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EXHIBIT 10.42A
 
[*] indicates that a confidential portion of the text of this agreement has been
omitted.

 
LOAN AGREEMENT

This Loan Agreement (this “Loan Agreement”) is made and entered into as of
December 30, 2010 (the ”Execution Date”) by and between XOMA Ireland Limited, a
company with limited liability organized under the laws of the Republic of
Ireland having a principal place of business at 26 Upper Pembroke Street, Dublin
2, Ireland (“XOMA Ireland”), on the first part, and Les Laboratoires Servier, a
corporation organized and existing under the laws of France having a principal
place of business at 22 rue Garnier, 92200 Neuilly-sur-Seine, France
(“Servier”), on the second part.  XOMA Ireland and Servier are sometimes
referred to herein individually as a “Party” and collectively as the “Parties”.

Recitals

A.            Concurrently with the execution of this Loan Agreement, XOMA
Ireland and Servier have entered into that certain Collaboration and License
Agreement, dated as of the date hereof (the “Collaboration Agreement”) pursuant
to which the Parties will establish a collaboration for the continued
development and commercialization of products containing XOMA 052.

B.             XOMA Ireland and Servier have agreed to enter into this Loan
Agreement pursuant to which XOMA Ireland may obtain an advance from Servier,
subject to the terms and conditions stated herein, in a principal amount equal
to the Loan Commitment.

Now, Therefore, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as follows:

1.        Definitions

1.1           Defined Terms.  Unless otherwise defined in this Loan Agreement,
all capitalized terms shall have the meanings given them in the Collaboration
Agreement.  As used in this Loan Agreement, the following terms shall have the
following respective meanings:

“Advance” means the loan made, or to be made, pursuant to Article 2 of this Loan
Agreement.

“Applicable Margin” means [*] basis points.

“Business Day” means a weekday on which commercial banks are open for business
in London, England.

“Collaboration Agreement” has the meaning specified in the Recitals.

 
1.

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“Collateral” means all of XOMA Ireland’s right, title and interest in, to and
under that certain Transfer Agreement, dated as of the date hereof, between XOMA
Ireland and XOMA Technology Limited relating to the Intellectual Property Rights
(as defined in the Fixed Equitable Charge).

“Disbursement Date” means the date the Advance is made pursuant to Article 2.

 “EURIBOR” has the meaning specified in Section 3.1(a).

“EURIBOR Interest Period” means the period commencing on the Disbursement
Date  (in the case of the first EURIBOR Interest Period) or the last Business
Day of the prior EURIBOR Interest Period (in all other cases) and ending on the
date that is [*] months thereafter; provided, however, that (a) no EURIBOR
Interest Period with respect to the Advance shall end later than the Maturity
Date, (b) the last day of an EURIBOR Interest Period shall be determined in
accordance with the practices of the EURIBOR market as from time to time in
effect, (c) if any EURIBOR Interest Period would otherwise end on a day that is
not a Business Day, that EURIBOR Interest Period shall be extended to the
following Business Day unless the result of such extension would be to carry
such EURIBOR Interest Period into another calendar month, in which event such
EURIBOR Interest Period shall end on the preceding Business Day, (d) any EURIBOR
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such EURIBOR Interest Period) shall end on the last Business Day
of the calendar month at the end of such EURIBOR Interest Period, and (e)
interest shall accrue from and include the first Business Day of an EURIBOR
Interest Period but exclude the last Business Day of such EURIBOR Interest
Period.

“EURIBOR Determination Date” means each date for calculating the EURIBOR for
purposes of determining the interest rate in respect of an EURIBOR Interest
Period. The EURIBOR Determination Date shall be the second Business Day prior to
the first day of the related EURIBOR Interest Period.

“Event of Default” means any of those conditions or events listed in Article 7.

“Execution Date” has the meaning specified in the opening paragraph hereof.

 “Fixed Equitable Charge” means a fixed equitable charge under the laws of the
Republic of Ireland substantially in the form attached as Exhibit A providing
for a fixed equitable charge on the Collateral.

“IFRS” means International Financial Reporting Standards, as they exist from
time to time, consistently applied.

“Indebtedness” means, as of any given time, XOMA’s entire indebtedness to
Servier as of such time arising under any of the Loan Documents in respect of
principal, interest, fees, costs or otherwise.

 
2.

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“Loan Commitment” means the principal amount of the Advance requested by XOMA
Ireland, which amount is fifteen million euros (€15,000,000).

“Loan Documents” means collectively, this Loan Agreement, the Note, and the
Fixed Equitable Charge, as such documents may be amended, modified, supplemented
or restated from time to time.  Loan Documents do not include the Collaboration
Agreement.

“Material Adverse Effect” means a material adverse effect upon (a) the business,
financial condition, operations or assets of XOMA and its Affiliates, taken as a
whole, or (b) the ability of XOMA Ireland to perform its obligations under the
Loan Documents.

“Maturity Date” means the earlier of (i) the fifth anniversary after the
Disbursement Date, (ii) the date of termination of the Collaboration Agreement
by Servier for material breach by XOMA Ireland under Section 11.4 of the
Collaboration Agreement, (iii) the [*] anniversary of  the effective date of
termination of the Collaboration Agreement under Section 11.3 of the
Collaboration Agreement and (iv) the date of assignment by XOMA of the
Collaboration Agreement to an Acquiror.

“Note” means the promissory note executed by XOMA Ireland evidencing the
Indebtedness, substantially in the form of Exhibit B attached hereto, to be
executed contemporaneously with the funding of the Advance.

“Obligations” means all Indebtedness, liabilities, obligations, covenants and
duties arising under any of the Loan Documents owing by XOMA to Servier whether
direct or indirect, absolute or contingent.

“Repayment Commencement Date” means, subject to Section 3.1(d) the date that is
the [*] anniversary of the Disbursement Date.

“Term” means the period from the Execution Date until the date on which all
outstanding Indebtedness has been repaid in full.

“XOMA Withholding Tax Action” has the meaning specified in Section 3.10(b).

1.2           Accounting Terms.  All accounting terms not specifically defined
in this Loan Agreement shall be determined and construed in accordance with
IFRS.

2.             The Advance

Within 10 (ten) days following the  Execution Date, provided that Servier has
received from XOMA Ireland on or prior to the Execution Date a formal request
for payment detailing all the information necessary for the bank transfer,
Servier shall make the Advance to XOMA Ireland in the principal amount of the
Loan Commitment in accordance with disbursement instructions supplied by XOMA
Ireland.  The Advance shall be evidenced by the Note executed by XOMA Ireland
and the proceeds of the Advance may be used by XOMA directly or indirectly in
relation to the Licensed Product pursuant to the Collaboration Agreement.

 
3.

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3.             Interest and Payments

3.1           Interest.

(a)           Calculation of Interest. For each EURIBOR Interest Period, the
outstanding principal amount of the Advance shall bear interest at a rate per
annum equal to the sum of (i) the applicable six-month Euro Inter-Bank Offered
Rate (“EURIBOR”) as published by Thomson Reuters (or any successor thereto) on
the EURIBOR Determination Date, plus (ii) the Applicable Margin; provided that
such rate shall not exceed [*] percent ([*]%).  As soon as practicable on each
EURIBOR Determination Date, SERVIER shall determine the interest rate that shall
apply to the Advance for the applicable EURIBOR Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to  XOMA Ireland.  Such determination shall be binding upon the
parties.  Interest on the Advance shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.  In the
event that SERVIER is unable to determine EURIBOR, the parties shall negotiate
in good faith to determine a substitute rate.  At the end of each six month
period, the unpaid interest will be added to the outstanding principal amount
for the calculation of interest for the next six month period.

(b)           Default Interest. Notwithstanding the above Section 3.1.(a) from
and during the continuance of any failure by XOMA Ireland to pay any principal
and accrued interest due and payable to Servier, the outstanding principal
amount and accrued interest of the Advance shall bear interest at a rate per
annum equal to [*] basis points above the EURIBOR on the EURIBOR Determination
Date. This remedy is in addition to the other remedies set forth in Article 8
below.

(c)           Interest Payments.  From the Disbursement Date to the Repayment
Commencement Date,  accrued interest shall not be due or payable; provided,
however that interest will accrue and be added to the outstanding principal as
provided in Section 3.1(a).  On the Repayment Commencement Date, all accrued and
unpaid interest to, but excluding, such date, shall be  paid by XOMA Ireland to
Servier and thereafter, accrued and unpaid interest shall be due and payable .at
the end of each six month period.

