means all Intellectual Property that is material to the conduct of the business
of the Loan Parties taken as a whole.
 
 
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5.10          Solvency.  Both before and after giving effect to the Term Loan,
the transactions contemplated herein, and the payment and accrual of all
transaction costs in connection with the foregoing, each Loan Party is and will
be Solvent.  As used herein, “Solvent” means, with respect to a Loan Party on a
particular date, that on such date (a) the fair value of the property (including
intangibles and goodwill) of such Loan Party is greater than the total amount of
liabilities, including contingent liabilities, of such Loan Party; (b) the
present fair salable value of the assets of such Loan Party is not less than the
amount that will be required to pay the probable liability of such Loan Party on
its debts as they become absolute and matured; (c) such Loan Party does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Loan Party’s ability to pay as such debts and liabilities mature; (d) such
Loan Party is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Loan Party’s property would
constitute an unreasonably small capital; (e) such Loan Party is not “insolvent”
within the meaning of Section 101(32) of the United States Bankruptcy Code (11
U.S.C. § 101, et seq.), as amended from time to time; (f) such Loan Party is not
deemed unable to pay its debts in accordance with section 162 of the Companies
Act of 1981 of Bermuda; and (g) such Loan Party is able to pay its debts as they
fall due.  The amount of contingent liabilities (such as litigation, guaranties
and pension plan liabilities) at any time shall be computed as the amount that,
in light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured
liability.
 
5.11          Taxes; Pension.  All foreign, United States federal, California
and other material state and local tax returns, reports and statements,
including information returns, required by any governmental authority to be
filed by each Loan Party and its Subsidiaries have been filed on a timely basis
with the appropriate governmental authority and all foreign, United States
federal, California and other material state and local taxes, levies,
assessments and similar charges have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding taxes, levies, assessments and similar charges or other amounts
which are the subject of a Permitted Contest.  Proper and accurate amounts have
been withheld by each Loan Party from its respective employees for all periods
in compliance with applicable laws and such withholdings have been timely paid
to the respective governmental authorities.  Each Loan Party has made all
contributions required to be made to all present pension, profit sharing and
deferred compensation plans in accordance with their terms, and no Loan Party
has withdrawn from participation in, or has permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of a
Loan Party, including any liability to the Pension Benefit Guaranty Corporation
or its successors or any other governmental authority.
 
5.12          Full Disclosure.  Loan Parties hereby confirm that all of the
information disclosed on the Perfection Certificate is true, correct and
complete as of the date of this Agreement.  No representation, warranty or other
statement made by or on behalf of a Loan Party to Agent or Lenders (including in
any certificate, instrument, agreement or document delivered pursuant to this
Agreement or any other Transaction Document) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained therein in light of the circumstances under which they were made not
misleading, it being recognized by Agent and Lenders that the projections and
forecasts provided by Loan Parties in good faith and based upon reasonable and
stated assumptions are not to be viewed as facts and that actual results during
the period or periods covered by any such projections and forecasts may differ
from the projected or forecasted results.
 
 
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5.13          Regulatory Compliance.
 
(a)           Each Loan Party has, and it and its products are in conformance
with, all registrations, authorizations, approvals, licenses, permits,
clearances, certificates, and exemptions issued or allowed by the U.S. Food and
Drug Administration or any successor thereto (“FDA”) or any comparable
governmental authority (including but not limited to new drug applications,
abbreviated new drug applications, biologics license applications,
investigational new drug applications, over-the-counter drug monograph, product
recertifications, manufacturing approvals and authorizations, pricing and
reimbursement approvals, labeling approvals or their foreign equivalent,
controlled substance registrations, and wholesale distributor permits)
(hereinafter “Registrations”) that are material to the conduct of the business
of the Loan Parties taken as a whole.  To the knowledge of each Loan Party,
neither the FDA nor any comparable governmental authority is considering
limiting, suspending, or revoking such Registrations or changing the marketing
classification or labeling or other significant parameter affecting the products
of the Loan Parties in any material respect.  To the knowledge of each Loan
Party, there is no false or materially misleading information or significant
omission in any product application or other submission to the FDA or any
comparable governmental authority.  The Loan Parties have fulfilled and
performed their obligations under each Registration in all material respects,
and no event has occurred or condition or state of facts exists which would
constitute a material breach or default under, or would cause revocation or
termination of, any such Registration.  To the knowledge of each Loan Party, no
event has occurred or condition or state of facts exists which would present
potential product liability that could reasonably be expected to result in a
Material Adverse Effect related, in whole or in part, to any Loan Party’s
activities or products that are subject to Public Health Laws.  To the knowledge
of each Loan Party, any third party that is a manufacturer or contractor for the
Loan Parties is in compliance in all material respects with all Registrations
required by the FDA or comparable governmental authority and all Public Health
Laws insofar as they reasonably pertain to the manufacture of product components
or products regulated as medical devices and marketed or distributed by the Loan
Parties.  “Public Health Laws” means all applicable Requirements of Law relating
to the procurement, development, manufacture, production, analysis,
distribution, dispensing, importation, exportation, use, handling, quality,
sale, or promotion of any drug, medical device, food, dietary supplement, or
other product (including, without limitation, any ingredient or component of the
foregoing products) subject to regulation under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. et seq.) and similar state laws, controlled substances
laws, pharmacy laws, or consumer product safety laws.
 
(b)           All products designed, developed, investigated, manufactured,
prepared, assembled, packaged, tested, labeled, distributed, sold or marketed by
or on behalf of the Loan Parties that are subject to the jurisdiction of the FDA
or a comparable governmental authority, have been and are being designed,
developed, investigated, manufactured, prepared, assembled, packaged, tested,
labeled, distributed, sold and marketed in compliance in all material respects
with the Public Health Laws and all other Requirements of Law, including,
without limitation, clinical and non-clinical evaluation, product approval or
clearance, premarketing notification, good manufacturing practices, labeling,
advertising and promotion, record-keeping, establishment registration and
listing, reporting of recalls, and adverse event reporting.
 
 
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(c)           No Loan Party is subject to any obligation arising under an
administrative or regulatory action, proceeding, investigation or inspection by
or on behalf of a governmental authority (including, without limitation, the
FDA), warning letter, notice of violation letter,  consent decree, or request
for information or other notice, response or commitment, the compliance with
which may reasonably be expected to have a Material Adverse Effect, that is made
to or with the FDA or any comparable governmental authority, and no such
obligation has been threatened.  Except as otherwise disclosed on Schedule B,
there is no, and there is no act, omission, event, or circumstance of which any
Loan Party has knowledge that would reasonably be expected to give rise to or
lead to any civil, criminal or administrative action, suit, demand, claim,
complaint, hearing, investigation, demand letter, warning letter, proceeding or
request for information pending against any Loan Party.  To each Loan Party’s
knowledge, there has not been any violation of any Public Health Laws by any
Loan Party in its product development efforts, submissions, record keeping and
reports to the FDA or any other comparable governmental authority that could
reasonably be expected to require or lead to investigation, corrective action or
enforcement, regulatory or administrative action that could reasonably be
expected to have a Material Adverse Effect.  To the knowledge of each Loan
Party, there are no civil or criminal proceedings relating to any Loan Party or
any officer, director or employee of any Loan Party that involve a matter within
or related to the FDA’s any other comparable governmental authority’s
jurisdiction except as otherwise disclosed on Schedule B.
 
(d)           As of the Closing Date, no Loan Party is undergoing any inspection
related to any activities or products of the Loan Parties that are subject to
Public Health Laws, or any other governmental authority investigation except as
set forth on Schedule B.
 
(e)           During the period of six calendar years immediately preceding the
Closing Date, no Loan Party has introduced into commercial distribution any
products manufactured by or on behalf of any Loan Party or distributed any
products on behalf of another manufacturer that were upon their shipment by any
Loan Party adulterated or misbranded in violation of 21 U.S.C. § 331. The Loan
Parties have not received any notice or communication from the FDA or comparable
governmental authority alleging material noncompliance with any Requirement of
Law. Except as otherwise disclosed on Schedule B, no product has been seized,
withdrawn, recalled, detained, or subject to a suspension (other than in the
ordinary course of business) of research, manufacturing, distribution or
commercialization activity, and there are no facts or circumstances reasonably
likely to cause (i) the seizure, denial, withdrawal, recall, detention, public
health notification, safety alert or suspension of manufacturing or other
activity relating to any product; (ii) a change in the labeling of any product
suggesting a compliance issue or risk; or (iii) a termination, seizure or
suspension of manufacturing, researching, distributing or marketing of any
product.  No proceedings in the United States or any other jurisdiction seeking
the withdrawal, recall, revocation, suspension, import detention, or seizure of
any product are pending or threatened against any Loan Party.
 
(f)            No Loan Party nor any of its respective officers, directors,
employees, agents or contractors (i) have been excluded or debarred from any
federal healthcare program (including without limitation Medicare or Medicaid)
or any other federal program or (ii) have received notice from the FDA or any
other comparable governmental authority with respect to debarment or
disqualification of any person that could reasonably be expected to have a
Material Adverse Effect. No Loan Party nor any of its respective officers,
directors, employees, agents or contractors have been convicted of any crime or
engaged in any conduct for which (x) debarment is mandated or permitted by 21
U.S.C. § 335a or (y) such person or entity could be excluded from participating
in the federal health care programs under Section 1128 of the Social Security
Act or any similar law.  To the knowledge of each Loan Party, no officer,
employee or agent of any Loan Party, has (aa) made any untrue statement of
material fact or fraudulent statement to the FDA or any other comparable
governmental authority; (bb) failed to disclose a material fact required to be
disclosed to the FDA or any other comparable governmental authority; or (cc)
committed an act, made a statement, or failed to make a statement that would
reasonably be expected to provide the basis for the FDA or any other comparable
governmental authority to invoke its policy respecting “Fraud, Untrue Statements
of Material Facts, Bribery, and Illegal Gratuities,” as set forth in 56 Fed.
Reg. 46191 (September 10, 1991).
 
 
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“Requirements of Law” means, with respect to any Person, the common law and any
federal, state, local, foreign, multinational or international laws, statutes,
codes, treaties, standards, rules and regulations, ordinances, orders,
judgments, writs, injunctions, decrees (including administrative or judicial
precedents or authorities) and other legally binding requirements of any
governmental authority that are applicable to such Person or any of its
property.

“Person” means any individual, partnership, corporation (including a business
trust and a public benefit corporation), joint stock company, estate,
association, firm, enterprise, trust, limited liability company, unincorporated
association, joint venture and any other entity or governmental authority.

5.14          Environmental Matters.  In each case as of the Closing Date and
except where any failures to comply would not reasonably be expected to result
in, either individually or in the aggregate, Environmental Liabilities (as
defined below) in excess of $250,000 to the Loan Parties and their Subsidiaries,
(a) the operations of each Loan Party and each Subsidiary of each Loan Party are
and have been in compliance with all applicable Environmental Laws (as defined
below), including obtaining, maintaining and complying with all Permits (as
defined below) required by any applicable Environmental Law, (b) no Loan Party
and no Subsidiary of any Loan Party is party to, and no Loan Party and no
Subsidiary of any Loan Party and no real property currently (or to the knowledge
of any Loan Party previously) owned, leased, subleased, operated or otherwise
used by or for any such Person is subject to or the subject of, any contractual
obligation or any pending (or, to the knowledge of any Loan Party, threatened)
order, action, investigation, suit, proceeding, audit, claim, demand, dispute or
notice of violation or of potential liability or similar notice relating in any
manner to any Environmental Law, (c) no Lien in favor of any governmental
authority securing, in whole or in part, Environmental Liabilities has attached
to any property of any Loan Party or any Subsidiary of any Loan Party and, to
the knowledge of any Loan Party, no facts, circumstances or conditions exist
that could reasonably be expected to result in any such Lien attaching to any
such property, (d) no Loan Party and no Subsidiary of any Loan Party has caused
or suffered to occur any Release (as defined below) of Hazardous Materials (as
defined below), (e) to the knowledge of any Loan Party there has been
no  Release of Hazardous Materials at any real property currently (or to the
knowledge of any Loan Party previously) owned, leased, subleased, operated or
otherwise used by or for any such Loan Party and each Subsidiary of each Loan
Party and (f) no Loan Party and no Subsidiary of any Loan Party (i) has
permitted any current or former tenant to engage in operations in violation of
any Environmental Law or (ii) knows of any facts, circumstances or conditions
reasonably constituting notice of a violation of any Environmental Law by any of
them, including receipt of any information request or notice of potential
responsibility under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or similar Environmental Laws.
 
“Environmental Laws” means all Requirements of Law and Permits imposing
liability or standards of conduct for or relating to the regulation and
protection of human health, safety, or the workplace (in each case to the extent
related to Hazardous Materials), the environment, Hazardous Materials, and
natural resources, including public notification requirements and environmental
transfer of ownership, notification or approval statutes.
 
 
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“Environmental Liabilities” means all claims, actions, suits, judgments,
damages, losses, liability, obligations, responsibilities, fines, penalties,
sanctions, costs, fees, taxes, commissions, charges, disbursements and expenses
(including without limitation, those incurred upon any appeal or in connection
with the preparation for and/or response to any subpoena or request for document
production relating thereto), in each case of any kind or nature (including
interest accrued thereon or as a result thereto and reasonable fees, charges and
disbursements of financial, legal and other advisors and consultants), whether
joint or several, whether or not indirect, contingent, consequential, actual,
punitive, treble or otherwise (including (i) costs of all actions required by
applicable Environmental Laws to (x) clean up, remove, treat or in any other way
address any Hazardous Material in the indoor or outdoor environment, (y) prevent
or minimize any Release or threat of a Release so that a Hazardous Material does
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment or (z) perform pre-remedial studies and
investigations and post-remedial monitoring and care with respect to any
Hazardous Material (collectively “Remedial Actions”) and (ii) natural resource
damages and costs and expenses of investigation and feasibility studies,
including the cost of environmental consultants and attorneys’ costs) that may
be imposed on, incurred by or asserted against any Loan Party or any Subsidiary
of any Loan Party as a result of, or related to, any claim, suit, action,
investigation, proceeding or demand by any Person, whether based in contract,
tort, strict liability, criminal or civil statute or common law or otherwise,
arising under any Environmental Law, including without limitation arising in
connection with any Release or threat of a Release and resulting from the
ownership, lease, sublease or other operation or use of property by any Loan
Party or any Subsidiary of any Loan Party, whether on, prior or after the date
hereof.

“Hazardous Material” means any substance, material or waste that is classified,
regulated or could otherwise give rise to liability under any Environmental Law
as hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including without limitation, petroleum or any
fraction thereof, asbestos, polychlorinated biphenyls and radioactive
substances.

“Permits” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other contractual obligations with, any
governmental authority, in each case applicable to such Person or any of its
property or to which such Person or any of its property is subject.

“Release” means any release, spill, emission, leaking, pumping, pouring,
emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Material into or through the
environment.

5.15          XOMA Bermuda and XOMA Development.   As of the Closing Date and
for long as such entity continues to exist, neither XOMA Bermuda nor XOMA
Development (i) has any assets, (ii) has any Indebtedness or other liabilities,
or (iii) conducts any business beyond the maintenance of its legal existence.
 
6.            AFFIRMATIVE COVENANTS.
 
6.1           Good Standing.  Each Loan Party shall maintain its and each of its
Subsidiaries’ existence and good standing (with respect to any jurisdiction
outside of the United States, to the extent applicable) in its jurisdiction of
organization (other than as a result of the Parent Redomestication, any
Subsidiary Redomestication or the Permitted Dissolutions (as defined in Section
6.13 below) and maintain qualification in each jurisdiction in which the failure
to so qualify could reasonably be expected to have a Material Adverse
Effect.  Each Loan Party shall maintain, and shall cause each of its
Subsidiaries to maintain, in full force all licenses, approvals and agreements,
the loss of which could reasonably be expected to have a Material Adverse
Effect.  “Subsidiary” means, with respect to a Loan Party, any entity the
management of which is, directly or indirectly controlled by, or of which an
aggregate of more than 50% of the outstanding voting capital stock (or other
voting equity interest) is, at the time, owned or controlled, directly or
indirectly by, such Loan Party or one or more Subsidiaries of such Loan Party,
and, unless the context otherwise requires each reference to a Subsidiary herein
shall be a reference to a Subsidiary of Borrower.
 
 
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6.2           Notice to Agent and the Lenders.  Loan Parties shall provide Agent
with (a) notice of any change in any material respect (except that in each case
such materiality qualifier shall not be applicable to any representation or
warranty that is already expressly qualified or modified by materiality in the
text thereof) in the accuracy of the Perfection Certificate promptly (but in any
event within six (6) Business Days) after the date on which any Responsible
Officer (as defined below) of a Loan Party obtains knowledge of the occurrence
of any such change, (b) notice of the occurrence of any Default or Event of
Default, promptly (but in any event within three (3) Business Days) after the
date on which any Responsible Officer of a Loan Party obtains knowledge of the
occurrence of any such event, (c) copies of all statements, reports and notices
made available generally by any Loan Party to its securityholders and all
documents filed with the Securities and Exchange Commission (“SEC”) or any
securities exchange or governmental authority exercising a similar function,
promptly (but in any event within five (5) Business Days) after delivering such
information to such persons; provided that notification to Agent by facsimile
transmission or electronic transmission of the filing of any such statement,
report or notice on the SEC’s Next-Generation EDGAR System shall satisfy the
notice and delivery requirements of this clause (c), (d) a report of any legal
actions pending or threatened against any Loan Party or any Subsidiary that
could reasonably be expected to result in damages or costs to any Loan Party or
any Subsidiary of $150,000 or more in excess of applicable insurance coverage,
promptly (but in any event within five (5) Business Days) after receipt of
notice thereof by a Responsible Officer of a Loan Party, including without
limitation any such legal actions alleging potential or actual violations of any
Public Health Law, (e) a list of new applications or registrations that any Loan
Party has made or filed in respect of any Intellectual Property or any material
change in status of any outstanding application or registration (other than any
change in status on an application or registration prosecuted by a third party
of which a Responsible Officer of the Loan Parties or the Borrower’s Director of
Intellectual Property has no knowledge) concurrently with the delivery of each
quarterly compliance certificate delivered pursuant to Section 6.3, (f) notice
of any breach or other event constituting a default or event of default under
any Material Agreement, promptly (but in any event within three (3) Business
Days) after the date on which any Responsible Officer of a Loan Party obtains
knowledge of the occurrence of any such event, (g) notice of any amendments to,
and copies of all statements, reports and notices (other than non-material
amendments, statements, reports and notices delivered in the ordinary course of
business) delivered to or by a Loan Party in connection with any Material
Agreement, promptly (but in any event within five (5) Business Days) after the
execution of any such amendment or the receipt of any statement, report or
notice by a Responsible Officer of any Loan Party, (h) copies of any notice that
the FDA or comparable governmental authority is limiting, suspending or revoking
any Registration, changing the market classification, distribution pathway or
parameters or labeling of the products of the Loan Parties, or considering any
of the foregoing, promptly (but in any event within three (3) Business Days)
after receipt thereof by a Responsible Officer of any Loan Party, (i) notice
that any Loan Party has become subject to any administrative or regulatory
action, FDA or comparable governmental authority inspection, Form FDA 483
observation, warning letter, notice of violation letter, or other enforcement
action, or notice, response or commitment, the compliance with which may be
reasonably expected to have a Material Adverse Effect, made to or with the FDA
or any comparable governmental authority, or notice that any product of any Loan
Party has been seized, withdrawn, recalled, detained, or subject to a suspension
of manufacturing, or the commencement of any proceedings in the United States or
any other jurisdiction seeking the withdrawal, recall, suspension, import
detention, or seizure of any product are pending or threatened against any Loan
Party, promptly (but in any event within three (3) Business Days) after receipt
thereof by a Responsible Officer of any Loan Party and (j) notice of any
material adverse deviation from the most recent annual operating plan of
Borrower delivered to Agent and Lenders in accordance with Section 6.3 promptly
(but in any event within three (3) Business Days) after the date on which any
Responsible Officer of a Loan Party obtains knowledge thereof.  “Responsible
Officer” shall mean the chief executive officer, president, chief financial
officer, chief medical officer, vice president of finance, general counsel,
executive vice president, chief scientific officer, vice president of regulatory
affairs and compliance, and any other officer with substantially the same
responsibility as any of the above.
 
 
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6.3           Financial Statements.  Borrower shall deliver to Agent and Lenders
(a) unaudited consolidated and, if available, consolidating balance sheets,
statements of operations and cash flow statements of Parent and its Subsidiaries
in the form attached hereto as Exhibit D-1 within 30 days of the end of each
calendar month, certified by Parent’s president, chief executive officer, chief
financial officer or general counsel, and (b) quarterly unaudited consolidated
and, if available, consolidating balance sheets, statements of operations and
cash flow statements of Parent and its Subsidiaries for each of the first three
fiscal quarters of each fiscal year of Parent and annual audited consolidated
and, if available, consolidating balance sheets, statements of operations and
cash flow statements of Parent and its Subsidiaries, certified by a recognized
firm of certified public accountants, in each case within five (5) Business Days
after such statements are required to be provided to the SEC.  All audited
financial statements delivered pursuant to this Section 6.3 shall be accompanied
by the report of an independent certified public accounting firm acceptable to
Agent (it being agreed that Ernst & Young LLP is acceptable to Agent) which
report shall (i) contain an unqualified opinion, stating that such consolidated
financial statements present fairly in all material respects the financial
position for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years and (ii) not include any explanatory paragraph
expressing substantial doubt as to going concern status.  All such annual and
quarterly statements are to be prepared using GAAP (subject, in the case of
unaudited financial statements, to the absence of footnotes and normal year end
audit adjustments) and are to be in compliance with applicable SEC
requirements.  All financial statements delivered pursuant to this Section 6.3
shall be accompanied by a compliance certificate, signed by the chief financial
officer or general counsel of Parent, in the form attached hereto as Exhibit
D-2, and the management discussion and analysis that is filed by the Parent with
the SEC for the respective fiscal period.  Borrower shall deliver to Agent and
Lenders (i) as soon as available and in any event not later than 75 days after
the end of each fiscal year of Parent, the annual operating plan for Parent, on
a consolidated basis, approved by the Board of Directors of Parent, for the
current fiscal year, and (ii) such budgets, sales projections, or other
business, financial, corporate affairs and other information as Agent or any
Lender may reasonably request from time to time.
 
6.4           Insurance.  Each Loan Party, at its expense, shall maintain, and
shall cause each Subsidiary to maintain, insurance (including, without
limitation, (a) comprehensive general liability, hazard, and business
interruption insurance and (b) with respect to any real property subject to a
Mortgage which is located in a Special Flood Hazard Area (as defined below),
Federal Flood Insurance (as defined below), or to the extent not available,
private flood insurance, in each case with respect to all of its properties and
businesses (including, the Collateral), in such amounts and covering such risks
as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated and in any event with deductible
amounts, insurers and policies that shall be reasonably acceptable to
Agent.  Borrower shall deliver to Agent certificates of insurance evidencing
such coverage, together with endorsements to such policies naming Agent as a
lender loss payee or additional insured, as appropriate, in form and substance
reasonably satisfactory to Agent.  Each policy shall provide that coverage may
not be canceled by the insurer except upon 30 days prior written notice to Agent
and shall not be subject to co-insurance.  Each Loan Party appoints Agent as its
attorney-in-fact to make, settle and adjust all claims under and decisions with
respect to such Loan Party’s policies of insurance, and to receive payment of
and execute or endorse all documents, checks or drafts in connection with
insurance payments. Agent shall not act as such Loan Party’s attorney-in-fact
unless an Event of Default has occurred and is continuing.  The appointment of
Agent as any Loan Party’s attorney in fact is a power coupled with an interest
and is irrevocable until all of the Obligations are paid in full in cash.
Proceeds of insurance shall be applied, at the option of Agent, to repair or
replace the Collateral or to reduce any of the Obligations.  “Federal Flood
Insurance” means Federally backed Flood Insurance available under the program
created by the U.S. Congress pursuant to the National Flood Insurance Act of
1968 and the Flood Disaster Protection Act of 1973, as revised by the National
Flood Insurance Reform Act of 1994, that mandates the purchase of flood
insurance to cover real property improvements located in Special Flood Hazard
Areas in participating communities and provides protection to property owners
through a Federal insurance program.  “Special Flood Hazard Area” means an area
that the Federal Emergency Management Agency’s current flood maps indicate has
at least a one percent (1%) chance of a flood equal to or exceeding the base
flood elevation (a 100-year flood) in any given year.
 
 
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6.5           Taxes.  Each Loan Party shall, and shall cause each Subsidiary to,
timely file all foreign, United States federal, California and other material
state and local tax reports and pay and discharge all foreign, United States
federal, California and other material state and local taxes, assessments and
governmental charges or levies imposed upon it, or its income or profits or upon
its properties or any part thereof, before the same shall be in default and
before the date on which penalties attach thereto, except to the extent such
taxes, assessments and governmental charges or levies are the subject of a
Permitted Contest.
 
6.6           Agreement with Landlord/Bailee.  Unless otherwise agreed to by
Agent in writing, each Loan Party shall obtain and maintain a landlord consent
and/or bailee letter in favor of Agent executed by the applicable landlord or
bailee (in the form attached hereto as Exhibit C-1 or Exhibit C-2, as
applicable, or in such other form as is reasonably acceptable to Agent, each an
“Access Agreement”)) with respect to any real property (other than real property
owned in fee simple by a Loan Party) on which (a) a Loan Party’s principal place
of business is located, (b) a Loan Party’s books or records are located or (c)
Collateral is located (other than Collateral with an aggregate value of less
than of $400,000) as Agent may require.  If Agent agrees in writing that a Loan
Party shall not be required to obtain and maintain an Access Agreement with
respect to any real property described in the immediately preceding sentence,
then concurrently with the delivery of each compliance certificate pursuant to
Section 6.3, the Borrower shall certify to Agent (1) that all payments under
such lease have been paid when due and (2) that no default or event of default
exists under such lease.
 
6.7           Real Property.  Upon request of the Agent, each Loan Party shall
deliver to it (a) an appraisal complying with and to the extent required by
FIRREA, (b) within forty-five days of receipt of notice from Agent that real
property of the Loan Parties is located in a Special Flood Hazard Area, Federal
Flood Insurance, and (c) a Mortgage on any real property owned by any Loan
Party, together with all Mortgage Supporting Documents relating thereto (or, if
such real property is located in a jurisdiction outside the United States,
similar documents deemed appropriate by the Agent to obtain the equivalent in
such jurisdiction of a first-priority mortgage on such owned real property).
 
6.8           Protection of Intellectual Property.  Each Loan Party shall take
all necessary actions to: (a) protect, defend and maintain the validity and
enforceability of its Material Intellectual Property, (b) promptly advise Agent
in writing of material infringements of its Material Intellectual Property and
take all appropriate actions to enforce its rights in its Material Intellectual
Property against infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, (c) not
allow any Material Intellectual Property to be abandoned, forfeited or dedicated
to the public without Agent’s written consent, and (d) notify Agent promptly,
but in any event within ten (10) Business Days, if it knows or has reason to
know (i) that any application or registration relating to any Material
Intellectual Property may become abandoned or dedicated, or (ii) if any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) has occurred
regarding such Loan Party’s ownership of any Material Intellectual Property, its
right to register the same, or to keep and maintain the same.  Each Loan Party
shall remain liable under each of its Intellectual Property licenses pursuant to
which it is a licensee (“Licenses”) to observe and perform all of the material
conditions and material obligations to be observed and performed by it
thereunder.  None of Agent or any Lender shall have any obligation or liability
under any such License by reason of or arising out of this Agreement, the
granting of a Lien, if any, in such License or the receipt by Agent (on behalf
of itself and Lenders) of any payment relating to any such License.  None of
Agent or any Lender shall be required or obligated in any manner to perform or
fulfill any of the obligations of any Loan Party under or pursuant to any
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any License, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or which it may be entitled at any time or times.
 
 
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6.9           Special Collateral Covenants.
 
(a)           Each Loan Party shall remain in possession of its respective
Collateral solely at (i) the location(s) specified on the Perfection
Certificate, except (A) as expressly permitted under Sections 7.3 or 7.5, (B) to
the extent such Collateral is in transit or undergoing maintenance or repair, or
(C) to the extent such Collateral constitutes “work in process” in the ordinary
course of business temporarily in the possession of a third party, and (ii)
other locations where portable goods of a de minimis value (such as laptops,
phones and other similar equipment) may be located in the ordinary course of
business; except that Agent, on behalf of itself and the Lenders, shall have the
right to possess (x) any chattel paper or instrument that constitutes a part of
the Collateral, (y) any other Collateral in which Agent’s security interest (on
behalf of itself and the Lenders) may be perfected only by possession and (z)
any Collateral after the occurrence of an Event of Default in accordance with
this Agreement and the other Transaction Documents.
 