(d)           Acceleration of Repayment Commencement Date.  In the event of any
termination of the Collaboration Agreement in its entirety by Servier pursuant
to Section 11.2 or Section 11.3 of the Collaboration Agreement prior to the date
which is [*] months prior to the Repayment Commencement Date, the Repayment
Commencement Date shall be accelerated, and the Repayment Commencement Date
shall be defined thereafter as the date that is [*] months following the
effective date of such termination, at which time interest payments shall
commence as provided in Section 3.1(c), at the interest rate provided in Section
3.1(a).

 
4.

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3.2           Principal Repayment.  Notwithstanding any provision to the
contrary, all outstanding principal, together with all accrued and unpaid
interest, shall be due and payable by XOMA Ireland on the Maturity Date.

3.3           Right of Offset.  From and after the Repayment Commencement Date,
Servier may, at its election upon written notice to XOMA Ireland, withhold from
XOMA Ireland and apply to the principal amount of the Advance an amount up to
[*]% of any milestone payment owing from Servier to XOMA Ireland under the
Collaboration Agreement and any royalty payment owing from Servier to XOMA
Ireland under the Collaboration Agreement.  Upon such application, Servier shall
be deemed to have satisfied its obligation to pay the withheld amount to XOMA
Ireland in respect of the applicable milestone payment, and XOMA Ireland shall
be deemed to have discharged the principal amount of the Advance in the amount
so applied. Servier shall have the right to set-off or apply any amounts owed by
Servier or any of its Affiliates to XOMA Ireland or any of its Affiliates
against the Indebtedness hereunder in case of Event of Default. Except as
expressly permitted under this Section 3.3, Servier shall not have any right to
set-off or apply any amounts owed by Servier or any of its Affiliates to XOMA
Ireland or any of its Affiliates against the Indebtedness hereunder.

3.4           Mandatory Prepayment.  From and after the Repayment Commencement
Date, upon receipt by XOMA Ireland or any of its Affiliates of any upfront,
milestone or royalty payment in cash from any Third Party Partner within the
Retained Territory, XOMA Ireland shall (a) promptly provide Servier written
notice thereof, and (b) within [*] days of the actual receipt of such payment,
prepay the Indebtedness in an amount equal to [*] percent ([*]%) of such
payment.

3.5           Payments on Non-Business Day.  In the event that any payment of
any principal, interest, fees or any other amounts payable by XOMA Ireland under
or pursuant to this Loan Agreement, or under any other Loan Document shall
become due on any day which is not a Business Day, such due date shall be
extended to the next succeeding Business Day, provided that no interest shall
accrue for and during any such extension.

3.6           Payment Procedures.  All sums payable by XOMA Ireland to Servier
under or pursuant to this Loan Agreement, or any other Loan Document, whether
principal, interest, or otherwise, shall be paid, when due, directly to Servier
bank account designated in writing by Servier to XOMA Ireland, in immediately
available funds denominated in Euros, and without setoff, deduction or
counterclaim.

3.7           Optional Prepayments. XOMA Ireland may prepay the outstanding
Indebtedness, in whole or in part, without premium or penalty, at any time and
from time to time.

3.8           Application of Prepayments or Repayments.  Any partial prepayment
or repayment shall be applied first to any Indebtedness consisting of amounts
other than principal and interest, second to accrued but accrued and unpaid
interest on the principal amount to be prepaid and finally to outstanding
principal.

 
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3.9           Collection Costs.  All amounts payable by XOMA Ireland under any
of the Loan Documents shall be payable with all collection costs and reasonable
attorneys' fees.

3.10         Tax Cooperation.

(a)           The Parties agree to cooperate with one another and use reasonable
efforts to reduce or eliminate tax withholding or similar obligations in respect
of payments of interest and other Indebtedness made by XOMA Ireland to Servier
under this Loan Agreement.  XOMA Ireland agrees that under current French/Irish
Laws, payments made by XOMA Ireland  to Servier under this Loan Agreement are
not subject to withholding tax in Ireland so long as Servier files appropriate
documentation with the Republic of Ireland evidencing its eligibility for an
exemption from withholding tax.  XOMA Ireland shall provide to Servier, who
shall complete any required portions of, any tax forms that may be reasonably
necessary in order for Servier not to withhold tax or to withhold tax at a
reduced rate under an applicable bilateral income tax treaty, including Forms
5000-EN and 5003-EN. To the extent XOMA Ireland is required to deduct and
withhold taxes on any payment to Servier, XOMA Ireland shall pay the amounts of
such taxes to the proper Governmental Authority in a timely manner and promptly
transmit to Servier an official tax certificate or other evidence of such
withholding sufficient to enable Servier to claim such payment of taxes. Servier
shall provide XOMA Ireland any tax forms that may be reasonably necessary in
order for XOMA Ireland not to withhold tax or to withhold tax at a reduced rate
under an applicable bilateral income tax treaty.  Each Party shall provide the
other with reasonable assistance to enable the recovery, as permitted by
applicable Laws, of withholding taxes, value added taxes, or similar obligations
resulting from payments made under this Loan Agreement, such recovery to be for
the benefit of the Party bearing such withholding tax or value added tax.

(b)           If XOMA Ireland is required to make a payment to Servier that is
subject to a deduction or withholding of tax, then (i) if such withholding or
deduction obligation arises as a result of any action by XOMA Ireland or any
failure on the part of XOMA Ireland to comply with applicable Laws or filing or
record retention requirements, that has the effect of modifying the tax
treatment of the Parties hereto (a “XOMA Withholding Tax Action”), then the sum
payable by XOMA Ireland (in respect of which such deduction or withholding is
required to be made) shall be increased to the extent necessary to ensure that
Servier receives a sum equal to the sum that it would have received had no such
Servier Withholding Tax Action occurred, and (ii) otherwise, the sum payable by
XOMA Ireland (in respect of which such deduction or withholding is required to
be made) shall be made to Servier after deduction of the amount required to be
so deducted or withheld, which deducted or withheld amount shall be remitted to
the proper Governmental Authority in accordance with applicable Laws.

4.             Conditions Precedent

The obligation of Servier to make the Advance shall be subject to the
satisfaction of each of the following conditions precedent:

 
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4.1           Representations and Warranties.  Each of the representations and
warranties of XOMA in this Loan Agreement shall be true and correct in all
material respects on and as of the Execution Date.

4.2           Collaboration Agreement Not Terminated by XOMA Ireland. The
Collaboration Agreement shall not have been terminated by XOMA Ireland, nor
shall XOMA Ireland have given Servier written notice of its intention to
terminate the Collaboration Agreement.

4.3           No Default.  No Event of Default shall have occurred and be
continuing.

4.4           Note.  XOMA Ireland shall have delivered to Servier the Note, duly
authorized and executed by XOMA Ireland.

4.5           Fixed Equitable Charge.  XOMA Ireland shall have delivered to
Servier the Fixed Equitable Charge, duly authorized and executed by XOMA
Ireland.

5.             Representations And Warranties of XOMA

XOMA Ireland hereby represents and warrants to Servier as of the Execution Date:

5.1           Organization, Good Standing and Qualification.  XOMA Ireland is
validly existing under the laws of the Republic of Ireland. XOMA Ireland is duly
qualified to transact business as a corporation and is in good standing (to the
extent such concept is applicable) in each jurisdiction in which the failure so
to qualify would have a material adverse effect upon XOMA Ireland’s ability to
perform its obligations under any of the Loan Documents or the validity or
enforceability of, or Servier’s rights and remedies under, this Loan Agreement
or any of the other Loan Documents.

5.2           Authorization; Due Execution.  XOMA Ireland has the requisite
power and authority to enter into each of the Loan Documents and to perform its
obligations under the terms of each of the Loan Documents.  All company action
on the part of XOMA Ireland, its officers, directors and stockholders necessary
for the authorization, execution, delivery and performance of each of the Loan
Documents has been taken.  Each of the Loan Documents has been duly authorized,
executed and delivered by XOMA Ireland and, upon due execution and delivery by
Servier of this Loan Agreement, each of the Loan Documents will each be a valid
and binding agreement of XOMA Ireland, enforceable in accordance with its
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally or by equitable principles.

5.3           Governmental Consents.  No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Irish, Belgian, or U.S. federal, state, provincial or cantonal,
or local governmental authority on the part of XOMA Ireland is required in
connection with the consummation of the transactions contemplated by the Loan
Documents, except for such approvals or consents the failure to obtain would not
reasonably be expected to result in a Material Adverse Effect.

 
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5.4           No Conflict.  XOMA Ireland’s execution, delivery and performance
of each of the Loan Documents does not violate any provision of XOMA Ireland’s
Memorandum and Articles of Association, each as amended as of the date hereof,
any provision of any order, writ, judgment, injunction, decree, determination or
award to which XOMA Ireland is a party or by which it is bound, or, to XOMA
Ireland’s knowledge, any law, rule or regulation currently in effect having
applicability to XOMA Ireland.