(b)           Each Loan Party shall (i) use the Collateral only in its trade or
business, (ii) maintain all of the Collateral in good operating order and
repair, normal wear and tear excepted, and (iii) use and maintain the Collateral
only in compliance with manufacturers’ recommendations or prudent industry
practices and all applicable laws, in each case except to the extent the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
 
(c)           The Agent and Lenders do not authorize and each Loan Party agrees
it shall not (i) remove any of its cash, Cash Equivalents or tangible assets
from, or maintain any of its cash, Cash Equivalents or tangible assets outside
of, the continental United States or (ii) remove any of its intangible assets
from, or maintain any of its intangible assets outside of, the United States,
Bermuda or Ireland, except in each case, (A) registrations of Intellectual
Property in each applicable jurisdiction of registration, (B) as expressly
permitted under clauses (a)(i)(B), (a)(i)(C) and (a)(ii) of this Section 6.9,
(C) office furniture and other related office equipment with an aggregate value
not to exceed $25,000, and (D) cash and Cash Equivalents in deposit accounts or
securities accounts maintained in Ireland so long as for purposes of this clause
(D), (1) the Agent has a first priority perfected Lien in such deposit accounts
or security accounts pursuant to fully executed Account Control Agreements, and
(2) no cash or Cash Equivalents are transferred from deposit accounts or
securities accounts in the United States to deposit accounts or securities
accounts in Ireland other than an amount equal to the actual out-of-pocket
costs, fees and expenses incurred or to be incurred by XOMA Ireland in the
ordinary course of business and used by XOMA Ireland to pay such costs, fees and
expenses within five (5) Business Days of such transfer, so long as (x) before
and after giving effect to such transfer, no Default or Event of Default shall
have occurred and be continuing or would result therefrom and (y) after giving
effect to such transfer and the payment of the related out-of-pocket costs, fees
and expenses, the aggregate amount of cash and Cash Equivalents maintained by
the Loan Parties in deposit accounts and securities accounts outside the United
States does not exceed $3,000,000 (or the Euro equivalent thereof).
 
 
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(d)           Each Loan Party shall pay promptly when due all documentary,
stamp, recording, excise and other similar taxes, charges, license fees, and
assessments levied or assessed on any of the Collateral, on its use, or on this
Agreement or any of the other Transaction Documents.  At its option, Agent may,
upon written notice to the applicable Loan Party and only after the occurrence
of an Event of Default,  discharge taxes, Liens, security interests or other
encumbrances at any time levied or placed on the Collateral and may pay for the
maintenance, insurance and preservation of the Collateral and effect compliance
with the terms of this Agreement or any of the other Transaction
Documents.  Each Loan Party agrees to reimburse Agent, on demand, all costs and
expenses incurred by Agent in connection with such payment or performance and
agrees that such reimbursement obligation shall constitute Obligations.
 
(e)           Each Loan Party shall, at all times, keep reasonably accurate and
complete records of the Collateral.
 
(f)            Each Loan Party agrees and acknowledges that any third person who
may at any time possess all or any portion of the Collateral shall be deemed to
hold, and shall hold, the Collateral as the agent of, and as pledge holder for,
Agent (on behalf of itself and Lenders). Agent may at any time give notice to
any third person described in the preceding sentence that such third person is
holding the Collateral as the agent of, and as pledge holder for, Agent (on
behalf of itself and Lenders).
 
(g)           Each Loan Party shall, during normal business hours, and in the
absence of a Default or an Event of Default, upon three (3) Business Days’ prior
notice, as frequently as Agent reasonably determines to be appropriate: (i)
provide Agent (who may be accompanied by representatives of any Lender at such
Lender’s sole expense except as otherwise agreed in Section 10.6) and any of its
officers, employees and agents access to the properties, facilities, principal
advisors and employees (including officers) of each Loan Party and to the
Collateral, (ii) permit Agent (who may be accompanied by representatives of any
Lender at such Lender’s sole expense except as otherwise agreed in Section
10.6), and any of its officers, employees and agents, to inspect, audit and make
extracts from any Loan Party’s books and records (or at the request of Agent,
deliver true and correct copies of such books and records to Agent), and (iii)
permit Agent (who may be accompanied by representatives of any Lender at such
Lender’s sole expense), and its officers, employees and agents, to inspect,
audit, appraise, review, evaluate and make test verifications and counts of the
Collateral of any Loan Party; provided, that, so long as no Default or Event of
Default has occurred and is continuing, the Loan Parties shall only be required
to reimburse Agent and any applicable Lender for costs and expenses under
Section 10.6 with respect to two (2) such inspections and audits under this
Section 6.9(g) during any calendar year.  Upon Agent’s request, each Loan Party
will promptly notify Agent in writing of the location of any Collateral.  If a
Default or Event of Default has occurred and is continuing or if access is
necessary to preserve or protect the Collateral as determined by Agent, each
such Loan Party shall provide such access to Agent and to each Lender at all
times and without advance notice, and shall reimburse Agent and any applicable
Lender for all reasonable costs and expenses incurred in connection
therewith.  Each Loan Party shall make available to Agent and its auditors or
counsel, as quickly as is possible under the circumstances, originals or copies
of all books and records that Agent may reasonably request.  Notwithstanding any
other provision of this Agreement or any other Transaction Document, so long as
no Default or Event of Default then exists, each Loan Party shall have the right
in its good faith business judgment to deny or restrict the Agent, the Lenders
and their respective representatives, access to highly confidential and
proprietary scientific data and specifications.
 
 
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6.10           Further Assurances.  Each Loan Party shall, upon request of
Agent, furnish to Agent such further information, execute and deliver to Agent
such documents and instruments (including, without limitation, UCC financing
statements, Mortgages and Mortgage Supporting Documents) and shall do such other
acts and things as Agent may at any time reasonably request relating to the
perfection or protection of the security interest created by this Agreement or
any other Transaction Document or for the purpose of carrying out the intent of
this Agreement and the other Transaction Documents.
 
6.11           Compliance with Law.  Each Loan Party shall comply with all
applicable statutes, rules, regulations, standards, policies and orders
administered or issued by any governmental authority having jurisdiction over
it, its business or its products, except where the failure to comply would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.  Without limiting the generality of the foregoing, each
Loan Party shall comply with all Public Health Laws and their implementation by
any applicable governmental authority and all lawful requests of any
governmental authority applicable to its products, except where the failure to
comply would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.  All products developed, manufactured,
tested, distributed or marketed by or on behalf of any Loan Party that are
subject to the jurisdiction of the FDA or comparable governmental authority
shall be developed, tested, manufactured, distributed and marketed in compliance
with the Public Health Laws and any other Requirements of Law, including,
without limitation, product approval or premarket notification, good
manufacturing practices, labeling, advertising, record-keeping, and adverse
event reporting, and have been and are being tested, investigated, distributed,
marketed, and sold in compliance with Public Health Laws and all other
Requirements of Law, except where the failure to comply would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.
 
6.12           Environmental Matters.  Each Loan Party shall, and shall cause
each of its Subsidiaries to, comply with, and maintain its real property,
whether owned, leased, subleased or otherwise operated or used, in compliance
with, all applicable Environmental Laws (including by implementing any Remedial
Actions necessary to achieve such compliance) or that is required by orders or
legally binding directives of any governmental authority under any applicable
Environmental Law except where the failure to comply would not reasonably be
expected to, individually or in the aggregate, result in Environmental
Liabilities (excluding legal fees and expenses) in excess of $250,000.  Without
limiting the foregoing, if an Event of Default is continuing or if Agent at any
time has a reasonable basis to believe that there exist violations of
Environmental Laws by any Loan Party or any Subsidiary of any Loan Party or that
there exist any Environmental Liabilities, in each case that could reasonably be
expected to result in Environmental Liabilities in excess of $250,000, then each
Loan Party shall, promptly upon receipt of request from Agent, cause the
performance of, or allow Agent and its Related Persons access to such real
property for the purpose of conducting, such environmental audits and
assessments, including subsurface sampling of soil and groundwater, and cause
the preparation of such reports, in each case as Agent may from time to time
reasonably request.  Such audits, assessments and reports, to the extent not
conducted by Agent or its designee, shall be conducted and prepared by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance reasonably acceptable to Agent.
 
 
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6.13          Post Closing Covenants.
 
 
(a)            Letters of Resignation. No later than 30 days after the Closing
Date (or such later date as the Agent shall approve in writing), Borrower shall
deliver executed but undated letters of resignation from each of the directors,
alternate directors and Secretary of XOMA Technology to the extent the same are
not delivered to Agent on or before the Closing Date.
 
(b)           Access Agreement.  No later than 45 days after the Closing Date
(or such later date as the Agent shall approve in writing), the Loan Parties
shall have used commercially reasonable efforts to deliver Access Agreements for
the leased locations of the Loan Parties located at (i) 2910 7th St., Berkeley,
CA 94710, (ii) 830/890 Heinz Ave., Berkeley, CA 94710, (iii) 804 Heinz Ave.,
Berkeley, CA 94710, (iv) 5854/5860 Hollis St., Emeryville, CA 94608, and (v) 820
Heinz Ave., Berkeley, CA 94710 (collectively, the “Space Lease Locations”).
 
(c)           Subsidiary Dissolutions.  On or prior to March 31, 2012 (or such
later date as the Agent shall approve in writing), each of XOMA Bermuda and XOMA
Development shall either (x) be dissolved and/or its existence terminated and
all assets of XOMA Bermuda or XOMA Development, as the case may be, shall be
transferred to another Loan Party organized in the U.S. (or in the case of XOMA
Bermuda another Loan Party organized in Bermuda) prior to such dissolution
and/or termination (the “Permitted Dissolutions”) or (y) have become a Loan
Party (with all of its capital stock pledged to secure the Obligations) pursuant
to such joinder agreements, guaranties and security documents as the Agent shall
require, accompanied by legal opinions, filings, board resolutions,
organizational documents of the type that would have been delivered if XOMA
Bermuda or XOMA Development, as the case may be, had been a Loan Party on the
Closing Date.
 
7.             NEGATIVE COVENANTS
 
7.1           Liens.  No Loan Party shall, and no Loan Party shall permit any of
its Subsidiaries to, create, incur, assume or permit to exist any Lien on any
Intellectual Property or any of its other assets, other than (a) Liens of the
type described in clauses (a) through (l) of Section 5.7 above, (b) Liens
granted by the [*] Subsidiary on the [*] (as defined below) and proceeds thereof
securing Indebtedness permitted under Section 7.2(d) below, (c) Liens granted by
the [*] Subsidiary on the [*] (as defined below) and proceeds thereof securing
Indebtedness permitted under Section 7.2(e) below, (d) Liens on Excluded
Negative Pledge Assets in favor of the applicable third party that is the
counterparty to the applicable permitted collaboration or development
arrangement with a Loan Party or other permitted transaction relating to the
Excluded Negative Pledge Assets securing obligations of such Loan Party arising
under such arrangement or transaction, (e) Liens in favor of the United States
government on inventions and other Intellectual Property created or produced
pursuant to contractual obligations between any Loan Party and the United States
government pursuant to 48 C.F.R. 52.227-11 (or by incorporation of such statute
into any contractual obligations), (f) solely to the extent the transactions
described in that certain Royalty Purchase Agreement (the “CIMZIA Royalty
Purchase Agreement”), dated as of August 12, 2010, by and among XOMA CDRA LLC, a
Delaware limited liability company (“XOMA CDRA”), Borrower, Parent and the
purchaser named therein are recharacterised as a secured financing, Liens
granted by XOMA CDRA on the Purchased Interest and Additional Collateral (in
each case as defined in the CIMZIA Royalty Purchase Agreement as in effect on
the date hereof), (g) Liens securing Indebtedness permitted to be incurred under
Section 7.2(i) so long as such Liens do not extend to any property of any Loan
Party other than the Intellectual Property and/or related contract rights that
are the subject of the collaboration to which such Indebtedness relates, (h) to
the extent it constitutes a Lien, the obligation of the Borrower to [*] (as
defined in Section 7.2(l) below) and (i) Liens on any XMET Assets securing
obligations other than Indebtedness pursuant to an XMET License Agreement so
long as such Liens do not extend to any property of any Loan Party other than
the XMET Assets that are the subject of such XMET License Agreement.  No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to, grant
any negative pledges on any Intellectual Property or any of its other assets,
other than (a) this Section 7.1, (b) negative pledges on the [*] and proceeds
thereof in favor of the holders of the Indebtedness permitted under Section
7.2(d) below, (c) negative pledges on the [*] and proceeds thereof in favor of
the holders of the Indebtedness permitted under Section 7.2(e) below, (d) other
restrictions applying only to Excluded Negative Pledge Assets imposed by the
applicable third party that is the counterparty to the applicable permitted
collaboration arrangement or other permitted transaction relating to such
Excluded Negative Pledge Asset, (e) negative pledges on the Intellectual
Property and/or contract rights that are the subject of a collaboration of the
type referred to in Section 7.2(i), (f) negative pledges or other restrictions
in any document or instrument governing Liens permitted pursuant to Section
5.7(d) provided that any such negative pledge or restriction contained therein
relates solely to the asset or assets subject to such permitted Liens, and (g)
negative pledges or other restrictions with respect to the XMET Assets set forth
in an XMET License Agreement so long as such negative pledges and other
restrictions do not extend to any property of any Loan Party other than the XMET
Assets that are the subject of such XMET License Agreement.
 
 
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“Excluded Negative Pledge Asset” shall mean Excluded Collateral (as defined in
the US Security Agreement) consisting of (a) Intellectual Property constituting
XOMA-052 (including without limitation all Collateral (as defined in that
certain Loan Agreement, dated as of December 30, 2010, by and between XOMA
Ireland and Servier, as in effect on the date hereof, the “Servier Loan
Agreement”)), or Anti-Botulism Antibody Products (as defined below), (b) the
Borrower’s contract rights in the collaboration and related agreements (the
“Novartis Contract Rights”) currently in place with Novartis (including without
limitation all Collateral (as defined in that certain Secured Note Agreement,
dated as of May 26, 2005, by and between Novartis and Borrower, as amended and
as in effect as of the date hereof, the “Novartis Loan Agreement”)), (c) the
[*], the [*] and proceeds thereof and (d) solely to the extent the transactions
described in the CIMZIA Royalty Purchase Agreement are recharacterised as a
secured financing, the assets of XOMA CDRA pledged under the CIMZIA Royalty
Purchase Agreement (including the Purchased Interest and Additional Collateral
as such terms are defined in the CIMZIA Royalty Purchase Agreement as in effect
on the date hereof).  As used herein, “Anti-Botulism Antibody Products” means
the antibody products known as XOMA 3AB (antibodies to serotype A), XOMA 3BB
(antibodies to serotype B), XOMA 3EB (antibodies to serotype E) and XOMA 4CD
(antibodies to serotype C and D), as well as the planned antibody products to
the F and G serotypes.
 
7.2           Indebtedness.  No Loan Party shall, and no Loan Party shall permit
any of its Subsidiaries to, directly or indirectly create, incur, assume, permit
to exist, guarantee or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness (as hereinafter defined), except for
 
(a)           the Obligations;
 
(b)           Indebtedness existing on the date hereof and set forth on Schedule
B to this Agreement;
 
(c)           Indebtedness consisting of capitalized lease obligations and
purchase money Indebtedness, in each case incurred by Borrower or any of its
Subsidiaries to finance the acquisition, repair, improvement or construction of
fixed or capital assets of such person, provided that (i) the aggregate
outstanding principal amount of all such Indebtedness, together with any
Indebtedness incurred pursuant to clause (m) below to refinance such
Indebtedness (or other refinancings thereof), does not exceed $500,000 at any
time and (ii) the principal amount of such Indebtedness does not exceed the
lower of the cost or fair market value of the property so acquired or built or
of such repairs or improvements financed with such Indebtedness (each measured
at the time of such acquisition, repair, improvement or construction is made);
provided, however, that any change in GAAP occurring after the Closing Date
shall not cause any lease existing on the date such change becomes effective
that was not a capitalized lease prior to such change to be deemed a capitalized
lease, and the obligations with respect thereto shall not constitute capitalized
lease obligations;
 
 
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(d)           Indebtedness of the [*] Subsidiary so long as no Loan Party or any
other Subsidiary or Affiliate of any Loan Party is directly, contingently or
otherwise indirectly obligated with respect to such Indebtedness or otherwise
provides any form of credit support to secure such Indebtedness;
 
(e)           Indebtedness of the [*] Subsidiary so long as no Loan Party or any
other Subsidiary or Affiliate of any Loan Party is directly, contingently or
otherwise indirectly obligated with respect to such Indebtedness or otherwise
provides any form of credit support to secure such Indebtedness;
 
(f)            Indebtedness of XOMA Ireland owed to Servier pursuant to the
Servier Loan Agreement in an aggregate principal amount not to exceed
€17,500,000;
 
(g)           Indebtedness of Borrower owed to Novartis pursuant to the Novartis
Loan Agreement in an aggregate principal amount not to exceed $17,000,000;
 
(h)           Indebtedness owing by any Loan Party to another Loan Party,
provided that (i) each Loan Party shall have executed and delivered to each
other Loan Party a demand note (each, an “Intercompany Note”) to evidence such
intercompany loans or advances owing at any time by each Loan Party to the other
Loan Parties, which Intercompany Note shall be in form and substance reasonably
satisfactory to Agent (it being agreed that the form signed and delivered on the
Closing Date pursuant to Section 4.1(u) is satisfactory to Agent and satisfies
the requirements of this Section 7.2(h)) and shall be pledged and delivered to
Agent pursuant to the Pledge Agreement as additional Collateral for the
Obligations, (ii) any and all Indebtedness of any Loan Party to another Loan
Party shall be subordinated to the Obligations pursuant to the subordination
terms set forth in each Intercompany Note, and (iii) no Default or Event of
Default would occur either before or after giving effect to any such
Indebtedness;
 
(i)            Indebtedness incurred in connection with a bona fide corporate
collaboration in the ordinary course of business and consistent with past
practice; provided, that (i) such Indebtedness shall be unsecured except to the
extent permitted to be secured pursuant to Section 7.1(g), (ii) no Default or
Event of Default shall have occurred and be continuing both before and after
incurring such Indebtedness, (iii) the incurrence of such Indebtedness shall
have been approved by the board of directors of the applicable Loan Party, (iv)
the aggregate outstanding principal amount of all such Indebtedness, together
with any Indebtedness incurred pursuant to clause (m) below to refinance such
Indebtedness (or other refinancings thereof), does not exceed $10,000,000 at any
time, (v) such Indebtedness shall not require any Loan Party to make any
payments prior to the date that is at least 180 days after the Termination Date
(as defined below in Section 10.10) other than regularly scheduled interest
payments at a rate not to exceed 14.05% per annum, and (vi) such Indebtedness is
otherwise on, and subject to, such terms and conditions as are reasonably
acceptable to Agent;
 
(j)            Indebtedness of any Loan Party arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business in an
aggregate amount not to exceed $10,000 at any time outstanding, provided that
any such Indebtedness is extinguished within ten (10) Business Days of its
incurrence;
 
 
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(k)           obligations of any Loan Party under any foreign exchange contract,
currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks to any Loan Party
arising from fluctuations in currency values or interest rates entered into in
the ordinary course of business and not for speculative purposes, so long as the
aggregate exposure of the Loan Parties does not exceed $4,000,000 at any time;
 
(l)            obligations owed by the Borrower to Medpace, Inc. pursuant to
that certain Amendment No. 1 thereto, dated as of October 4, 2011, by and among
the Borrower and Medpace, Inc. (the “Medpace First Amendment”), which amends
that certain Master Services Agreement, dated as of November 9, 2009, by and
among the Borrower and Medpace, Inc. (as so amended, the “Medpace Agreement”),
in an aggregate principal amount not to exceed $[*], less any payments of such
obligations by the Loan Parties under the Medpace First Amendment from time to
time;
 
(m)           extensions, refinancings, modifications, amendments and
restatements of any items of Indebtedness described in clauses (c), (f), (g) and
(i) above, provided that the principal amount thereof is not increased (other
than an increase in the amount of accrued and unpaid interest, prepayment
premiums and other fees and expenses associated with such extension,
refinancing, modification, amendment or restatement), and the terms thereof are
not modified to impose more burdensome terms upon any Loan Party or its
Subsidiary, as the case may be; and
 
(n)           other Indebtedness not otherwise permitted under this Section 7.2
in aggregate principal amount not to exceed $100,000 at any time.
 
The term “Indebtedness” means, with respect to any person, at any date, without
duplication, (i) all obligations of such person for borrowed money, (ii) all
obligations of such person evidenced by bonds, debentures, notes or other
similar instruments, or upon which interest payments are customarily made, (iii)
all obligations of such person to pay the deferred purchase price of property or
services, but excluding obligations to trade creditors incurred in the ordinary
course of business and not past due by more than 90 days, (iv) all capital lease
obligations of such person, (v) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product, (vi) all obligations of such person
to purchase securities (or other property) which arise out of or in connection
with the issuance or sale of the same or substantially similar securities (or
property), (vii) all contingent or non-contingent obligations of such person to
reimburse any bank or other person in respect of amounts paid under a letter of
credit or similar instrument, (viii) all equity securities of such person
subject to repurchase or redemption otherwise than at the sole option of such
person, (ix) all “earnouts” and similar payment obligations of such person (it
being understood, for the purposes of this clause (ix), that milestone and
royalty payments to be made in the ordinary course of business pursuant to
licensing agreements permitted hereunder, which do not constitute seller
financing, shall not be deemed to be “earnouts”), (x) all indebtedness secured
by a Lien on any asset of such person, whether or not such indebtedness is
otherwise an obligation of such person, (xi) all obligations of such person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, and (xii) all
obligations or liabilities of others guaranteed by such person.
 
 
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7.3           Dispositions.  No Loan Party shall, and no Loan Party shall permit
any of its Subsidiaries to, convey, sell, rent, lease, sublease, mortgage,
license, transfer or otherwise dispose of (collectively, “Transfer”) any of the
Collateral or any Intellectual Property, except for the following (collectively,
“Permitted Dispositions”):  (a) sales of inventory in the ordinary course of
business, (b) dispositions by a Loan Party or any of its Subsidiaries of
tangible assets that are no longer used or useful in the business of such Loan
Party or Subsidiary for cash and fair value so long as (i) no Default or Event
of Default exists at the time of such disposition or would be caused after
giving effect thereto and (ii) the fair market value of all such assets disposed
of does not exceed $1,000,000 in any calendar year, (c) non-exclusive licenses
and exclusive licenses for the use of any Loan Party’s Intellectual Property in
the ordinary course of business, so long as (i) no Default or Event of Default
has occurred and is continuing at the time of such Transfer or would result
therefrom, (ii) such license constitutes an arms-length transaction in the
ordinary course of business (and in the case of an exclusive license, made in
connection with a bona fide corporate collaboration in the ordinary course of
business and approved by the board of directors of the applicable Loan Party)
and the terms of which, on their face, (A) do not provide for a sale or
assignment (other than to the extent such assignment constitutes a Lien
permitted under clause (g) or (i) of the first sentence of Section 7.1) of any
Intellectual Property and (B) do not restrict (other than as permitted under
clause (e) or (g) of the second sentence of Section 7.1) such Loan Party’s
ability to pledge, grant a security interest in or Lien on, or assign or
otherwise Transfer any Intellectual Property, (iii) the applicable Loan Party
delivers seven (7) Business Days prior written notice and a brief summary of the
terms of such license to Agent, (iv) the applicable Loan Party delivers to Agent
copies of the final executed licensing documents in connection with such license
within five (5) Business Days upon consummation of such license (provided that
the applicable Loan Party shall use commercially reasonable efforts to ensure
that the confidentiality provisions of such licensing documentation permit the
applicable Loan Party to deliver such documents to Agent, and if the applicable
Loan Party fails to obtain such permission, the applicable Loan Party shall
deliver to Agent and Lenders such licensing documentation redacted to the extent
necessary to comply with such confidentiality restrictions) and (v) all
royalties, milestone payments or other proceeds arising from the licensing
agreement are paid to a deposit account or securities account that is governed
by an Account Control Agreement, (d) Transfers of Antibody Libraries and Related
Assets (as defined below) in the ordinary course of business, on arms-length
terms, to unaffiliated third parties so long as (i) no Default or Event of
Default has occurred and is continuing at the time of such Transfer, (ii) the
applicable Loan Party delivers seven (7) Business Days prior written notice and
a brief summary of the terms of such sale to Agent, (iii) the applicable Loan
Party delivers to Agent copies of the final executed transaction documents
within five (5) Business Days upon consummation of such transaction and (iv) all
proceeds arising from such transaction are paid to a deposit account or
securities account that is governed by an Account Control Agreement, (e) the
Transfer of the [*] to the [*] Subsidiary upon formation thereof, provided that
at the time of such Transfer no Default or Event of Default shall be continuing
or would result therefrom, (f) the Transfer of the [*] to the [*] Subsidiary
upon formation thereof, provided that at the time of such Transfer no Default or
Event of Default shall be continuing or would result therefrom, (g) Transfers of
assets from any Loan Party or any Subsidiary thereof to Borrower, (h) Transfers
of Intellectual Property from any Loan Party or any Subsidiary thereof to XOMA
Technology in the ordinary course of business consistent with past practice, (i)
Transfers of assets between XOMA Ireland and XOMA Technology, (j) Transfers of
cash and Cash Equivalents expressly permitted pursuant to clause (D) of the
exception to Section 6.9(c) and (k) the [*] Disposition so long as (i) no
Default or Event of Default has occurred and is continuing or would result
therefrom, (ii) the Borrower delivers seven (7) Business Days prior written
notice and a brief summary of the terms of the [*] Disposition to Agent, (iii)
the Borrower delivers to Agent copies of the final executed documents in
connection with the [*] Disposition within five (5) Business Days of
consummation of the [*] Disposition and (iv) all royalties, milestone payments
or other proceeds arising from the [*] Disposition are paid to a deposit account
or securities account that is governed by an Account Control Agreement.  As used
herein “Antibody Libraries and Related Assets” shall mean (a) specific
collections of polynucleotides encoding antibodies and their associated
biological materials, (b) intellectual property and know-how related thereto or
to the use thereof, (c) materials, intellectual property and know-how embodying
the Targeted Affinity Enhancement™ technology or other technology made available
by XOMA for improving or enhancing the affinity of antibodies and (d) the
informatics and other materials-handling systems, associated software
applications and related data systems and know-how related thereto made
available by XOMA for use in connection therewith.  As used herein, the “[*]
Disposition” shall mean the Transfer of all or a portion of the Intellectual
Property identified on Schedule C to [*], a Delaware corporation, or one or more
of its affiliates.
 
 
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7.4           Change in Name, Location or Executive Office; Change in Business;
Change in Fiscal Year.  No Loan Party shall, and no Loan Party shall permit any
of its Subsidiaries to: (a) change its name or its jurisdiction of organization;
(b) relocate its chief executive office prior to providing a duly executed
Access Agreement with respect to such new location; (c) engage in any business
other than or reasonably related or incidental to the businesses currently
engaged in by such Loan Party or Subsidiary; (d) cease to conduct business
substantially in the manner conducted by such Loan Party or Subsidiary as of the
date of this Agreement; or (e) change its fiscal year end; except, in each case
with respect to clauses (a), (b), (c) and (d), pursuant to (A) the Parent
Redomestication or any Subsidiary Redomestication and only upon 30 days prior
written notification to Agent and delivery of all reaffirmations, perfection
certificates, legal opinions or other documents or information reasonably
requested by Agent in connection therewith, or (B) the Permitted
Dissolutions.  The term “Parent Redomestication” means the (i) conversion of
Parent to a Delaware corporation pursuant to the provisions of Section 388 of
the Delaware General Corporation Law, (ii) discontinuance of Parent’s
registration in Bermuda pursuant to the provisions of Sections 132G and 132H of
the Companies Act 1981 of Bermuda and (iii) any exchange of shares in the
capital of Parent registered as a Bermuda exempted company for capital stock in
Parent organized as a Delaware corporation on a one-for-one basis to the extent
necessary to give effect to such conversion.  The term “Subsidiary
Redomestication” means (i) the conversion of any wholly owned Subsidiary of
Parent which is organized in a jurisdiction outside of the United States to an
entity organized in a jurisdiction within the United States and (ii) the
exchange of capital stock of such Subsidiary organized in a jurisdiction outside
of the United States for the capital stock of such Subsidiary as organized in a
jurisdiction inside of the United States to the extent necessary to give effect
to such conversion.
 
7.5           Mergers or Acquisitions.  No Loan Party shall merge or
consolidate, and no Loan Party shall permit any of its Subsidiaries to merge or
consolidate, with or into any other person or entity (other than (a) mergers of
a Subsidiary into Borrower in which Borrower is the surviving entity, (b)
mergers of a Subsidiary of Parent (other than Borrower) into a Loan Party (other
than Parent) in which such Loan Party is the surviving entity, and (c) mergers
of a Subsidiary of Parent which is not a Loan Party into another Subsidiary of
Parent which is not a Loan Party) or acquire, or permit any of its Subsidiaries
to acquire, all or substantially all of the capital stock or property of another
person or entity or all or substantially all of the assets constituting any line
of business, division, branch, operating division or other unit operation of
another person or entity.
 