5.5           Litigation.  There is no action, litigation or proceeding pending
or threatened against or involving XOMA Ireland or its Affiliates in any court
or before or by any agency or regulatory body which would reasonably be expected
to result in a Material Adverse Effect.

5.6           Payment of Taxes.  XOMA Ireland has filed all tax returns which
were required to be filed by it prior to and as of the date of this Loan
Agreement.  XOMA Ireland has paid all taxes and assessments which to XOMA
Ireland 's knowledge are payable by it, to the extent that the same have become
due and payable and before they became delinquent, except for any taxes or
assessments that are being contested in good faith by appropriate proceedings
properly instituted and diligently conducted.  XOMA Ireland does not know of any
proposed material tax assessment against it or any of its properties for which
adequate provision has not been made on its books.

5.7           Compliance.  XOMA Ireland is in compliance with and in conformity
to all laws, ordinances, rules, regulations and all other legal requirements,
the violation of which would reasonably be expected to result in a Material
Adverse Effect.

6.             Covenants

XOMA Ireland covenants and agrees that, during the Term, it will:

6.1           Maintenance of Existence and Rights. Maintain and preserve in full
force and effect its existence and all material rights, contracts, licenses,
leases, qualifications, privileges, franchises and other authority necessary for
the conduct of its business, and qualify and remain qualified to do business in
each jurisdiction in which such qualification is material to its business and
operations or ownership of its properties, except where the lapsing of any of
the foregoing would not reasonably be expected to result in a Material Adverse
Effect.

6.2           Governmental and Other Approvals.  Apply for, obtain and maintain
in effect, as applicable, all material authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and registrations
(whether with any court, governmental agency, regulatory authority, securities
exchange or otherwise) which are necessary in connection with the execution,
delivery and performance by XOMA Ireland of this Loan Agreement, the Loan
Documents, or any other documents or instruments to be executed or delivered by
XOMA Ireland, in connection with the Loan Documents.

 
8.

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6.3           Compliance with Laws. Carry out its obligations pursuant to this
Agreement consistent with all applicable laws.

6.4           Use of Proceeds.  Use the proceeds of the Advances solely for the
purposes set forth in Article 2 above.

6.5           Payment of Taxes. Pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it or its income or property prior
to the date on which penalties attach thereto and (b) all lawful claims and
debts which, if unpaid, might become a lien upon any of its property; provided
that XOMA Ireland shall not be required to pay any such tax, assessment, charge,
levy, claim or debt for which XOMA Ireland has obtained a bond or insurance, or
for which it has established a reserve, if the payment thereof is being
contested in good faith and by appropriate proceedings which are being
reasonably and diligently pursued.

6.6           Litigation.  Notify Servier in writing, reasonably promptly upon
learning thereof, of any litigation commenced against XOMA Ireland or any of its
Affiliates,  which would reasonably be expected to result in a Material Adverse
Effect.

6.7           Notices/Material Developments.  Promptly (and in any event within
five (5) Business Days) after obtaining knowledge of the occurrence of any event
that has resulted in or would reasonably be expected to result in a Material
Adverse Effect, deliver to Servier a statement of XOMA Ireland setting forth the
details of each such event and the action which XOMA Ireland has taken and
proposes to take with respect thereto.  In addition, XOMA Ireland shall promptly
inform Servier by written notice of the occurrence of any event or condition of
any nature which constitutes an Event of Default.

7.             Events Of Default

The occurrence or existence of any of the following conditions or events shall
constitute an “Event of Default” hereunder:

7.1           Failure to Pay.  XOMA Ireland shall fail to pay any principal,
interest or other sums due to Servier under this Loan Agreement and such failure
shall continue for a period of [*] Business Days after the receipt of written
notice from Servier thereof.

7.2           Other Defaults Under the Loan Documents.  Any default in the
observance or performance of any of the other conditions, covenants, or
agreements of XOMA Ireland set forth in this Loan Agreement or in any Loan
Document, and, if such default is capable of remedy, continuance thereof for a
period of [*] days after the receipt of written notice from Servier thereof.

7.3           Insolvency; Bankruptcy.  If (i) XOMA Ireland,  XOMA (US) LLC, or
XOMA Ltd, (in each case, “XOMA”) becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, its debts as they mature, or applies
for, consents to, or acquiesces in the appointment of a trustee, receiver,
liquidator, conservator or other custodian for itself, or a substantial part of
its property, or makes a general assignment for the benefit of creditors;
(ii) XOMA files a voluntary petition in bankruptcy or a trustee, receiver,
liquidator, conservator or other custodian is appointed for XOMA, or for a
substantial part of its property; (iii) any bankruptcy, reorganization, debt
arrangement, or other proceedings under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or against XOMA, and the
same is consented to or acquiesced by XOMA,  or otherwise remains undismissed
for [*] days; or (iv) any warrant of attachment is issued against any
substantial part of the property of XOMA which is not released within [*] days
of service thereof.

 
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7.4           Representations and Warranties.  Any representation or warranty
made by XOMA Ireland in any Loan Document shall fail to be true and correct in
any material respect when made or deemed to have been made.

8.            Servier’s Rights And Remedies

8.1           Rights and Remedies.  Upon the occurrence and during the
continuance of an Event of Default, Servier may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by XOMA Ireland :

(a)           Declare all Obligations immediately due and payable;

(b)           Terminate this Loan Agreement as to any future liability or
obligation of Servier, but without affecting the Obligations of XOMA Ireland to
Servier;

(c)           Exercise the remedies in respect of the Collateral provided for
in, and in accordance with, the Loan Documents; and

(d)           Exercise the remedies (including damages) available to Servier
under the applicable laws arising out of a breach of this Loan Agreement by XOMA
Ireland.

8.2           Waiver of Defaults.  No Event of Default shall be waived by
Servier except in a written instrument specifying the scope and terms of such
waiver and signed by an authorized officer of Servier, and such waiver and shall
be effective only for the specific times and purposes given.  No single or
partial exercise of any right, power or privilege hereunder, nor any delay in
the exercise thereof, shall preclude other or further exercise of Servier’s
rights.  No waiver of any Event of Default shall extend to any other or further
Event of Default.  No forbearance on the part of Servier in enforcing any of
Servier’s rights or remedies hereunder or under any of the other Loan Documents
shall constitute a waiver of any of its rights or remedies.

 
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8.3           Remedies Cumulative.  Servier’s rights and remedies under this
Loan Agreement, the Loan Documents, and all other agreements shall be
cumulative.  Servier shall have all other rights and remedies not expressly set
forth herein as provided under applicable law, or in equity.  No exercise by
Servier of one right or remedy shall be deemed an election, and no waiver by
Servier of any Event of Default on XOMA Ireland’s part shall be deemed a
continuing waiver.  No delay by Servier shall constitute a waiver, election, or
acquiescence by it.  No waiver by Servier shall be effective unless made in a
written document signed on behalf of Servier and then shall be effective only in
the specific instance and for the specific purpose for which it was given.

8.4           Waiver.  XOMA Ireland waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Servier on which XOMA Ireland may in any way be liable.

9.             Miscellaneous

9.1           Entire Agreement; Amendments.  This Loan Agreement, together with
the Note, sets forth the complete, final and exclusive agreement and all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings between the
Parties with respect to the subject matter hereof.  There are no covenants,
promises, agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as are set forth in this
Loan Agreement, the Note and the Collaboration Agreement.  No subsequent
alteration, amendment, change or addition to this Loan Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.

9.2           Assignment. Neither Party may assign or transfer this Loan
Agreement, the Note or any rights or obligations hereunder or thereunder (or any
participation or interest in the Note or the Advance) without the prior written
consent of the other, except that Servier may make such an assignment without
XOMA Ireland’s consent to its Affiliates, provided such assignment has no
material adverse impact on XOMA Ireland. Any assignment or attempted assignment
by either Party in violation of the terms of this Section 9.2 shall be null,
void and of no legal effect.

9.3           Severability.  If any of the provisions of this Loan Agreement are
held to be invalid or unenforceable by any court of competent jurisdiction from
which no appeal can be or is taken, the provision shall be considered severed
from this Loan Agreement and shall not serve to invalidate any remaining
provisions hereof.  The Parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the Parties when entering this Loan Agreement may
be realized.

9.4           Notices.  Any notices given under any Loan Document shall be in
writing, addressed to the Parties at the following addresses, and delivered by
person, by facsimile (with receipt confirmation), or by FedEx or other reputable
courier service.  Any such notice shall be deemed to have been given: (a) as of
the day of personal delivery; (b) one (1) day after the date sent by facsimile
service; or (c) on the day of successful delivery to the other Party confirmed
by the courier service.  Unless otherwise specified in writing, the mailing
addresses of the Parties shall be as described below.