7.6           Restricted Payments.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries (other than the [*] Subsidiary and the [*]
Subsidiary) to, (a) declare or pay any dividends or make any other distribution
or payment on account of or redeem, retire, defease or purchase any capital
stock (other than the payment of dividends to Borrower and any exchange of
capital stock required to complete the Parent Redomestication or any Subsidiary
Redomestication), (b) purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of any Indebtedness
other than regularly scheduled or mandatory repayments of Indebtedness permitted
to be incurred under Section 7.2 (provided that no such regularly scheduled or
mandatory repayments of Indebtedness of Subsidiaries that are not Loan Parties
shall be directly or indirectly funded by any Loan Party), (c) make any payment
in respect of management fees or consulting fees (or similar fees) to any
equityholder or other Affiliate of a Loan Party other than as set forth on
Schedule B, (d) be a party to or bound by an agreement that restricts a
Subsidiary from paying dividends or otherwise distributing property to Borrower
or (e) make any payments on account of intercompany Indebtedness permitted under
Section 7.2 (except in accordance with the terms of the applicable Intercompany
Note then in effect with respect to such intercompany Indebtedness); provided,
that for any taxable period for which Borrower is either a disregarded entity or
a partnership for U.S. federal or applicable state or local income tax purposes
or is a member of a consolidated, combined or similar income tax group of which
Parent or any other direct or indirect parent of Borrower is the common parent,
Borrower may make distributions to fund the income tax liability of Parent (or
such other common parent) to the extent such liability is attributable to
Borrower and/or its Subsidiaries.
 
 
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7.7           Investments.  No Loan Party shall, and no Loan Party shall permit
any of its Subsidiaries to, directly or indirectly (a) acquire or own, or make
any loan, advance or capital contribution (an “Investment”) in or to any person
or entity (other than to another Loan Party to the extent permitted under the
terms and conditions set forth in Section 7.2(h)), (b) acquire or create any
Subsidiary, or (c) engage in any joint venture or partnership with any other
person or entity, other than: (i) Investments existing on the date hereof and
set forth on Schedule B to this Agreement, (ii) Investments in cash and Cash
Equivalents (as defined below), (iii) loans or advances to employees of Borrower
or any of its Subsidiaries to finance travel, entertainment and relocation
expenses and other ordinary business purposes in the ordinary course of business
as presently conducted, provided that the aggregate outstanding principal amount
of all loans and advances permitted pursuant to this clause (iii) shall not
exceed $50,000 at any time, (iv) Investments consisting of accounts receivable,
endorsements for collection, deposits or similar Investments arising in the
ordinary course of business, (v) any Investment consisting of intercompany
Indebtedness extended by a Loan Party to another Loan Party to the extent
permitted under Section 7.2(h), (vi) the contribution of the [*] to the [*]
Subsidiary upon formation thereof, provided that at the time of such
contribution no Default or Event of Default shall be continuing or would result
therefrom, (vii) the contribution of the [*] to the [*] Subsidiary so long as at
the time of such contribution no Default or Event of Default shall be continuing
or would result therefrom, (viii) Investments made in connection with purchases
of inventory, supplies, material or equipment in the ordinary course of
business, (ix) Investments received as consideration in connection with the [*]
Disposition and (x) capital contributions by Parent to any Loan Party (clauses
(i) through (x) collectively, the “Permitted Investments”).
 
The term “Cash Equivalents” means (v) any readily-marketable securities
(i) issued by, or directly, unconditionally and fully guaranteed or insured by
the United States federal government or (ii) issued by any agency of the United
States federal government the obligations of which are fully backed by the full
faith and credit of the United States federal government, (w) any
readily-marketable direct obligations issued by any other agency of the United
States federal government, any state of the United States or any political
subdivision of any such state or any public instrumentality thereof, in each
case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s,
(x) any commercial paper rated at least “A-1” by S&P or “P-1” by Moody’s and
issued by any entity organized under the laws of any state of the United States,
(y) any U.S. dollar-denominated time deposit, insured certificate of deposit,
overnight bank deposit or bankers’ acceptance issued or accepted by (i) Agent or
(ii) any commercial bank that is (A) organized under the laws of the United
States, any state thereof or the District of Columbia, (B) “adequately
capitalized” (as defined in the regulations of its primary federal banking
regulators) and (C) has Tier 1 capital (as defined in such regulations) in
excess of $250,000,000 or (z) shares of any United States money market fund that
(i) has substantially all of its assets invested continuously in the types of
investments referred to in clause (v), (w), (x) or (y) above with maturities
which shall not exceed 396 days, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating obtainable
for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (v), (w), (x) and (y)
above shall not exceed 365 days.  For the avoidance of doubt, “Cash Equivalents”
does not include (and each Loan Party is prohibited from purchasing or
purchasing participations in) any auction rate securities or other corporate or
municipal bonds with a long-term nominal maturity for which the interest rate is
reset through a Dutch auction.
 
 
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Notwithstanding the foregoing the Borrower may form (1) a special purpose entity
after the Closing Date (the “[*] Subsidiary”) for the purpose of [*] (the “[*]
Activities”) and/or (2) a special purpose entity after the Closing Date (the
“[*] Subsidiary”) for the purpose of [*] (as defined below) (the “[*]
Activities”); provided, that at the option of the Borrower, the [*] Subsidiary
and the [*] Subsidiary may be the same entity and have the combined purposes set
forth above.  Neither the [*] Subsidiary nor the [*] Subsidiary shall be
required to be a Loan Party.  At any time when it is a Subsidiary of a Loan
Party, the [*] Subsidiary shall not engage in any activities other than the [*]
Activities and activities reasonably related thereto and shall not have any
assets other than immaterial assets and the [*].  At any time when it is a
Subsidiary of a Loan Party, the [*] Subsidiary shall not engage in any
activities other than the [*] Activities and activities reasonably related
thereto and shall not have any assets other than immaterial assets and the
[*].  No Loan Party or any other Subsidiary thereof shall be obligated directly,
contingently or otherwise indirectly for any obligation or liability of the [*]
Subsidiary or [*] Subsidiary.  No funds or assets of any Loan Party shall be
expended after the Closing Date on or in connection with the [*] or the [*]
(whether for development costs, legal fees, debt or equity financing transaction
costs or otherwise) in excess of $600,000 in the aggregate (excluding (A) funds
provided by a third party for such  purpose and (B) up to an additional $600,000
for which a written commitment has been received from a third party for
reimbursement of such expended funds).  No Liens may be granted or Indebtedness
incurred in connection with the [*] or the [*] until such [*] has been
Transferred to the [*] Subsidiary or the [*] have been transferred to the [*]
Subsidiary, respectively, other than Liens permitted under clause (h) of the
first sentence of Section 7.1 and Indebtedness permitted under Section 7.2(l).

“[*]” means [*].

7.8           Transactions with Affiliates.  No Loan Party shall, and no Loan
Party shall permit any of its Subsidiaries to, directly or indirectly enter into
or permit to exist any transaction with any Affiliate (as defined below) of a
Loan Party or any Subsidiary of a Loan Party except for (i) transactions that
are in the ordinary course of such Loan Party’s or such Subsidiary’s business,
upon fair and reasonable terms that are no more favorable to such Affiliate than
would be obtained in an arm’s length transaction, (ii) transactions solely among
Loan Parties that are expressly permitted hereunder, (iii) tax distributions by
Borrower expressly permitted under the proviso to Section 7.6, and (iv) any
exchange of capital stock required to give effect to the Parent Redomestication
or any Subsidiary Redomestication.  As used herein, “Affiliate” means, with
respect to a Loan Party or any Subsidiary of a Loan Party, (a) each person that,
directly or indirectly, owns or controls 5.0% or more of the stock or membership
interests having ordinary voting power in the election of directors or managers
of such Loan Party or such Subsidiary, and (b) each person that controls, is
controlled by or is under common control with such Loan Party or such
Subsidiary.
 
Without limitation of the foregoing, in no event shall any Loan Party engage, or
permit any of its Subsidiaries to engage, in any transaction with the [*]
Subsidiary or [*] Subsidiary except for (i) administrative (including legal and
human resources) support services provided to the [*] Subsidiary and/or [*]
Subsidiary on reasonable and customary terms that do not interfere with the
business of any Loan Party or any of its Subsidiaries, (ii) any Transfer to the
[*] Subsidiary of the [*] upon fair and reasonable terms no less favorable to
any Loan Party or any of its Subsidiaries than would be obtained in a comparable
arm’s length transaction with a person or entity other than the [*] Subsidiary,
provided that at the time of such Transfer no Default or Event of Default shall
be continuing or would result therefrom, (iii) any Transfer to the [*]
Subsidiary of the [*] upon fair and reasonable terms no less favorable to any
Loan Party or any of its Subsidiaries than would be obtained in a comparable
arm’s length transaction with a person or entity other than the [*] Subsidiary,
provided that at the time of such Transfer no Default or Event of Default shall
be continuing or would result therefrom, (iv) transactions between the [*]
Subsidiary and [*] Subsidiary which do not directly or indirectly involve or
otherwise adversely affect any Loan Party or any other Subsidiary of any Loan
Party, (v) other transactions in the ordinary course of business and undertaken
in good faith and not for purposes of evading any covenant or restriction in any
Transaction Document and upon fair and reasonable terms no less favorable to any
Loan Party or any of its Subsidiaries than would be obtained in a comparable
arm’s length transaction with a person or entity other than the [*] Subsidiary
or [*] Subsidiary and which is disclosed in writing to Agent, and (vi) the
expenditure by the Loan Parties of up to $600,000 in the aggregate (excluding
(A) funds provided by a third party for such  purpose and (B) up to an
additional $600,000 for which a written commitment has been received from a
third party for reimbursement of such expended funds) after the Closing Date on
or in connection with the [*] or the [*] (whether for development costs, legal
fees, debt or equity financing transaction costs or otherwise) expressly
permitted under Section 7.7.
 
 
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7.9           Compliance.  No Loan Party shall, and no Loan Party shall permit
any of its Subsidiaries to, (a) fail to comply with the laws and regulations
described in clauses (b) or (c) of Section 5.8 herein, or (b) use any portion of
the Term Loan to purchase, become engaged in the business of purchasing or
selling, or extend credit for the purpose of purchasing or carrying Margin
Stock.
 
7.10         Deposit Accounts and Securities Accounts.  No Loan Party shall
directly or indirectly maintain or establish any deposit account or securities
account, unless Agent, the applicable Loan Party or Loan Parties and the
depository institution or securities intermediary at which the account is or
will be maintained enter into a deposit account control agreement or securities
account control agreement (or, in respect of XOMA Ireland, a Notice of
Assignment and Acknowledgment of Assignment in the form set forth on Schedule 2
to the Irish Debenture), as the case may be, in form and substance satisfactory
to Agent (an “Account Control Agreement”) (which agreement shall provide, among
other things, that (i) such depository institution or securities intermediary
has no rights of setoff or recoupment or any other claim against such deposit or
securities account (except as agreed to by Agent), other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (ii) such
depository institution or securities intermediary shall comply with all
instructions of Agent without further consent of such Loan Party or Loan
Parties, as applicable, including, without limitation, an instruction by Agent
to comply exclusively with instructions of Agent with respect to such account
(such notice, a “Notice of Exclusive Control”), in each case with such
modifications as may be acceptable to the Agent), prior to or concurrently with
the establishment of such deposit account or securities account (or in the case
of any such deposit account or securities account maintained as of the date
hereof, on or before the Closing Date).  Except as provided in the last sentence
of this Section 7.10, each Loan Party shall deposit all of its cash and Cash
Equivalents into deposit accounts or securities accounts, as applicable, which
are subject to Account Control Agreements.  Agent may only give a Notice of
Exclusive Control with respect to any deposit account or securities account at
any time at which an Event of Default has occurred and is continuing.  At the
request of Agent, Borrower shall create or designate a dedicated deposit account
or accounts to be used exclusively for payroll or withholding tax
purposes.  Notwithstanding anything herein to the contrary, this Section 7.10
shall not apply to (a) any deposit account exclusively used for payroll, payroll
taxes, or other employee wage and benefit payments to or for the benefit of the
Loan Parties’ employees, provided that the aggregate balance in such accounts
does not exceed the amount necessary to make the immediately succeeding payroll,
payroll tax or benefit payment (or such minimum amount as may be required by any
Requirement of Law with respect to such accounts), as applicable, (b) any
zero-balance disbursement account, and (c) any deposit account or securities
account the average daily balance of which in the aggregate, together with the
average daily balance of all such other deposit accounts and securities accounts
excluded pursuant to this clause (c), shall not exceed $100,000  (all accounts
described in clause (a) through (c) of this sentence are referred to as
“Excluded Accounts”).
 
 
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7.11          Amendments to Other Agreements.  No Loan Party shall amend, modify
or waive any provision of (a) any Material Agreement or (b) any of such Loan
Party’s organizational or constitutional documents, in each case without the
prior written consent of Agent and the Requisite Lenders (unless the net effect
of such amendment, modification or waiver is not adverse in any material respect
to any Loan Party, Agent or the Lenders).
 