 
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If to XOMA:
XOMA Ireland Limited
         
26 Upper Pembroke Street
   
Dublin 2
   
Ireland
   
Attention: Company Secretary
   
FAX: 353 1 637 3989
       
With copies (which shall not constitute notice) to:
         
A & L Goodbody
   
North Wall Quay
   
IFSC
   
Dublin 1
   
Attention:  Seamus O’Croinin
   
FAX: 353 1 649 2649
       
If to Servier:
           
22 rue Garnier,
   
92200 Neuilly-sur-Seine,
   
France
   
Attention:  Direction de la Coopération Scientifique
   
FAX:  +33.1.55.72.39.00
       

9.5           Waiver. Any delay in enforcing a Party’s rights under this Loan
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such Party’s rights to the future enforcement of its
rights under this Loan Agreement, excepting only as to an express written and
signed waiver as to a particular matter for a particular period of time.

9.6           Governing Law.  Resolution of all disputes, controversies or
claims arising out of, relating to or in connection with this Loan Agreement or
the performance, enforcement, breach or termination of this Loan Agreement and
any remedies relating thereto, shall be governed by and construed under the
substantive laws of [*], without regard to conflicts of law rules.

9.7           Binding Arbitration.  If the Parties are unable to resolve a
dispute relating to any alleged breach under this Loan Agreement or any issue
relating to the interpretation or application of this Loan Agreement within [*]
days after first notification of such dispute and either Party wishes to pursue
the matter, each such dispute, controversy or claim shall be finally resolved by
binding arbitration administered by the International Chamber of Commerce
(“ICC”) pursuant to its Dispute Resolution Rules then in effect, and judgment on
the arbitration award may be entered in any court having jurisdiction
thereof.  The Parties agree that:

 
12.

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(a)           The arbitration shall be conducted by a panel of three persons
experienced in the pharmaceutical business. Within [*] days after initiation of
arbitration, each Party shall select one person to act as arbitrator and the two
Party-selected arbitrators shall select a third arbitrator within [*] days of
their appointment.  If the arbitrators selected by the Parties are unable or
fail to agree upon the third arbitrator, the third arbitrator shall be appointed
by the ICC. The place of arbitration shall be [*], and all proceedings and
communications shall be in English.

(b)           Either Party may apply to the arbitrators for interim injunctive
relief until the arbitration award is rendered or the controversy is otherwise
resolved.  Either Party also may, without waiving any remedy under this Loan
Agreement, seek from any court having jurisdiction any injunctive or provisional
relief necessary to protect the rights or property of that Party pending the
arbitration award.  The arbitrators shall have no authority to award punitive or
any other type of damages not measured by a Party’s compensatory damage.  Each
Party shall bear its own costs and expenses and attorneys’ fees and an equal
share of the arbitrators’ fees and any administrative fees of arbitration,
unless the arbitrators determine that a Party has incurred unreasonable expense
due to vexatious or bad faith position taken by the other Party, in which event,
the arbitrators may make an award of all or any portion of such expenses so
incurred.

(c)           Reasons for the arbitrators’ decisions should be complete and
explicit, including reasonable determinations of law and fact.  The written
reasons should also include the basis for any damages awarded and a statement of
how the damages were calculated.  Such a written decision shall be rendered by
the arbitrators following a full comprehensive hearing, no later than [*] months
following the selection of the arbitrators under Section 10.7(a).

(d)           Except to the extent necessary to confirm an award or as may be
required by applicable Laws, neither Party nor any arbitrator may disclose the
existence, content, or results of an arbitration without the prior written
consent of both Parties.  In no event shall an arbitration be initiated after
the date when commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the applicable statute of
limitations.

9.8           Construction of this Loan Agreement.  Except where the context
otherwise requires, wherever used, the use of any gender shall be applicable to
all genders, and the word “or” is used in the inclusive sense.  When used in
this Loan Agreement, “including” means “including without limitation”.  Where
the context herein requires, the singular number shall be deemed to include the
plural, the masculine gender shall include the feminine and neuter genders, and
vice versa. When a reference is made in this Loan Agreement to the Recitals,
Articles, Sections, Exhibits or Schedules, such reference is to a Recital,
Article or Section of, or an Exhibit or Schedule to, this Loan Agreement, unless
otherwise indicated.  References to either Party include the successors and
permitted assigns of that Party.  The headings of this Loan Agreement are for
convenience of reference only and in no way define, describe, extend or limit
the scope or intent of this Loan Agreement or the intent of any provision
contained in this Loan Agreement. The Parties have each consulted counsel of
their choice regarding this Loan Agreement and have jointly prepared this Loan
Agreement, and, accordingly, no provisions of this Loan Agreement shall be
construed against either Party on the basis that the Party drafted this Loan
Agreement or any provision thereof.  If the terms of this Loan Agreement
conflict with the terms of any Exhibit, then the terms of this Loan Agreement
shall govern.  The official text of this Loan Agreement and any Exhibits hereto,
any notice given or accounts or statements required by this Loan Agreement, and
any dispute proceeding related to or arising hereunder, shall be in English.  In
the event of any dispute concerning the construction or meaning of this Loan
Agreement, reference shall be made only to this Loan Agreement as written in
English and not to any other translation into any other language.

 
13.

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9.9           Counterparts.  This Loan Agreement may be executed in two (2) or
more counterparts, each of which shall be an original and all of which together
will constitute the  same document.

[The signature page follows.]

 
14.

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In Witness Whereof, the Parties have executed this Loan Agreement in duplicate
originals by their proper officers as of the Execution Date.

Les Laboratoires Servier
XOMA Ireland Limited
       
By:
By:
   
Name: [*]
Name: [*]
   
Title: [*]
Title: [*]
       
By:
     
Name: [*]
     
Title: [*]
 

 
 
[Signature Page to Loan Agreement]
 
 
 

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Exhibit A

Dated   [to be dated as of the funding and note dates]

XOMA IRELAND LIMITED

(the “Company”)

LES LABORATOIRES SERVIER

(the “Chargee”)

FIXED CHARGE

 
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INDEX

1.
DEFINITIONS AND INTERPRETATION
3
     
2.
OBLIGATION TO PAY AND DISCHARGE:
6
     
3.
CHARGING PROVISIONS
6
     
4.
SUPPLEMENTARY PROVISIONS
6
     
5.
GENERAL PROTECTION OF ASSETS
8
     
6.
ENFORCEMENT
10
     
7.
RECEIVERS
10
     
8.
LIABILITY OF CHARGEE AND RECEIVER
12
     
9.
CHARGEE AS MORTGAGEE IN POSSESSION
13
     
10.
STATUTORY POWERS
13
     
11.
CURRENCY CLAUSES
13
     
12.
MISCELLANEOUS PROVISIONS
14

 
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THIS FIXED CHARGE is dated _________________ and made between

 
(1)
XOMA IRELAND LIMITED a company incorporated in Ireland with registered number
307875 and having its registered office at 26 Upper Pembroke Street, Dublin 2,
Ireland (the Company); and

 
(2)
LES LABORATOIRES SERVIER, a corporation organised and existing under the laws of
France having its principal place of business at 22 rue Garnier, 92200
Neuilly-sur-Seine, France (the Chargee).

RECITALS

 
The Company is indebted or may hereafter become indebted to the Chargee in
respect of certain borrowings incurred by the Company pursuant to a Loan
Agreement (the Loan Agreement) dated December 30, 2010 between the Chargee as
lender and the Company as borrower.

It has been agreed between the Company and the Chargee that all monies now owing
or which shall at any time in the future become owing from the Company to the
Chargee pursuant to the Loan Agreement together with interest, costs and charges
arising thereunder shall be secured by this Charge.