8.            DEFAULT AND REMEDIES.
 
8.1           Events of Default.  Loan Parties shall be in default under this
Agreement and each of the other Transaction Documents if (each of the following,
an “Event of Default”):
 
(a)           Borrower shall fail to pay (i) any principal when due, or (ii) any
interest, fees or other Obligations (other than as specified in clause (i))
within a period of three (3) Business Days after the due date thereof (other
than on the Term Loan Maturity Date) under any of the Transaction Documents;
 
(b)           any Loan Party breaches any of its obligations under Section 6.1
(solely as it relates to maintaining its existence), Section 6.2, Section 6.3,
Section 6.4 (solely by reason of  non-payment of premiums by a Loan Party or any
such default that relates to property or casualty insurance policies), or
Article 7;
 
(c)           any Loan Party breaches any of its other obligations under any of
the Transaction Documents and fails to cure such breach within 30 days after the
earlier of (i) the date on which a Responsible Officer of such Loan Party
becomes aware, or through the exercise of reasonable diligence should have
become aware, of such failure and (ii) the date on which notice shall have been
given to Borrower from Agent;
 
(d)           any warranty, representation or statement made or deemed made by
or on behalf of any Loan Party in any of the Transaction Documents or otherwise
in connection with any of the Obligations shall be false or misleading in any
material respect at the time such warranty, representation or statement was made
or deemed made;
 
(e)           Collateral with an aggregate value in excess of $100,000 is
subjected to attachment, execution, levy, seizure or confiscation in any legal
proceeding or otherwise, and no bond is posted or protective order obtained to
negate such risk, and such legal proceeding shall not have been vacated or
discharged for a period of 20 consecutive days, and there shall not be in effect
(by reason of a pending appeal or otherwise) any stay of enforcement thereof;
 
(f)           one or more judgments, orders or decrees shall be rendered against
any Loan Party or any Subsidiary of a Loan Party that exceeds by more than
$250,000 any insurance coverage applicable thereto (to the extent the relevant
insurer has been notified of such claim and has not denied coverage therefor),
or one or more non-monetary judgments, orders or decrees shall be rendered
against any Loan Party or any Subsidiary of a Loan Party that could reasonably
be expected to result in a Material Adverse Effect, and in either case (i)
enforcement proceedings shall have been commenced by any creditor upon any such
judgment, order or decree or (ii) such judgment, order or decree shall not have
been vacated or discharged for a period of 30 consecutive days and there shall
not be in effect (by reason of a pending appeal or otherwise) any stay of
enforcement thereof;
 
 
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(g)           (i)           any Loan Party or any Subsidiary of a Loan Party
shall generally not pay its debts as such debts become due, shall admit in
writing its inability to pay its debts generally, shall make a general
assignment for the benefit of creditors, or shall cease doing business as a
going concern, (ii) any proceeding shall be instituted by or against any Loan
Party or any Subsidiary of a Loan Party seeking to adjudicate it a bankrupt or
insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, composition of it or its debts or any similar
order, in each case under any law relating to bankruptcy, examination,
insolvency or reorganization or relief of debtors or seeking the entry of an
order for relief or the appointment of a custodian, receiver, trustee, Irish law
examiner, conservator, liquidating agent, liquidator, other similar official or
other official with similar powers, in each case for it or for any substantial
part of its property and, in the case of any such proceedings instituted against
(but not by or with the consent of) such Loan Party or such Subsidiary, either
such proceedings shall remain undismissed or unstayed for a period of 45 days or
more or any action sought in such proceedings shall occur or (iii) any Loan
Party or any Subsidiary of a Loan Party shall take any corporate or similar
action or any other action to authorize any action described in clause (i) or
(ii) above;
 
(h)           a Material Adverse Effect has occurred;
 
(i)            (i) any provision of any Transaction Document shall fail to be
valid and binding on, or enforceable against, a Loan Party party thereto, or
(ii) any Transaction Document purporting to grant a security interest to secure
any Obligation shall fail to create a valid and enforceable security interest on
any Collateral with a value in excess of $100,000 purported to be covered
thereby or such security interest shall fail or cease to be a perfected Lien
with the priority required in the relevant Transaction Document except to the
extent that any such loss of perfection or priority results from the failure of
the Agent to file UCC financing statements or continuation statements or other
equivalent filings, or any Loan Party shall state in writing that any of the
events described in clause (i) or (ii) above shall have occurred;
 
(j)            (i) any Loan Party or any Subsidiary of a Loan Party defaults
under any Material Agreement (after any applicable grace period contained
therein), (ii) (A) any Loan Party or any Subsidiary of a Loan Party fails to
make (after any applicable grace period) any payment when due (whether due
because of scheduled maturity, required prepayment provisions, acceleration,
demand or otherwise) on any Indebtedness (other than the Obligations) of such
Loan Party or such Subsidiary having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$300,000 (“Material Indebtedness”), (B) any other event shall occur or condition
shall exist under any contractual obligation relating to any such Material
Indebtedness, if the effect of such event or condition is to accelerate, or to
permit the acceleration of (without regard to any subordination terms with
respect thereto), the maturity of such Material Indebtedness or (C) any such
Material Indebtedness shall become or be declared to be due and payable, or be
required to be prepaid, redeemed, defeased or repurchased (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof,
or (iii) Borrower or any Subsidiary defaults (beyond any applicable grace
period) under any obligation for payments due or otherwise under any lease
agreement that meets the criteria for the requirement of an Access Agreement
under Section 6.6 and, as a result thereof, the landlord thereunder has the
right to terminate such lease agreement;
 
 
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(k)           (i) any of the chief executive officer or the chief financial
officer of Borrower as of the date hereof shall cease to be involved in the day
to day operations (including research development) or management of the business
of Borrower, unless a permanent or interim successor of such officer is
appointed by the board of directors of the Borrower within 90 days of such
cessation of involvement, and such successor is in compliance with the Office of
Foreign Assets Control, money-laundering, anti-terrorism, SEC, drug/device laws
and regulations, and other similar regulations (in each case, to the extent
applicable to a natural Person), (ii) Parent shall cease to own and control all
of the economic and voting rights associated with ownership of all of the
outstanding capital stock of all classes of the Borrower and each other Loan
Party on a fully-diluted basis, (iii) the acquisition, directly or indirectly,
by any person or group (as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) of more than thirty-five percent (35%) of the
voting power of the voting stock of Parent by way of merger or consolidation or
otherwise, (iv) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Parent (together with any new directors whose election by the board
of directors of Parent or whose nomination for election by the stockholders of
Parent was approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason other than death or disability to constitute a majority of the directors
then in office, or (v) Borrower ceases to own and control, directly or
indirectly, all of the economic and voting rights associated with the
outstanding voting capital stock (or other voting equity interest) of each of
its Subsidiaries; provided, however, that (x) the consummation of the Parent
Redomestication, any Subsidiary Redomestication or the Permitted Dissolutions in
each case as expressly permitted hereunder shall not constitute an Event of
Default under this clause (k) and (y) the [*] Subsidiary and the [*] Subsidiary
may issue voting and/or economic equity interests to an unrelated third party
for fair value as determined by the board of directors of such entities;
 
(l)           (i) The FDA or any other governmental authority initiates
enforcement action against any Loan Party or any supplier of a Loan Party that
causes any Loan Party to recall, withdraw, remove or discontinue marketing any
of its products which could reasonably be expected to have a Material Adverse
Effect of the type described in clauses (b), (c), (d) and (e) of the definition
thereof; (ii) [*]; (iii) any Loan Party conducts a mandated or voluntary recall
which could reasonably be expected to result in liability and expense to the
Loan Parties of $[*] or more; or (iv) any Loan Party enters into a settlement
agreement with the FDA or any other governmental authority that results in
aggregate liability as to any single or related series of transactions,
incidents or conditions, of $[*] or more, or that could reasonably be expected
to have a Material Adverse Effect of the type described in clauses (b), (c), (d)
and (e) of the definition thereof.
 
8.2           Lender Remedies.  Upon the occurrence and during the continuance
of any Event of Default, Agent may, and at the written request of the Requisite
Lenders shall, terminate the Commitments and declare any or all of the
Obligations to be immediately due and payable, without demand or notice to any
Loan Party and the accelerated Obligations shall bear interest at the Default
Rate pursuant to Section 2.5, provided that, upon the occurrence of any Event of
Default specified in Section 8.1(g) above, the Obligations shall be
automatically accelerated.  After the occurrence and during the continuance of
an Event of Default, Agent shall have (on behalf of itself and Lenders) all of
the rights and remedies of a secured party under the UCC, and under any other
applicable law.
 
8.3           Application of Proceeds.  Proceeds from any Transfer of the
Collateral or from any Transfer of the Intellectual Property (other than
Permitted Dispositions) and all payments made to or proceeds of Collateral or
Intellectual Property received by Agent during the continuance of an Event of
Default shall be applied as follows: (a) first, to pay all fees, costs,
indemnities, reimbursements and expenses then due to Agent under the Transaction
Documents in its capacity as Agent under the Transaction Documents, until paid
in full in cash, (b) second, to pay all fees, costs, indemnities, reimbursements
and expenses then due to Lenders under the Transaction Documents in accordance
with their respective Pro Rata Shares, until paid in full in cash, (c) third, to
pay all interest on the Term Loan then due to Lenders in accordance with their
respective Pro Rata Shares (other than interest, fees, expenses and other
amounts accrued after the commencement of any proceeding referred to in Section
8.1(g) if a claim for such amounts is not allowable in such proceeding), until
paid in full in cash, (d) fourth, to pay all principal on the Term Loan then due
to Lenders in accordance with their respective Pro Rata Shares, until paid in
full in cash, (e) fifth, to pay all other Obligations then due to Lenders in
accordance with their respective Pro Rata Shares (including, without limitation,
all interest, fees, expenses and other amounts accrued after the commencement of
any proceeding referred to in Section 8.1(g) whether or not a claim for such
amounts is allowable in such proceeding), until paid in full in cash, and (f)
finally, to Borrower or as otherwise required by law.  Borrower shall remain
fully liable for any deficiency.
 
 
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9.            THE AGENT.
 
9.1           Appointment of Agent.
 
(a)           Each Lender hereby appoints GECC (together with any successor
Agent pursuant to Section 9.6) as Agent under the Transaction Documents and
authorizes Agent to (a) execute and deliver the Transaction Documents and accept
delivery thereof on its behalf from Loan Parties, (b) take such action on its
behalf and to exercise all rights, powers and remedies and perform the duties as
are expressly delegated to Agent under such Transaction Documents and (c)
exercise such powers as are reasonably incidental thereto.  The provisions of
this Article 9 are solely for the benefit of Agent and the Lenders and none of
Loan Parties nor any other person shall have any rights as a third party
beneficiary of any of the provisions hereof.  In performing its functions and
duties under this Agreement and the other Transaction Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any Loan Party or any other person.  Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Transaction Documents.  The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Transaction Document or otherwise a
fiduciary or trustee relationship in respect of any Lender.  Except as expressly
set forth in this Agreement and the other Transaction Documents, Agent shall not
have any duty to disclose, and shall not be liable for failure to disclose, any
information relating to Borrower or any of its Subsidiaries that is communicated
to or obtained by GECC or any of its affiliates in any capacity.
 
(b)           Without limiting the generality of clause (a) above, Agent shall
have the sole and exclusive right and authority (to the exclusion of the
Lenders), and is hereby authorized, to (i) act as the disbursing and collecting
agent for the Lenders with respect to all payments and collections arising in
connection with the Transaction Documents (including in any other bankruptcy,
insolvency or similar proceeding), and each person making any payment in
connection with any Transaction Document to any Lender is hereby authorized to
make such payment to Agent, (ii) file and prove claims and file other documents
necessary or desirable to allow the claims of Agent and the Lenders with respect
to any Obligation in any proceeding described in any bankruptcy, insolvency or
similar proceeding (but not to vote, consent or otherwise act on behalf of such
Lender), (iii) act as collateral agent for Agent and each Lender for purposes of
the perfection of all Liens created by the Transaction Documents and all other
purposes stated therein, (iv) manage, supervise and otherwise deal with the
Collateral, (v) take such other action as is necessary or desirable to maintain
the perfection and priority of the Liens created or purported to be created by
the Transaction Documents, (vi) except as may be otherwise specified in any
Transaction Document, exercise all remedies given to Agent and the other Lenders
with respect to the Collateral, whether under the Transaction Documents,
applicable law or otherwise and (vii) execute any amendment, consent or waiver
under the Transaction Documents on behalf of any Lender that has consented in
writing to such amendment, consent or waiver; provided, however, that Agent
hereby appoints, authorizes and directs each Lender to act as collateral
sub-agent for Agent and the Lenders for purposes of the perfection of all Liens
with respect to the Collateral, including any deposit account maintained by a
Loan Party with, and cash and cash equivalents held by, such Lender, and may
further authorize and direct the Lenders to take further actions as collateral
sub-agents for purposes of enforcing such Liens or otherwise to transfer the
Collateral subject thereto to Agent, and each Lender hereby agrees to take such
further actions to the extent, and only to the extent, so authorized and
directed.  Agent may, upon any term or condition it specifies, delegate or
exercise any of its rights, powers and remedies under, and delegate or perform
any of its duties or any other action with respect to, any Transaction Document
by or through any trustee, co-agent, employee, attorney-in-fact and any other
person (including any Lender).  Any such person shall benefit from this
Article 9 to the extent provided by Agent.
 
 
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(c)           If Agent shall request instructions from Requisite Lenders or all
affected Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Transaction Document, then Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from Requisite Lenders or all
affected Lenders, as the case may be, and Agent shall not incur liability to any
person by reason of so refraining.  Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Transaction Document
(a) if such action would, in the opinion of Agent, be contrary to law or any
Transaction Document, (b) if such action would, in the opinion of Agent, expose
Agent to any potential liability under any law, statute or regulation or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.  Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Transaction
Document in accordance with the instructions of Requisite Lenders or all
affected Lenders, as applicable.
 
9.2           Agent’s Reliance, Etc.  Neither Agent nor any of its affiliates
nor any of their respective directors, officers, agents, employees or
representatives shall be liable for any action taken or omitted to be taken by
it or them hereunder or under any other Transaction Documents, or in connection
herewith or therewith, except for damages caused by its or their own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.  Without limiting the generality of the foregoing, Agent:  (a) may
treat the payee of any Note as the holder thereof until such Note has been
assigned in accordance with Section 10.1; (b) may consult with legal counsel,
independent public accountants and other experts, whether or not selected by it,
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts; (c) shall not be responsible or otherwise incur liability for any
action or omission taken in reliance upon the instructions of the Requisite
Lenders, (d) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or the other Transaction Documents; (e)
shall not have any duty to inspect the Collateral (including the books and
records) or to ascertain or to inquire as to the performance or observance of
any provision of any Transaction Document, whether any condition set forth in
any Transaction Document is satisfied or waived, as to the financial condition
of any Loan Party or as to the existence or continuation or possible occurrence
or continuation of any Default or Event of Default and shall not be deemed to
have notice or knowledge of such occurrence or continuation unless it has
received a notice from Borrower or any Lender describing such Default or Event
of Default clearly labeled “notice of default”; (f) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
effectiveness, genuineness, sufficiency or value of, or the attachment,
perfection or priority of any Lien created or purported to be created under or
in connection with, any Transaction Document or any other instrument or document
furnished pursuant hereto or thereto; and (g) shall incur no liability under or
in respect of this Agreement or the other Transaction Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent or otherwise authenticated by the proper party or parties.
 
 
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9.3           GECC and Affiliates.  For so long as GECC is a Lender hereunder,
it shall have the same rights and powers under this Agreement and the other
Transaction Documents as any other Lender and may exercise the same as though it
were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include GECC in its individual capacity.  GECC and its
affiliates may lend money to, invest in, and generally engage in any kind of
business with, Borrower, any of Borrower’s Subsidiaries, any of their Affiliates
and any person who may do business with or own securities of Borrower, any of
Borrower’s Subsidiaries or any such Affiliate, all as if GECC were not Agent and
without any duty to account therefor to Lenders.  GECC and its affiliates may
accept fees and other consideration from Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.  Each Lender acknowledges the potential conflict of interest between
GECC as a Lender holding disproportionate interests in the Term Loan and GECC as
Agent, and expressly consents to, and waives, any claim based upon, such
conflict of interest.
 
9.4           Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in Section 6.3 and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of each Loan Party and its own decision to enter into this
Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.  Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Term Loan, and
expressly consents to, and waives, any claim based upon, such conflict of
interest.
 
9.5           Indemnification.  Lenders shall and do hereby indemnify Agent (to
the extent not reimbursed by Loan Parties and without limiting the obligations
of Loan Parties hereunder), ratably according to their respective Pro Rata
Shares from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any
other Transaction Document or any action taken or omitted to be taken by Agent
in connection therewith; provided that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent’s gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction. Without limiting the foregoing, each Lender agrees to reimburse
Agent promptly upon demand for its Pro Rata Share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Transaction Document, to the extent that Agent is not reimbursed
for such expenses by Loan Parties.  The provisions of this Section 9.5 shall
survive the termination of this Agreement.
 