IT IS AGREED BY THIS DEED as follows:

10.           DEFINITIONS AND INTERPRETATION
 
10.1         In this Charge, unless the context otherwise requires:
 
Act means the Land and Conveyancing Law Reform Act 2009;

Business Day means a day (other than a Saturday or Sunday) on which banks are
open for the conduct of their normal business in Dublin;

Dispute means any suit, action, proceedings and/or any dispute or difference
which may arise out of or in connection with or which may relate in any way to
the Finance Documents (including but not limited to any suit, action,
proceedings, dispute or difference relating to the formation, interpretation or
performance of the Finance Documents or any dispute or difference which may
arise out of or in connection with or which may relate in any way to any
non-contractual obligations of any nature (including those to which Regulation
(EC) No. 864/2007 applies) between the parties or any of them and Disputes shall
be construed accordingly;

 
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Enforcement Event means the occurrence and continuance  of an Event of Default;

Event of Default has the meaning ascribed to it in the Loan Agreement;

euro means the national currency unit for the time being of Ireland;

Finance Documents means this Charge and the Loan Agreement;

Indebtedness means, as of any given time, the Company’s entire indebtedness to
the Chargee as of such time arising under any of the Loan Documents in respect
of principal, interest, fees, costs or otherwise;

Intellectual Property Rights  means all of the Company’s  patents and patent
applications in the Licensed Territory listed in the Schedule, and  any and all
related continuations, continuations-in-part, divisions, extensions, reissues,
re-examinations, renewals or substitutions, any and all other proprietary rights
related to any of the foregoing (including without limitation remedies against
infringements thereof and rights of protection of an interest therein under the
laws of all jurisdictions) in the Territory;

Licensed Territory means all countries of the world other than (a) the United
States of America and (b) Japan, including their respective territories and
possessions;
 
Loan Documents means collectively the Loan Agreement and the Note as such
documents may be amended, modified, supplemented or restated from time to time;

Obligations means all Indebtedness, liabilities, obligations, covenants and
duties arising under any of the Loan Documents owing by the Company to the
Chargee whether direct or indirect, absolute or contingent;

Proceedings has the meaning ascribed to it in clause 12.11.2;

Product has the meaning ascribed to that term in the Transfer Agreement;

Receiver has the meaning ascribed to it in clause 7.1;

Specifically Charged Property means the property and assets referred to in
clauses 3.1 and 3.2; inclusive;

Transfer Agreement means that certain Transfer Agreement between XOMA Technology
Ltd. and the Company dated 21 December 2010 relating to the Intellectual
Property Rights; and

XOMA 052 has the meaning ascribed to that term in the Transfer Agreement;

10.2         In this Charge (except where the context otherwise requires):

 
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(a)   a word or phrase the definition of which is contained or referred to in
section 2 of the Companies Act 1963 or Section 3 of the Act has the meaning
thereby attributed to it;

(b)   the singular includes the plural and vice versa and any gender includes
the other gender;

(c)   words importing persons include natural persons, firms, partnerships,
companies, corporations, associations, organisations, governments, states,
foundations and trusts (in each case whether or not having a separate legal
personality);

(d)   any reference to a statute, statutory provision or subordinate legislation
(“legislation”) is (unless the contrary is clearly stated) to be construed as a
reference to legislation operative in Ireland and is (except where the context
otherwise requires) to be construed as referring to such legislation as amended
and in force from time to time and to any legislation which re-enacts or
consolidates (with or without modification) any such legislation;

(e)   save as otherwise provided in this Charge, any reference to a section,
clause, paragraph, sub-clause, sub-paragraph or schedule is a reference to a
section, clause, paragraph, sub-clause, sub-paragraph or schedule (as the case
may be) of this Charge;

(f)   the index and headings are inserted for convenience only and are not to
affect the construction of this Charge;

(g)   a reference to any document includes that document as it has or may be
amended, varied, assigned, novated, restated or supplemented from time to time;

(h)   the Company and the Chargee or any other person shall be construed so as
to include its successors in title, permitted assigns and permitted transferees;

(i)   any reference to a legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any legal concept
or thing is, in respect of any jurisdiction other than Ireland, to be deemed to
include a reference to what most nearly approximates in that jurisdiction to the
Irish legal term; and

 
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(j)   any phrase introduced by the terms “including”, “include”, “in particular”
or any similar expression is to be construed as illustrative and shall not limit
the sense of the words preceding those terms; [and]
 
(k)   terms not specifically defined herein shall have the meaning attributed to
them in the [Loan Agreement.

10.3         The Schedule forms part of this Charge and is to have effect as if
set out in full in the body of this Charge and any reference to this Charge
includes the Schedule.

11.          OBLIGATION TO PAY AND DISCHARGE:

The Company shall pay and discharge to the Chargee on first demand the
Obligations when due.

12.          CHARGING PROVISIONS

The Company as beneficial owner to the intent that the charges contained in this
Charge will be a continuing security for the payment and discharge of the
Obligations:

12.1         HEREBY CHARGES by way of first fixed charge the Transfer Agreement
and all the right, title and interest of the Company in the Transfer Agreement;

12.2         HEREBY CHARGES as a first fixed charge all of the Company’s rights,
title, interest and benefit in all Intellectual Property Rights including,
without limitation, all Intellectual Property Rights specified in the Schedule
to this Charge.

13.          SUPPLEMENTARY PROVISIONS

13.1         The Company shall during the continuance of the security
constituted by this Charge from time to time do, execute, acknowledge and
deliver all and every such further deeds, conveyances, assignments, demises,
mortgages, charges, documents and assurances at law as are necessary or
advisable or as the Chargee may reasonably require for the better granting,
conveying, assigning, transfer, demising or charging the same to the Chargee for
the purpose referred to in this clause 4.1 and for conferring upon the Chargee
such power of sale and other powers over the said property as are expressed to
be conferred by this Charge.

 
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13.2         This security will be a continuing security notwithstanding any
settlement of account or other matter or thing whatsoever and in particular will
not be considered satisfied by any intermediate repayment or satisfaction of all
or any of the monies, liabilities and obligations secured by this Charge and
will continue in full force and effect until final repayment in full and total
satisfaction of all monies, liabilities and obligations secured by this Charge;
and if upon such final repayment and satisfaction there shall exist any right on
the part of the Company or any other person to draw funds or otherwise which, if
exercised, would or might cause the Company to become actually or contingently
liable to the Chargee whether as principal debtor or as surety for another
person, then the Chargee will be entitled to retain this security and all
rights, remedies and powers conferred by this Charge, the Specifically Charged
Property for so long as shall or might be necessary to secure the discharge of
such actual or contingent liability; and in the event that any demand is made by
the Chargee under this Charge the said monies will become due and shall be paid
and discharged to the Chargee and all provisions of this Charge will apply
accordingly.

13.3         The security constituted by this Charge will be in addition to and
will not operate so as in any way to prejudice or affect any other security
which the Chargee may now or at any time in the future hold for or in respect of
all or any part of the monies and liabilities secured by this Charge, nor will
any such other security or any lien to which the Chargee may be otherwise
entitled or the liability of any person not party to this Charge for all or any
part of the monies and liabilities secured by this Charge be in any way
prejudiced or affected by this security. The Chargee will have full power at its
discretion to give time for payment to or make any other arrangement with any
such other person without prejudice to the liability of the Company under this
Charge.

13.4         If the Obligations covenanted to be paid and discharged in this
Charge have been unconditionally and irrevocably paid and discharged in full the
Chargee shall, as soon as reasonably practicable after such payment and
discharge and at the request and cost of the Company, execute such documents as
may be necessary to release the security created by this Charge.

13.5         If the Chargee receives, or is deemed to be affected by, actual or
constructive notice of any subsequent charge or assignment or other disposition
or interest affecting the Specifically Charged Property or any part of the
Specifically Charged Property, the Chargee may open a new account for the
Company.  If the Chargee does not open a new account then, unless the Chargee
gives express written notice to the contrary to the Company, the Chargee will
nevertheless be treated as if it had done so at the time when it received or was
deemed to have received notice and as from that time all payments made to any
account of the Company shall be credited or be treated as having been credited
to the new account and will not operate to reduce the amount due from the
Company to the Chargee at the time when the Chargee received or was deemed to
have received that notice.

 
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14.          GENERAL PROTECTION OF ASSETS

14.1         The Company shall not create or permit to subsist any mortgage,
charge, pledge, debenture, lien (other than a lien arising in the ordinary and
usual course of business by operation of law) or other encumbrance on the
Specifically Charged Property securing any obligation of any person or any other
type of preferential arrangement (including any title transfer and retention
arrangement) having a similar effect.

14.2         The Company may not take any action in relation to the Specifically
Charged Property or this Charge under the provisions of Section 94 of the Act
(Court order for sale).

14.3         The Company shall also at all times during the continuance of the
security constituted by this Charge:

(a)            notify the Chargee in writing of all of the  Intellectual
Property Rights upon written demand by the Chargee and make such applications
and maintain such registrations to keep those registered Intellectual Property
Rights which are material to the Company's business in force and to record the
Company’s interest in those Intellectual Property Rights, take such steps at its
own expense as are within its power (including, without limitation, the
institution of legal proceedings) to prevent third parties infringing the
Intellectual Property Rights and use its best endeavours to procure that any
further Intellectual Property Rights licensed to it are freely assignable and
chargeable to the Chargee;

(b)            if requested to do so by the Chargee from time to time, make
entries in any appropriate public register (in Ireland or elsewhere) of the
Intellectual Property Rights which record the existence of this Charge;

(c)            in the event of a notice being served affecting the Specifically
Charged Property or any part of the Specifically Charged Property or in the
event of any proceedings being commenced affecting the Specifically Charged
Property in a matter of material importance immediately give full particulars of
the notice or proceedings to the Chargee;

(d)

 
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(i)
do, observe and perform all its obligations and all matters and things necessary
or expedient to be done, observed and performed under or by virtue of every
licence and agreement to which the Company is party so as to preserve, protect
and maintain all of the rights of the Company in them;

 
(ii)
not suffer or permit any default for which any of the same may be terminated or
as a result of which any party thereto may be relieved of any liability or
obligation but, on the contrary, exercise and enforce from time to time all its
rights and remedies;

 

 
(iii)
if and when entitled to do so, renew all such licences and agreements so long as
the same have utility or commercial value; and

 
(iv)
on the expiration of any such licences and agreements, use its best endeavours
to obtain new licences or agreements as the case may be on the most favourable
terms available so long as the same have utility or commercial value;

 
(e)

 
(i)
not without the written consent of the Chargee sell, convey, assign or transfer
the Specifically Charged Property or any interest therein or any part of the
Specifically Charged Property;

 
(ii)
not part with possession of the Specifically Charged Property or any part of the
Specifically Charged Property without the prior written consent of the Chargee;
and

(f)            pay or cause to be paid all rents, taxes, rates, assessments,
impositions, calls and outgoings, whether governmental, municipal or otherwise,
imposed upon or payable in respect of the Specifically Charged Property or any
part of the Specifically Charged Property as and when the same become payable,
and also punctually pay and discharge, or cause to be paid and discharged, all
debts and obligations to or in respect of persons employed by the Company which
by law may have priority over the security created by this Charge;
 
 
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(g)            not amend or waive any terms of the Transfer Agreement without
the prior written consent of the Chargee;

(h)            not sell, assign, part with, transfer, or otherwise dispose of
the benefit of all or any of the Company’s right, title and interest in and to
the Specifically Charged Property or any part of them and not agree to, or grant
any option in respect of, any of the foregoing

and so that, if the Company fails to perform any obligation on its part
contained in this Charge, the Chargee may itself or by any agents perform any of
the said covenants capable of being performed by it or by such agents, and if
any such obligation requires the payment or expenditure of money the Chargee may
make such payment or expenditure with its own funds or with money borrowed by or
advanced to it for such purpose but will be under no obligation so to do; all
sums so expended or paid shall be added to the indebtedness secured by this
Charge and will bear interest accordingly and will be repayable to the Chargee
on demand.

15.           ENFORCEMENT

The security constituted by this Charge shall be enforceable and the
Obligations, not already payable on demand, shall become due and payable on
first demand immediately upon and at any time after the occurrence of an
Enforcement Event.  At any time after the security constituted by this Charge
has become enforceable, the statutory powers conferred by the Act, as varied,
disapplied and/or as extended by this Charge shall become exercisable.

16.           RECEIVERS

16.1         At any time on or after the occurrence of an Enforcement Event, the
Chargee may from time to time appoint (i) by Deed in writing under the hand of a
duly authorised officer of the Chargee or (ii) under the Act, any person or
persons considered by it to be competent to be a receiver or a receiver and
manager (hereinafter called a Receiver which expression will, where the context
so admits, include the plural and any substituted receiver or receiver and
manager) of any part of the Specifically Charged Property.  The restrictions
contained in section 108(1) of the Act will not apply to the appointment of a
Receiver under this Charge.  The Chargee may from time to time in writing under
the hand of a duly authorised officer of the Chargee remove any Receiver so
appointed and appoint another in his stead.

16.2         A Receiver so appointed will be the agent of the Company, and the
Company will be solely responsible for his acts and defaults, and the Chargee
will have power from time to time to fix the remuneration of any Receiver
appointed by the Chargee and to direct payment thereof out of the Specifically
Charged Property or any part thereof, but the Company will alone be liable for
the payment of such remuneration. The provisions of sub-sections 108(4) and (7)
(Appointment of a Receiver) of the Act will not apply to the appointment of a
Receiver under clause 7.1.

 
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16.3         A Receiver so appointed under clause 7.1 will have and be entitled
to exercise, in addition to all powers conferred by the Act (except where
expressly disapplied in this Charge) and pursuant to section 108(3) of the Act,
the following additional powers:

(a)            to take possession of, collect and get in all or any part of the
property in respect of which the Receiver is appointed, and for that purpose
take any proceedings in the name of the Company or otherwise as may seem
expedient;

(b)           to make any arrangements or compromise which the Receiver or the
Chargee may think expedient;

(c)           to do all such other acts and things as may be incidental or
conducive to any of the matters or powers above and which the Receiver lawfully
may or can do as agent for the Company.

16.4         The foregoing powers of appointment of a Receiver are in addition
to and not to the prejudice of all statutory and other powers of the Chargee
under the Act (as varied or disapplied herein) or otherwise, and so that such
powers will be and remain exercisable by the Chargee in respect of any part of
the Specifically Charged Property in respect of which no appointment of a
Receiver by the Chargee is for the time being subsisting, notwithstanding that
an appointment under the powers of clause 9.1. shall have subsisted and been
withdrawn in respect of that part of the Specifically Charged Property or shall
be subsisting in respect of any other part of the Specifically Charged Property.

16.5         All monies received by the Receiver shall be applied by the
Receiver for the following purposes (subject to the claims of secured or
unsecured creditors (if any) ranking in priority to this Charge) and in the
following order:

(a)            in payment of all costs, charges and expenses of and incidental
to the appointment of the Receiver and the exercise of all or any of the above
powers and of all outgoings properly paid by the Receiver;

 
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(b)            in payment of remuneration to the Receiver at such rate as may be
agreed between the Receiver and the Chargee; and

(c)            in or towards payment to the Chargee of all monies the payment of
which is secured by this Charge

and any surplus shall be paid to the Company or any other person entitled
thereto. The provisions of section 109 (Application of money received) of the
Act shall not apply to this Charge.

16.6         No purchaser or other person will be bound or concerned to see or
enquire whether the right of the Chargee or any Receiver appointed by the
Chargee to exercise any of the powers conferred by this Charge has arisen or not
or be concerned with notice to the contrary or with the propriety of the
exercise or purported exercise of such powers.

17.           LIABILITY OF CHARGEE AND RECEIVER

17.1        In the event that the Chargee or any Receiver appointed under this
Charge takes possession of the Specifically Charged Property or any part or
parts of the Specifically Charged Property or otherwise exercises any statutory
powers or any additional powers set forth in this Charge, neither the Chargee or
any Receiver will be liable to account as mortgagee or as mortgagee in
possession in respect of any of the Specifically Charged Property or be liable
for any loss upon realisation or for any neglect or default of any nature
whatsoever (except to the extent that the same results from the Chargee’s or the
Receiver’s negligence or wilful default) in connection with any of the
Specifically Charged Property for which a mortgagee in possession might as such
be liable.   All costs, charges and expenses incurred by the Chargee or any
Receiver appointed under this Charge (including the costs of any proceedings to
enforce the security hereby given) shall be paid by the Company or Companies
concerned on a solicitor and own client basis and be charged on the Specifically
Charged Property.
 
17.2         Save as provided for in section 103 of the Act or otherwise, the
Chargee will not be liable for any involuntary losses which may happen in or
about the exercise or execution of the statutory power of sale or any of the
powers or trusts expressed or implied which may be vested in the Chargee.

 
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18.          CHARGEE AS MORTGAGEE IN POSSESSION

In addition to the statutory powers incidental to the estate or interest of
mortgagees contained in the Act as more particularly detailed in Clause 10
(Statutory powers) at any time after the Chargee in accordance with the
provisions of this Charge enters into possession of the Specifically Charged
Property or any part of the Specifically Charged Property, the Chargee will have
power to:

18.1         perform or cause to be performed all acts and things requisite or
desirable according to the law of the country in which the Specifically Charged
Property or any part of the Specifically Charged Property of which the Chargee
is in possession is situate for the purpose of giving effect to the exercise of
any of the said powers, authorities and discretions.
 
18.2         The provisions of section 97 of the Act (Taking possession),
section 99(1) (Mortgagee in possession) and section 101 (Applications under
sections 97 and 100) shall not apply to this Charge.

19. STATUTORY POWERS

19.1         At any time after the security constituted by this Charge has
become enforceable (in accordance with clause 6 (Enforcement):

(a)            the statutory power of sale conferred by section 100 (Power of
sale) of the Act free from restrictions contained in section 100(1), (2), (3)
and (4) and without the requirement to serve notice (as provided for in section
100(1)); and

(b)            the incidental powers of sale conferred by section 102
(Incidental powers)

will immediately arise and be exercisable by the Chargee and/or any Receiver (as
appropriate).
 