9.6           Successor Agent.  Agent may resign at any time by delivering five
(5) days prior notice of such resignation to the Lenders and the Borrower,
effective on the date set forth in such notice.  Upon any such resignation, the
Requisite Lenders shall have the right to appoint a successor Agent.  If no
successor Agent shall have been so appointed by the Requisite Lenders and shall
have accepted such appointment within 30 days after the resigning Agent’s giving
notice of resignation, then the resigning Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing to
accept such appointment, or otherwise shall be a commercial bank or financial
institution or a subsidiary of a commercial bank or financial institution if
such commercial bank or financial institution is organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000.  If no successor Agent has been appointed
pursuant to the foregoing, within 30 days after the date such notice of
resignation was given by the resigning Agent, the Requisite Lenders shall
thereafter perform all the duties of Agent hereunder until such time, if any, as
the Requisite Lenders appoint a successor Agent as provided above. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the acceptance
of any appointment as Agent hereunder by a successor Agent or the effective date
of the resigning Agent’s resignation, the resigning Agent shall be discharged
from its duties and obligations under this Agreement and the other Transaction
Documents, except that any indemnity rights or other rights in favor of such
resigning Agent shall continue. After any resigning Agent’s resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Transaction Documents.
 
 
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9.7           Setoff and Sharing of Payments.  In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.8(e), each Lender is hereby authorized at any time or
from time to time upon the direction of Agent, without notice to Borrower or any
other person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of Borrower (regardless of whether such balances are then due to
Borrower) and any other properties or assets at any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower
against and on account of any of the Obligations that are not paid when
due.  Any Lender exercising a right of setoff or otherwise receiving any payment
on account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares of the Obligations.  Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender may exercise its right to
offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the Term
Loan made or other Obligations held by other Lenders or holders may exercise all
rights of offset, bankers’ lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of
the Term Loan and the other Obligations in the amount of such
participation.  Notwithstanding the foregoing, if all or any portion of the
offset amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of offset, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without
interest.  The term “Pro Rata Share” means, with respect to any Lender at any
time, the percentage obtained by dividing (x) the Commitment of such Lender then
in effect (or, if such Commitment is terminated, the aggregate outstanding
principal amount of the Term Loan owing to such Lender) by (y) the Total
Commitment then in effect (or, if the Total Commitment is terminated, the
outstanding principal amount of the Term Loan owing to all Lenders).
 
9.8           Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
 
(a)           Advances; Payments.  If Agent receives any payment for the account
of Lenders on or prior to 1:00 p.m. (New York time) on any Business Day, Agent
shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment
on such Business Day. If Agent receives any payment for the account of Lenders
after 1:00 p.m. (New York time) on any Business Day, Agent shall pay to each
applicable Lender such Lender’s Pro Rata Share of such payment on the next
Business Day. To the extent that any Lender has failed to fund any such payments
and Term Loans (a “Non-Funding Lender”), Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender’s Pro Rata Share of all
payments received from Borrower.
 
 
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(b)           Return of Payments.
 
(i)           If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from a Loan Party and such related payment is not received by Agent, then
Agent will be entitled to recover such amount (including interest accruing on
such amount at the Federal Funds Rate for the first Business Day and thereafter,
at the rate otherwise applicable to such Obligation) from such Lender on demand
without setoff, counterclaim or deduction of any kind.
 
(ii)           If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to a Loan Party or paid to any other
person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Transaction Document,
Agent will not be required to distribute any portion thereof to any Lender.  In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to a Loan Party or such other person,
without setoff, counterclaim or deduction of any kind.
 
(c)           Non-Funding Lenders.  The failure of any Non-Funding Lender to
make the Term Loan or any payment required by it hereunder shall not relieve any
other Lender (each such other Lender, an “Other Lender”) of its obligations to
make the Term Loan, but neither any Other Lender nor Agent shall be responsible
for the failure of any Non-Funding Lender to make the Term Loan or make any
other payment required hereunder.  Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Transaction Document or constitute a “Lender” (or
be included in the calculation of “Requisite Lender” hereunder) for any voting
or consent rights under or with respect to any Transaction Document.  At
Borrower’s request, Agent or a person reasonably acceptable to Agent shall have
the right with Agent’s consent and in Agent’s sole discretion (but shall have no
obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender
agrees that it shall, at Agent’s request, sell and assign to Agent or such
person, all of the Commitments and all of the outstanding Term Loans of that
Non-Funding Lender for an amount equal to the principal balance of all Term
Loans held by such Non-Funding Lender and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement (as defined below).
 
(d)           Dissemination of Information.  Agent shall use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to Borrower, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided that Agent shall not be
liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.  Lenders acknowledge
that Borrower is required to provide financial statements to Lenders in
accordance with Section 6.3 hereto and agree that Agent shall have no duty to
provide the same to Lenders.
 
 
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(e)           Actions in Concert.  Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement, the Notes or any other Transaction Documents (including exercising
any rights of setoff) without first obtaining the prior written consent of Agent
and Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of Agent and Requisite Lenders.
 
10.           MISCELLANEOUS.
 
10.1          Assignment.
 
(a)           Subject to the terms of this Section 10.1, each Lender shall have
the right to sell, transfer or assign, at any time or times, all or a portion of
its rights and obligations hereunder and under the other Transaction Documents,
its Commitment, its Term Loans or any portion thereof or interest therein,
including any Lender’s rights, title, interests, remedies, powers or duties
thereunder; provided, however, that any such sale, transfer or assignment shall:
(i) except in the case of a sale, transfer or assignment to a Qualified Assignee
(as defined below), require the prior written consent of Agent and the Requisite
Lenders (which consent shall not be unreasonably withheld, conditioned or
delayed); (ii) require the execution of an assignment agreement in form and
substance reasonably satisfactory to, and acknowledged by, Agent (an “Assignment
Agreement”); (iii) be conditioned on such assignee Lender representing to the
assigning Lender and Agent that it is purchasing the applicable Commitment
and/or Term Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iv) be in an
aggregate amount of not less than $1,000,000, unless such assignment is made to
an existing Lender or an affiliate of an existing Lender or is of the assignor’s
(together with its affiliates’) entire interest of the Term Loans or is made
with the prior written consent of Agent; and (v) include a payment to Agent of
an assignment fee of $3,500 (unless otherwise agreed by Agent); providedfurther,
however, that so long as no Default or Event of Default has occurred and is
continuing, assignments of all or any portion of the Term Loan (or any rights or
obligations under the Transaction Documents) to any Non-Eligible Lender (as
defined below) shall require the prior consent of the Borrower, which consent
shall not be unreasonably withheld, delayed or conditioned, and the consent of
Borrower shall be deemed to have been given if Borrower has not delivered an
objection in writing within five (5) Business Days of a request for such
consent.  In the case of an assignment by a Lender under this Section 10.1(a),
the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as all other Lenders hereunder.  The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitment
and Term Loans, as applicable, or assigned portion thereof from and after the
date of such assignment.  Borrower hereby acknowledges and agrees that any
assignment shall give rise to a direct obligation of Borrower to the assignee
and that the assignee shall be considered to be a “Lender”.  In the event any
Lender assigns or otherwise transfers all or any part of the Commitments and
Obligations, Borrower shall, upon the assignee’s or the assignor’s request,
execute new Notes in exchange for the Notes, if any, being assigned.  Agent may
amend Schedule A to this Agreement to reflect assignments made in accordance
with this Section 10.1.
 
As used herein, “Qualified Assignee” means (a) any Lender and any affiliate of
any Lender and (b) any commercial bank, savings and loan association or savings
bank or any other entity which is an “accredited investor” (as defined in
Regulation D under the Securities Act) which extends credit or buys loans as one
of its businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
BBB or higher from S&P and a rating of Baa2 or higher from Moody's at the date
that it becomes a Lender and in each case of clauses (a) and (b), which, through
its applicable lending office, is capable of lending to Borrower without the
imposition of any withholding or similar taxes; provided that no person proposed
to become a Lender after the Closing Date that holds any subordinated debt or
stock issued by any Loan Party or its Affiliates shall be a Qualified Assignee.
 
 
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As used herein, “Non-Eligible Lender” means (a) any hedge fund or private equity
fund that is engaged in the business of purchasing distressed debt or (b) any
entity that has (i) become subject to a voluntary or involuntary case under the
U.S. Bankruptcy Code or any similar bankruptcy laws, (ii) a custodian,
conservator, receiver or similar official appointed for it or any substantial
part of such entity’s assets, or (iii) made a general assignment for the benefit
of creditors, been liquidated, or otherwise been adjudicated as, or determined
by any governmental authority having regulatory authority over such entity or
its assets to be, insolvent or bankrupt, and in the case of this clause (b),
Agent has determined that such entity is reasonably likely to fail to fund any
payments required to be made by it (if any) under the Transaction Documents.
 
(b)           In addition to the other rights provided in this Section 10.1,
each Lender may, without notice to or consent from Agent or any Loan Party, sell
participations to one or more persons or entities in or to all or a portion of
its rights and obligations under the Transaction Documents (including all of its
rights and obligations with respect to the Term Loans); provided, however, that,
whether as a result of any term of any Transaction Document or of such
participation, (i) no such participant shall have a commitment, or be deemed to
have made an offer to commit, to make the Term Loan hereunder, and, no such
participant shall be liable for any obligation of such Lender hereunder, (ii)
such Lender’s rights and obligations, and the rights and obligations of the Loan
Parties and Agent and other Lenders towards such Lender, under any Transaction
Document shall remain unchanged and each other party hereto shall continue to
deal solely with such Lender, which shall remain the holder of the Obligations,
and in no case shall a participant have the right to enforce any of the terms of
any Transaction Document, and (iii) the consent of such participant shall not be
required (either directly, as a restraint on such Lender’s ability to consent
hereunder or otherwise) for any amendments, waivers or consents with respect to
any Transaction Document or to exercise or refrain from exercising any powers or
rights such Lender may have under or in respect of the Transaction Documents
(including the right to enforce or direct enforcement of the Obligations),
except for those described in clauses (ii), (iii) and (viii) of subsection
10.9(c) hereof.
 
10.2          Notices.  All notices, requests or other communications given in
connection with this Agreement shall be in writing, shall be addressed to the
parties at their respective addresses set forth on the signature pages hereto
below such parties’ name or in the most recent Assignment Agreement executed by
any Lender, or in the case of any Loan Party to the address of the Parent (or,
solely in the case of service of process or other documents in accordance with
Section 10.3 below, the address of the Borrower), unless and until a different
address may be specified in a written notice to the other party delivered in
accordance with this Section, and shall be deemed given (a) on the date of
receipt if delivered by hand, (b) on the date of sender’s receipt of
confirmation of proper transmission if sent by facsimile transmission, (c) on
the next Business Day after being sent by a nationally-recognized overnight
courier, and (d) on the fourth Business Day after being sent by registered or
certified mail, postage prepaid.  As used herein, the term “Business Day” means
and includes any day other than Saturdays, Sundays, or other days on which
commercial banks in New York, New York are required or authorized to be closed.
 
10.3          Process Agent.  Each Loan Party irrevocably, (a) nominates as its
agent, to receive service of process or other documents, the Borrower; and (b)
agrees that service of process or documents on that agent or any other person
appointed under clause (a) will be sufficient service on it. The process agent
named above irrevocably and unconditionally accepts that appointment. Each Loan
Party shall ensure that the process agent remains authorized to accept service
on its behalf.  If the process agent ceases to have an office in the place
specified, each Loan Party shall ensure that at all times there is another
person in that place acceptable to the Agent to receive process on its
behalf.  Each Loan Party shall promptly notify the Agent in writing of the
appointment of such other person.
 
 
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10.4          Correction of Transaction Documents.  Agent may correct patent
errors and fill in all blanks in this Agreement or the Transaction Documents
consistent with the agreement of the parties.
 
10.5          Performance.  Time is of the essence of this Agreement.  This
Agreement shall be binding, jointly and severally, upon all parties described as
the “Borrower” and their respective successors and assigns, and shall inure to
the benefit of Agent, Lenders, and their respective successors and assigns;
provided, however, that (a) any assignment by any Lender shall be subject to the
provisions of Section 10.1 and (b) no Loan Party may assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of Agent and Lenders pursuant to Section 10.9.
 
10.6          Payment of Fees and Expenses.  Loan Parties agree, jointly and
severally, to pay or reimburse upon demand for all reasonable fees, costs and
expenses incurred by Agent (and solely with respect to clause (d), the Lenders)
in connection with (a) the investigation, preparation, negotiation, execution,
administration of, or any amendment, modification, waiver or termination of,
this Agreement or any other Transaction Document, (b) any legal advice relating
to Agent’s rights or responsibilities under any Transaction Document, (c) the
administration of the Loans and the facilities hereunder and any other
transaction contemplated hereby or under the Transaction Documents and (d) the
enforcement, assertion, defense or preservation of Agent’s and Lenders’ rights
and remedies under this Agreement or any other Transaction Document, in each
case of clauses (a) through (d), including, without limitation, reasonable
attorneys’ fees and expenses, reasonable fees and expenses of consultants,
auditors (including internal auditors) and appraisers and UCC and other
corporate search and filing fees and wire transfer fees.  Borrower further
agrees that such fees, costs and expenses shall constitute Obligations.  This
provision shall survive the termination of this Agreement.  For the avoidance of
doubt, this Section 10.6 shall not apply to Taxes, which shall be governed
exclusively by Section 2.2(e) and Section 6.9(d).
 
10.7          Indemnity Provisions.
 
(a)           General Indemnity.  Each Loan Party shall and does hereby jointly
and severally indemnify and defend Agent, Lenders, and their respective
successors and assigns, and their respective directors, officers, employees,
consultants, attorneys, agents and affiliates (each an “Indemnitee”) from and
against all liabilities, losses, damages, expenses, penalties, claims, actions
and suits (including, without limitation, related reasonable attorneys’ fees) of
any kind whatsoever arising, directly or indirectly, which may be imposed on,
incurred by or asserted against such Indemnitee as a result of or in connection
with this Agreement, the other Transaction Documents or any of the transactions
contemplated hereby or thereby (the “Indemnified Liabilities”); provided that,
no Loan Party shall have any obligation to any Indemnitee with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise from
the gross negligence or willful misconduct of such Indemnitee as determined by a
final non-appealable judgment of a court of competent jurisdiction.  In no event
shall any Indemnitee be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any
loss of profits, business or anticipated savings).  Each Loan Party, the Agent
and each Lender waives, releases and agrees (and each Loan Party shall cause
each other Loan Party to waive, release and agree) not to sue upon any such
claim for any special, indirect, consequential or punitive damages, whether or
not accrued and whether or not known or suspected to exist in its favor.  This
provision shall survive the termination of this Agreement.
 