20.          CURRENCY CLAUSES
 
 
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20.1         All monies received or held by the Chargee or by a Receiver under
this Charge may from time to time after demand has been made be converted into
such other currency as the Chargee considers necessary or desirable to cover the
obligations and liabilities of the Company in that currency at the then
prevailing spot rate of exchange (as conclusively determined by the Chargee) for
purchasing the currency to be acquired with the existing currency.

20.2         If and to the extent the Company fails to pay the amount due on
demand, the Chargee may in its absolute discretion without notice to the Company
purchase at any time thereafter so much of a currency as the Chargee considers
necessary or desirable to cover the obligations and liabilities of the Company
in such currency, secured by this Charge, at the then prevailing spot rate of
exchange (as conclusively determined by the Chargee) for purchasing such
currency with euro and the Company hereby agrees to indemnify the Chargee
against the full euro price (including all costs, charges and expenses) paid by
the Chargee.

20.3         No payment to the Chargee (whether under any judgment or court
order or otherwise) will discharge the obligation or liability of the Company in
respect of which it was made unless and until the Chargee receives payment in
full in the currency in which such obligation or liability was incurred, and to
the extent that the amount of any such payment, on actual conversion into such
currency, fall short of such obligation or liability expressed in that currency,
the Chargee will have a further separate cause of action against the Company and
will be entitled to enforce the charges created by this Charge to recover the
amount of the shortfall.

21.           MISCELLANEOUS PROVISIONS

21.1        Costs:

(a)            All costs, charges and expenses (on a full indemnity basis)
properly occasioned by or incidental to this or any other security held by or
offered to the Chargee for the same indebtedness or by or to the enforcement of
any such security and incurred, suffered or paid by the Chargee will be charged
on the Specifically Charged Property and will be treated as monies due from the
Company to the Chargee on current account and will bear interest and be secured
accordingly.

(b)            The charges conferred by this Charge will be in addition and
without prejudice to any and every other remedy, lien or security which the
Chargee may or but for the said charges would have for the monies and
liabilities secured by this Charge.

 
-14-

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(c)            The Company shall pay all stamp, registration and other taxes to
which this Charge or any judgment given in connection with this Charge is or at
any time may be subject and shall indemnify the Chargee against any liabilities,
costs, claims and expenses resulting from any failure to pay or delay in paying
any such tax.

(d)            Any certificate or determination of the Chargee as to any matter
provided for in this Charge will be conclusive and binding on the Company.

21.2        Interest: Any interest payable under the terms of this Charge will
be payable as well after as before any judgment.

21.3        Power of Attorney:  The Company by way of security hereby
irrevocably appoints and constitutes the Chargee and any Receiver appointed by
the Chargee under this Charge jointly and also severally the attorney and also
the attorneys of the Company on the Company's behalf and in the name of the
Company and as its act and deed to do all acts and to execute, seal or otherwise
perfect any deed, assurance, agreement, instrument, document or act which the
Company could itself do in relation to the Specifically Charged Property or
which may be required or which may be deemed proper for any of the matters
provided for in this Charge.

21.4        Notices:

(a)            Any notice or demand for payment to be given or served under this
Charge shall be in writing and shall be duly expressed to be a notice or demand
under this Charge and will be deemed duly given or served if sent by facsimile
at the time of transmission (subject to the correct code or facsimile number
being received) or if posted 48 hours after the time at which it was posted or,
if delivered by hand, at the time of delivery if such a day is a Business Day or
if such day is not a Business Day on the next following Business Day, to the
party to whom it is to be given or served at its address set out below or such
other address or facsimile number as such party may have previously communicated
for such purpose by notice to the party giving such first mentioned notice or
demand. The addresses and facsimile numbers for service on the parties to this
Charge are:

The Company
Address:
26 Upper Pembroke Street
Dublin 2
Ireland
 
Attention:
[*]
 
Facsimile Number:
FAX: 353 1 637 3989

 
-15-

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The Chargee
Address:
22 rue Garnier
92200 Neuilly-sur-Seine
France
 
Attention:
[*]
 
Facsimile Number:
FAX: 33 1 55 72 39 00
 

(b)            Any party giving or serving a notice or demand under this Charge
by facsimile shall, but without prejudice to the validity of the notice or
demand given, send a copy of the notice or demand by pre-paid registered post to
the party receiving such notice or demand to that party's address set out in
clause 12.4.1 or to such other address as such party shall have previously
communicated by notice to the party giving such first-mentioned notice or
demand.

(c) Any notice or demand given or served under this Charge will be deemed to
have been received by the party so receiving such notice or demand on the
Business Day of such receipt only if the notice or demand has been received
during usual business hours on such Business Day, and if the notice or demand is
received outside usual business hours it will be deemed to have been received on
the next following Business Day.

21.5        Waiver and Forbearance:

(a)            The rights of the Chargee will not be prejudiced or restricted by
any indulgence or forbearance extended to the Company or other parties, and no
waiver by the Chargee in respect of any breach will operate as a waiver in
respect of any subsequent breach.

(b)            No failure or delay by the Chargee in exercising any right or
remedy will operate as a waiver of such right or remedy, nor will any single or
partial exercise or waiver of any right or remedy prevent its further exercise
or the exercise by the Chargee of any other right or remedy.

21.6        Remedies Cumulative: The rights and remedies of the Chargee under
this Charge are cumulative and are without prejudice and in addition to any
rights or remedies which the Chargee may have at law or in equity. No exercise
by the Chargee of any right or remedy under this Charge, or at law or in equity,
shall (save to the extent, if any, provided expressly in this Charge, or at law
or in equity) operate so as to hinder or prevent the exercise by it of any other
right or remedy. Each and every right and remedy may be exercised from time to
time as often and in such order as may be deemed expedient by the Chargee.

 
-16-

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21.7        Severability:  If a term or provision in this Charge is or becomes
illegal, invalid or unenforceable, in whole or in part, in any respect (or any
of the security intended to be created by or pursuant to this Charge is
ineffective) under the law of any jurisdiction, such illegality, invalidity or
unenforceability shall not affect:

(a)            the legality, validity or enforceability of the remaining
provisions or the effectiveness of any of the other provisions of this Charge in
that jurisdiction; or

(b)            the legality, validity or enforceability of such provision or the
effectiveness of any other provision of this Charge under the laws of any other
jurisdiction.

21.8        Assignment:

(a)            The Company may not assign nor enter into any trust arrangement
with any third party in respect of any of its rights under this Charge.

(b)            The Chargee will be entitled to assign the benefit of this Charge
or any part of this Charge to any person, and the Company hereby consents to any
such assignment. The Chargee will be entitled to impart any information
concerning the Company to any assignee or successor in title.

(c)            In the event of assignment by the Chargee as permitted by clause
12.8.2, the Company shall at the request of the Chargee join in such assignment
so as to cause full beneficial title to the security created by this Charge to
be passed to the relevant assignee.

21.9        Counterparts:  This Charge may be entered into in the form of two or
more counterparts, each executed by one of the parties but, taken together,
executed by all, and, provided that all of the parties so enter into the Charge,
each of the executed counterparts, when duly exchanged or delivered, will be
deemed to be an original but, taken together, will constitute one instrument.

21.10      Variation:  This Charge may not be released, discharged,
supplemented, amended, varied or modified in any manner except by an instrument
in writing signed by a duly authorised officer or representative of each of the
parties to this Charge.

21.11      Governing law and Jurisdiction:

 
-17-

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

 

(a)            This Charge and all relationships created hereby and arising out
of or in connection with it will in all respects be governed by and construed in
accordance with the laws of Ireland.

(b)            The Company hereby agrees for the exclusive benefit of the
Chargee that any legal action or proceedings (Proceedings) brought against the
Company with respect to this Charge may be brought in the High Court in Ireland
or such other competent court of Ireland as the Chargee may elect, and the
Company waives any objection to Proceedings in such courts whether on grounds of
venue or on the grounds that Proceedings have been brought in any inconvenient
forum. The Company undertakes to enter an unconditional appearance within 14
days after the completion of any service or process in any Proceedings. The
Company hereby consents to the service by post of any process issued in
connection with this Charge. Nothing in this Charge will affect the right to
serve process in any other manner permitted by law.

(c)            Nothing contained in this Charge will limit the right of the
Chargee to take Proceedings against the Company in any other court of competent
jurisdiction, nor will the taking of any Proceedings in any one or more
jurisdictions preclude the taking by the Chargee of Proceedings in any other
jurisdiction whether concurrently or not.

IN WITNESS whereof this Deed has been duly executed on the date first above
written.

GIVEN under the common seal
   
of
         
XOMA IRELAND LIMITED:
 
________________
   
[*]
               
________________
   
[*]
                 
SIGNED AND SEALED
   
on behalf of
   
LES LABORATOIRES SERVIER
   

 
-18-

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SCHEDULE

Intellectual Property Rights

1.
1.  Title:
IL1-Beta binding antibodies and fragments thereof

 
Inventors:
Linda Masat; Mary Haak-Frendscho; Gang Chen; Arnold Horwitz; Marina Roell

COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
60/692,830
06/21/05
 
PCT
PCT/US06/024261
06/21/06
WO07/002261
Australia
2006 262179
06/21/06
AU2006262179 A1
Brazil
PI0612273-6
06/21/06
BRPI0612273 A2
Canada
2,612,760
06/21/06
CA2612760 A1
China
2006 80026551.9
06/21/06
CN101228188 A
EP:
06773749.4
06/21/06
1899378
Austria
06773749.4
06/21/06
1899378
Belgium
06773749.4
06/21/06
1899378
Bulgaria
06773749.4
06/21/06
1899378
Cyprus
06773749.4
06/21/06
1899378
Czech Republic
06773749.4
06/21/06
1899378
Denmark
06773749.4
06/21/06
1899378
Estonia
06773749.4
06/21/06
E004059
Finland
06773749.4
06/21/06
1899378
France
06773749.4
06/21/06
1899378
Germany
06773749.4
06/21/06
60 2006 010 072.8-08
Greece
06773749.4
06/21/06
1899378
Hungary
06773749.4
06/21/06
E 007716
Iceland
06773749.4
06/21/06
1899378
Ireland
06773749.4
06/21/06
1899378
Italy
06773749.4
06/21/06
73749BE/2009
Latvia
06773749.4
06/21/06
1899378
Lithuania
06773749.4
06/21/06
1899378
Luxembourg
06773749.4
06/21/06
1899378
Monaco
06773749.4
06/21/06
1899378
Netherlands
06773749.4
06/21/06
1899378
Poland
06773749.4
06/21/06
1899378
Portugal
06773749.4
06/21/06
1899378

 
-19-

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

 
 
Romania
06773749.4
06/21/06
1899378
Slovak Republic
06773749.4
06/21/06
1899378
Slovenia
06773749.4
06/21/06
1899378
Spain
06773749.4
06/21/06
1899378
Sweden
06773749.4
06/21/06
1899378
Switzerland
06773749.4
06/21/06
1899378
Turkey
06773749.4
06/21/06
TR 2009 09878 T4
UK
06773749.4
06/21/06
1899378
EP
09 174 190.0
10/27/09
2163562
EP
10 179 089.7
09/23/10
 
EP
10 179 088.9
09/23/10
 
Hong Kong
09100795.8
06/21/06
1123560
Hong Kong
10107181.2
07/27/10
 
Israel
188094
06/21/06
 
Israel
202630
12/09/09
 
India
320/CHENP/2008
06/21/06
 
Korea
10-2008-7001520
06/21/06
KR20080039875 A
Mexico
MX/a/07/016032
06/21/06
 
New Zealand
565138
06/21/06
 
Philippines
1-2007-502895
06/21/06
 
Russian Fed
2008102135
06/21/06
RU2008102135 A
Singapore
200718904-6
06/21/06
 
South Africa
2008/00555
06/21/06
2008/00555

2.  Title:
METHODS FOR TREATMENT OF IL-1BETA RELATED DISEASES

Inventors:
Alan M. Solinger; Patrick J. Scannon; Robert J. Bauer; David Alleva

 
 
COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
60/871,046
12/20/06
 
US Provisional
60/908,389
03/27/07
 
US Provisional
60/911,033
04/10/07
 
PCT
PCT/US07/088411
12/20/07
WO 08/077145
Europe
07 869 675.4
12/20/07
EP2094306 A2
Australia
2007333635
12/20/07
AU2007333635
Brazil
PI 0720928-2
12/20/07
 
Canada
2,673,592
12/20/07
 
China
200780051536.4
12/20/07
CN 101616690A
Hong Kong
10102012.8
02/25/10
1135323A
India
4626/DELNP/2009
12/20/07
 
Indonesia
W00 2009 01721
12/20/07
050.2064A
Mexico
MX/a/2009/006709
12/20/07
 
Russia
2009127066
12/20/07
 
South Africa
2009/04660
12/20/07
2009/04660

 
 
-20-

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

 

3.  Title:
METHODS FOR TREATMENT OF GOUT

Inventors:
Alan M. Solinger

COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
61/015,633
12/20/07
 
US Provisional
61/059,378
06/06/08
 
US Provisional
61/095,191
09/08/08
 
PCT
PCT/US08/087519
12/18/08
WO 2009/086003
Australia
2008343085
07/12/10
 
Canada
2,710,252
06/18/10
 
China
200880126879.7
08/13/10
 
EP
08866346.3
12/18/08
 
Mexico
MX/a/2010/006823
06/18/10
 
Russia
2010129783
07/20/10
 

4.  Title:
METHODS FOR THE TREATMENT OF RHEUMATOID ARTHRITIS

Inventors:
Alan M. Solinger, Alexander Owyang

COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
61/059,711
06/05/08
 
US Provisional
61/095,232
09/08/08
 
PCT
PCT/US09/46441
12/06/2010
WO 2009/149370
Canada
PCT/US09/46441
12/06/2010
 
Australia
PCT/US09/46441
 
To be filed by 01/06/11
Europe
PCT/US09/46441
 
To be filed by 01/06/11

5.  Title:
METHODS FOR TREATING OR PREVENTING IL-1BETA RELATED DISEASES

Inventors:
Patrick J. Scannon, Alan M. Solinger, Robert J. Bauer

COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
61/094,842
09/05/08
 
US Provisional
61/121,451
12/10/08
 
PCT
PCT/US09/56086
09/04/09
WO 2010/028275

6.  Title:
METHODS FOR IMPROVEMENT OF BETA CELL FUNCTION

Inventors:
Patrick J. Scannon, Alan M. Solinger, Robert J. Bauer

COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
61/094,857
09/05/08
 
US Provisional
61/121,486
12/10/08
 
PCT
PCT/US09/56084
09/04/09
WO 2010/028273

 
-21-

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7.  Title:
CARDIOVASCULAR RELATED USES OF IL-1ΒETA ANTIBODIES AND BINDING FRAGMENTS THEREOF

Inventors:                      Patrick J. Scannon, Alan M. Solinger, Jeffrey D.
Feldstein

COUNTRY
APP. NO.
FILE DATE
PATENT/PUBLICATION
US Provisional
61/182,679
05/29/09
 
US Provisional
61/252,571
10/16/09
 
US Provisional
61/313,001
03/11/10
 
PCT
PCT/US10/36761
05/28/10
 

[*]

 
-22-

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Exhibit B
PROMISSORY NOTE
€15,000,000
Dublin, Ireland

Insert date loan is funded

XOMA Ireland Limited, a company organized under the laws of the Republic of
Ireland (“XOMA”), for value received, hereby promises to pay to the order of Les
Laboratoires  Servier,  a corporation organized and existing under the laws of
France (“Servier”), the principal amount of €15,000,000 or the aggregate
outstanding principal amount of the Advance, together with interest as provided
for below, payable on the dates, in the amounts and in the manner set forth
below.

1.      Loan Agreement.  This Promissory Note is the Note referred to in that
certain Loan Agreement, dated as of the date hereof, by and between XOMA and
Servier (as the same may be amended, supplemented, restated or otherwise
modified from time to time, the “Loan Agreement”).  Capitalized terms used
herein without definitions shall have the meanings given to such terms in the
Loan Agreement.

2.      Principal Payments.  Subject to the terms and conditions of the Loan
Agreement, the total outstanding balance of all Indebtedness shall be due and
payable in accordance with the terms of the Loan Agreement.

3.      Interest.  The outstanding principal amount shall accrue interest and be
payable at the rate or rates per annum and in the manner set forth in the Loan
Agreement.

4.      Payment on Non-Business Day. In the event that any payment of any
principal, interest, fees or any other amounts payable by XOMA under or pursuant
to this Loan Agreement, or under any other Loan Document shall become due on any
day which is not a Business Day, such due date shall be extended to the next
succeeding Business Day, provided that no interest shall accrue for and during
any such extension.

5.      Default.  Upon the occurrence of an Event of Default under the Loan
Agreement or any of the other Loan Documents, all unpaid principal, accrued
interest and other amounts owing hereunder shall become due and payable as
provided in the Loan Agreement and applicable law.

6.      Governing Law.  This Note shall be governed by and construed in
accordance with the substantive laws of [*], without regard to conflicts of law
rules.

XOMA:
XOMA Ireland Limited.
         
By: [*]
 
Its: [*]

 
 
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