 
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(b)           Environmental Liabilities.  Without limiting the foregoing,
“Indemnified Liabilities” includes all Environmental Liabilities imposed on,
incurred by or asserted against any Indemnitee, including those arising from, or
otherwise involving, any property of any Loan Party or any affiliate of any Loan
Party or any actual, alleged or prospective damage to property or natural
resources or harm or injury alleged to have resulted from any Release or
threatened Release of Hazardous Materials on, upon or into such property or
natural resource or any property on or contiguous to any real property owned or
leased by any Loan Party or any affiliate of any Loan Party, whether or not,
with respect to any such Environmental Liabilities, any Indemnitee is a
mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the
successor-in-interest to any Loan Party or any affiliate of any Loan Party or
the owner, lessee or operator of any property of any Loan Party or any affiliate
of any Loan Party through any foreclosure action, in each case except to the
extent such Environmental Liabilities (i) are incurred following foreclosure by
Agent or following Agent or any Lender having become the successor-in-interest
to any Loan Party or any affiliate of any Loan Party and (ii) are attributable
to such Indemnitee.
 
(c)           Foreign Currency Indemnity.  If, at any time (i) the Agent or any
Lender, receiver, or an attorney receives or recovers any amount payable by a
Loan Party including: (A) under any judgment or order of any government
authority, (B) for any breach of this Agreement or any other Transaction
Document, (C) on the liquidation or bankruptcy of any Loan Party or any proof or
claim in that liquidation or bankruptcy, or (D) any other thing into which the
obligations of any Loan Party may have become merged; and (ii) the currency in
which the payment is made is not in US Dollars; each Loan Party, jointly and
severally, indemnifies the Agent and each Lender, receiver, or attorney against
any shortfall between the amount payable in US Dollars and the amount actually
or notionally received or recovered by the Agent and each Lender, receiver, or
attorney after the currency in which the payment is made is converted or
translated into US Dollars under clause (d) below.
 
(d)           Conversion of Currencies.  In making any currency conversion under
clause (c) above, the Agent and any Lender, receiver, or attorney may itself or
through its bankers (in a manner consistent with their usual practices) purchase
one currency with another, whether or not through an intermediate currency,
whether spot or forward, in the manner and amounts and at the time it thinks
fit.
 
(e)           For the avoidance of doubt, this Section 10.7 shall not apply to
Taxes, which shall be governed exclusively by Section 2.2(e) and Section 6.9(d).
 
(f)            Continuing Indemnities and Evidence of Loss.  Each indemnity of a
Loan Party in this Agreement or any other Transaction Document is a continuing
obligation of the Loan Party, despite any settlement of account or the
occurrence of any other thing, and remains in full force and effect until the
Obligations are fully and finally repaid. Each indemnity of a Loan Party in this
Agreement or any other Transaction Document is an additional, separate and
independent obligation of a Loan Party and no one indemnity limits the general
nature of any other indemnity. Each indemnity of a Loan Party in this Agreement
or any other Transaction Document survives the termination of this Agreement or
any other Transaction Document. A certificate given by an officer of the Agent
or any Lender detailing the amount of any loss covered by any indemnity in this
Agreement or any other Transaction Document is sufficient evidence of such loss.
 
10.8          Rights Cumulative.  Agent’s and Lenders’ rights and remedies under
this Agreement or otherwise arising are cumulative and may be exercised
singularly or concurrently.  Neither the failure nor any delay on the part of
Agent or any Lender to exercise any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise of that or
any other right, power or privilege.  NONE OF AGENT OR ANY LENDER SHALL BE
DEEMED TO HAVE WAIVED ANY OF ITS RESPECTIVE RIGHTS UNDER THIS AGREEMENT OR UNDER
ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY BORROWER UNLESS SUCH WAIVER
IS EXPRESSED IN WRITING AND SIGNED BY AGENT, REQUISITE LENDERS OR ALL LENDERS,
AS APPLICABLE.  A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.
 
 
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10.9          Entire Agreement; Amendments, Waivers.
 
(a)           This Agreement and the other Transaction Documents constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter.  Section headings contained in
this Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.
 
(b)           Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Transaction Document, or any consent to any departure by
a Loan Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent, Borrower, and Lenders having more than (x) 50%
of the aggregate Commitments of all Lenders or (y) if such Commitments have
expired or been terminated, 50% of the aggregate outstanding principal amount of
the Term Loans (the “Requisite Lenders”).  Except as set forth in clause (c)
below, all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.
 
(c)           No amendment, modification, termination or waiver of any provision
of this Agreement or any other Transaction Document shall, unless in writing and
signed by Borrower, Agent and each Lender directly affected thereby: (i)
increase or decrease any Commitment of any Lender or increase or decrease the
Total Commitment (which shall be deemed to affect all Lenders), (ii) reduce the
principal of or rate of interest on any Obligation or the amount of any fees
payable hereunder (other than waiving the imposition of the Default Rate), (iii)
postpone the date fixed for or waive any payment of principal of or interest on
the Term Loan, or any fees hereunder, (iv) release all or substantially all of
the Collateral, or consent to a transfer of all or substantially all of the
Intellectual Property, in each case except as otherwise expressly permitted in
the Transaction Documents (which shall be deemed to affect all Lenders), (v)
subordinate the Lien on all or substantially all of the Collateral granted in
favor of Agent securing the Obligations (which shall be deemed to affect all
Lenders), (vi) release a Loan Party from, or consent to a Loan Party’s
assignment or delegation of, such Loan Party’s obligations hereunder and under
the other Transaction Documents or any Guarantor from its guaranty of the
Obligations (which shall be deemed to affect all Lenders), (vii) amend, modify,
terminate or waive Section 8.3, 9.7 or 10.9(b) or (c), or (viii) amend or modify
the definition of “Requisite Lenders”.
 
(d)           Notwithstanding any provision in this Section 10.9 to the
contrary, no amendment, modification, termination or waiver affecting or
modifying the rights or obligations of Agent hereunder shall be effective unless
signed by Borrower, Agent and Requisite Lenders.
 
(e)           Each Lender hereby consents to the release by Agent of any Lien
held by Agent for the benefit of itself and the Lenders in any or all of the
Collateral to secure the Obligations upon (i) the occurrence of any Permitted
Disposition pursuant to Section 7.3 and (ii) the termination of the Commitments
and the payment and satisfaction in full of the Obligations.
 
 
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Notwithstanding the foregoing, this Agreement may be amended without the written
consent of the Requisite Lenders and solely with the consent of the Agent,
Parent and Borrower in order to effect technical amendments to this Agreement in
connection with or arising out of the Parent Redomestication or any Subsidiary
Redomestication.
 
10.10       Binding Effect.  This Agreement shall continue in full force and
effect until the Termination Date; provided, however, that the provisions of
this Section 10.10 and Sections 2.2(e), 9.5, 10.6 and 10.7 and the other
indemnities contained in the Transaction Documents shall survive the Termination
Date.  The surrender, upon payment or otherwise, of any Note or any of the other
Transaction Documents evidencing any of the Obligations shall not affect the
right of Agent to retain the Collateral for such other Obligations as may then
exist or as it may be reasonably contemplated will exist in the future.  This
Agreement and the grant of a security interest in the Collateral pursuant to any
Transaction Document shall automatically be reinstated if the Agent or any
Lender is ever required to return or restore the payment of all or any portion
of the Obligations (all as though such payment had never been
made).  “Termination Date” means the date on which all of the Obligations are
paid in full in cash, all of the Commitments hereunder are terminated, and this
Agreement shall have been terminated.
 
10.11        Use of Logo.  Each Loan Party authorizes Agent to use its name,
logo and/or trademark without notice to or consent by such Loan Party, in
connection with certain promotional materials that Agent may disseminate to the
public.  The promotional materials may include, but are not limited to,
brochures, video tape, internet website, press releases, tombstones, advertising
in newspaper and/or other periodicals, lucites, and any other materials relating
the fact that Agent has a financing relationship with Borrower and such
materials may be developed, disseminated and used without Loan Parties’
review.  Nothing herein obligates Agent to use a Loan Party’s name, logo and/or
trademark, in any promotional materials of Agent.  Loan Parties shall not, and
shall not permit any of its respective Affiliates to, issue any press release or
other public disclosure (other than any document filed with any governmental
authority relating to a public offering of the securities of Borrower or
otherwise required to be filed by any Loan Party with the SEC) using the name,
logo or otherwise referring to General Electric Capital Corporation, GE
Healthcare Financial Services, Inc. or of any of their affiliates, the
Transaction Documents or any transaction contemplated herein or therein without
at least two (2) Business Days prior written notice to and the prior written
consent of Agent unless, and only to the extent that, Loan Parties or such
Affiliate is required to do so under applicable law and then, only after
consulting with Agent prior thereto.
 
10.12        Waiver of Jury Trial.  EACH OF THE LOAN PARTIES, AGENT AND LENDERS
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER TRANSACTION
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG LOAN
PARTIES, AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION
OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
AMONG LOAN PARTIES, AGENT AND/OR LENDERS.  THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT.
THIS WAIVER IS IRREVOCABLE.  THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING.  THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENTS,
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY
RELATED TRANSACTION.  THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
 
 
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10.13        Governing Law and Jurisdiction.
 
(a)           GOVERNING LAW.  THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS
(EXCLUDING THOSE TRANSACTION DOCUMENTS THAT BY THEIR OWN TERMS ARE EXPRESSLY
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF
THE COLLATERAL, PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER
THAN NEW YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF
PERFECTION OF ANY LIEN OR IN REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT
OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE
TO APPLY TO THAT EXTENT.
 
(b)           SUBMISSION TO JURISDICTION.  ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE
STATE OF NEW YORK LOCATED IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY EXECUTING THIS
AGREEMENT HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  NOTWITHSTANDING
THE FOREGOING, THE AGENT AND OTHER LENDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY LOAN PARTY (OR ANY PROPERTY OF SUCH LOAN PARTY)
IN THE COURT OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY
OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS.  THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, THAT ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTIONS.
 
(c)           NON-EXCLUSIVE JURISDICTION.  NOTHING CONTAINED IN THIS SECTION
10.13 SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE REQUIREMENTS OF LAW OR COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER
JURISDICTION.
 
10.14        Confidentiality.  Each Lender and Agent agrees to use all
reasonable efforts to maintain, in accordance with its customary practices, the
confidentiality of information obtained by it pursuant to any Transaction
Document and designated in writing by any Loan Party as confidential, except
that such information may be disclosed (a) with the Borrower’s consent, (b) to
such Lender’s or Agent’s Related Persons (as defined below), as the case may be,
that are advised of the confidential nature of such information and are
instructed to keep such information confidential in accordance with the terms
hereof, (c) to the extent such information presently is or hereafter becomes (i)
publicly available other than as a result of a breach of this Section 10.14 or
(ii) available to such Lender or Agent or any of their Related Persons, as the
case may be, from a source (other than any Loan Party) not known by them to be
subject to disclosure restrictions, (d) to the extent disclosure is required by
any applicable law, rule, regulation, court decree, subpoena or other legal,
administrative, governmental or regulatory request, order or proceeding or
otherwise requested or demanded by any governmental authority, (e) to the extent
necessary or customary for inclusion in league table measurements, (f) (i) to
the National Association of Insurance Commissioners or any similar organization,
any examiner or any nationally recognized rating agency or (ii) otherwise to the
extent consisting of general portfolio information that does not identify Loan
Parties, (g) to current or prospective assignees or participants and to their
respective Related Persons, in each case to the extent such assignees,
participants or Related Persons agree to be bound by provisions substantially
similar to the provisions of this Section 10.14 (and such persons or entities
may disclose information to their respective Related Persons in accordance with
clause (b) above), (h) to any other party hereto, and (i) in connection with the
exercise or enforcement of any right or remedy under any Transaction Document,
in connection with any litigation or other proceeding to which such Lender or
Agent or any of their Related Persons is a party or bound, or to the extent
necessary to respond to public statements or disclosures by Loan Parties or
their Related Persons referring to a Lender or Agent or any of their Related
Persons. In the event of any conflict between the terms of this Section 10.14
and those of any other contractual obligation entered into with any Loan Party
(whether or not a Transaction Document), the terms of this Section 10.14 shall
govern. “Related Persons” means, with respect to any person or entity, each
affiliate of such person or entity and each director, officer, employee, agent,
trustee, representative, attorney, accountant and each insurance, environmental,
legal, financial and other advisor and other consultants and agents of or to
such person or entity or any of its affiliates.
 
 
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10.15        USA Patriot Act.  Each Lender that is subject to the Patriot Act
hereby notifies the Loan Parties that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that
identifies each Loan Party, which information includes the name and address of
each Loan Party and other information that will allow such Lender to identify
each Loan Party in accordance with the Patriot Act.
 
10.16        Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.  Delivery of an executed
signature page of this Agreement by facsimile transmission or electronic
transmission shall be as effective as delivery of a manually executed
counterpart hereof.
 
[Signature Page Follows]
 
 
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IN WITNESS WHEREOF, each Loan Party, Agent and Lenders, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

BORROWER:

XOMA (US) LLC, a Delaware limited liability company
 
By:
       Name:        Title:    

 
PARENT:

XOMA LTD., a Bermuda exempted company
 
By:
       Name:        Title:    

                                          
EACH GUARANTOR:

XOMA TECHNOLOGY LTD., a Bermuda exempted company
 
By:
       Name:        Title:    

 
XOMA IRELAND LIMITED, an Irish private limited company
 
By:
       Name:        Title:    

 
Address For Notices For All Loan Parties:
 
c/o XOMA Ltd.
2910 Seventh Street
Berkeley, CA 94710
Attention: Legal Department
Phone: (510) 201-7200
Facsimile: (510) 649-7571
 
[XOMA CREDIT AGREEMENT]
 
 
 

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AGENT AND LENDER:

GENERAL ELECTRIC CAPITAL CORPORATION
 
By:
       Name:        Title: Duly Authorized Signatory  

 
Address For Notices:
 
General Electric Capital Corporation
c/o GE Healthcare Financial Services, Inc.
Two Bethesda Metro Center, Suite 600
Bethesda, Maryland  20814
Attention: Senior Vice President of Risk – Life Science Finance
Phone: (301) 961-1640
Facsimile: (301) 664-9855
 
With a copy to:

General Electric Capital Corporation
c/o GE Healthcare Financial Services, Inc.
Two Bethesda Metro Center, Suite 600
Bethesda, Maryland  20814
Attention: General Counsel
Phone: (301) 961-1640
Facsimile:  (301) 664-9866

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