ex10_35.htm


     

    Exhibit 10.35

    
 

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

     

    DISCOVERY COLLABORATION
AGREEMENT

     

    This
Discovery Collaboration Agreement (this “Agreement”) is
effective as of September 9, 2009 (the “Effective Date”) and
is made by and between Arana Therapeutics Limited (ACN 002 951 877), an
Australian company having offices at Level 2, 37 Epping Road, Macquarie Park,
New South Wales 2113, Australia (“Arana”), and XOMA
Development Corporation, a Delaware corporation having offices at 2910 Seventh
Street, Berkeley, California 94710, USA (“XOMA”).  Arana
and XOMA are sometimes referred to herein individually as a “Party” and together
as the “Parties.”

     

    BACKGROUND

     

    A.           Arana
is engaged in the research and development of product candidates, including
without limitation Antibodies, for use in treating and/or preventing human
diseases.

     

    B.           XOMA
has developed certain materials, technologies and related information,
hereinafter identified as [*], the Discovery Know-How and the Systems, that are
useful to the discovery, optimization and development of Antibodies and related
proteins.

     

    C.           Prior
to the Effective Date, XOMA has conducted certain activities [*] to Arana’s
satisfaction.

     

    D.           XOMA
and Arana, as specified herein, wish to form a collaboration directed toward
identifying new Antibodies for diseases of interest to Arana and in the course
of which, inter alia,
XOMA would [*].

     

    E.           Arana,
on its own behalf and on behalf of its Affiliates, agrees to accept the
Transferred Materials under the terms and conditions of this
Agreement.

     

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

     

    Section
1. DEFINITIONS

     

    1.1 “Affiliate” means any
corporation, company, partnership, joint venture and/or firm that controls, is
controlled by or is under common control with a Party to this
Agreement.  For purposes hereof, “control” means (a) in the case of a
corporate entity, direct or indirect ownership of more than fifty percent (50%)
of the stock or shares entitled to vote for the election of directors; (b) in
the case of a non-corporate entity, direct or indirect ownership of more than
fifty percent (50%) of the equity interests with the power to direct the
management and policies of such non-corporate entity; or (c) possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the entity in question (whether through ownership of
securities or other ownership interests, by contract or otherwise).

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    1.2 “Antibody” shall mean
any molecule, including full immunoglobulin molecules (e.g., IgG, IgM, IgE,
IgA and IgD molecules) and ScFv, Fv and Fab molecules, that has an amino acid
sequence by virtue of which it specifically interacts with an antigen, immunogen
or hapten or which elicits an immune response and wherein that amino acid
sequence consists essentially of a functionally operating region of an antibody
variable region, including any naturally occurring or recombinant form of such a
molecule.

     

    1.3 “Antibody Product”
means any composition of matter or article of manufacture consisting essentially
of an Antibody (a) alone or (b) integrally associated with a
composition of matter or article of manufacture (including without limitation
conjugates bound to a toxin, label or other moiety) providing therapeutic,
half-life, safety or other advantages to the Antibody.

     

    1.4 “Applicable Interest
Rate” has the meaning specified in Section 13(d)
hereof.

     

    1.5 “Arana Licensee”
means, solely with respect to Licensed Products, any Third Party to whom Arana
licenses or grants rights, as part of a bona fide collaboration, development,
commercialization or marketing arrangement, to develop, commercialize, market or
distribute any such Licensed Product.  All arrangements with an Arana
Licensee shall be pursuant to a written agreement, which will incorporate
requirements on each Arana Licensee sufficient to ensure compliance with the
provisions of Sections 7(b), 12(b)(ii), 12(c), and 14 and any other
provisions of this Agreement expressly relating to Arana Licensees and provide
(where possible under the governing law of such written agreements) that XOMA
shall be a third party beneficiary thereof.  No Third Party shall be
an Arana Licensee if such Third Party does not take material economic risk with
respect to the development or commercialization of the Licensed Product that is
the subject of the applicable arrangement; provided, that this sentence
shall not prevent Arana from using any Third Party as a distributor or selling
agent.

     

    1.6 “Arana Validation” has
the meaning specified in Section 3(c)(i) hereof.

     

    1.7 [*]

     

    1.8 “Bacterial Cell Expression
Patent Rights” or “BCE Patent Rights”
means the Patent Rights described on Schedule
1.8.

     

    1.9 “Bankruptcy Code” has
the meaning specified in Section 18(c) hereof.

     

    1.10 [*]

     

    1.11 [*]

     

    1.12  “BLA” means a
Biologics Licensing Application or New Drug Application (each as defined in the
FDC Act) and any other equivalent marketing authorization application or other
license, registration or application seeking approval from a Regulatory
Authority to market a Licensed Product in the Field in the
Territory.

     


    
      
         


      

      
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    1.13 [*]

     

    1.14 [*]

     

    1.15 [*]

     

    1.16 “Change of Control”
means any transaction or series of transactions with respect to an entity as a
result of which any person or group (as defined under the U.S. Securities
Exchange Act of 1934, as amended) becomes, directly or indirectly, the
beneficial owner of more than fifty percent (50%) of the total voting power of
such entity’s equity securities or otherwise gains control of such
entity.

     

    1.17 [*]

     

    1.18 “Collaboration” has
the meaning specified in Section 2(a) hereof.

     

    1.19 “Collaboration
Committee” has the meaning specified in Section 2(b)
hereof.

     

    1.20 “Combination Product”
has the meaning specified in Section 1.43 hereof.

     

    1.21 “Confidential
Information” means any information and data received by a Party (the
“Receiving
Party”) from the other Party or its Affiliates (the “Disclosing Party”) in
connection with this Agreement or the Mutual Confidentiality Agreement effective
as of February 27, 2009 between Arana Therapeutics (VIC) Pty Limited and XOMA
(US) LLC.  Notwithstanding the foregoing, Confidential Information
shall not include any part of such information or data:

     

    (a) which is
or becomes public knowledge (through no fault of the Receiving Party);
or

     

    (b) which is
made available to the Receiving Party by a Third Party not under an obligation
of confidentiality with the Disclosing Party (and such lawful right can be
demonstrated by the Receiving Party’s written records); or

     

    (c) which is
already rightfully in the Receiving Party’s possession at the time of receipt
from the Disclosing Party (and such prior possession can be demonstrated by the
Receiving Party’s written records); or

     

    (d) which is
independently developed by an employee of the Receiving Party and/or its
Affiliates without the aid, application or use of confidential information
disclosed by the Disclosing Party (and such independent development can be
demonstrated by the Receiving Party’s written records), provided such independent
development does not breach any of the Receiving Party’s obligations under this
Agreement.

     

    1.22 “Control” or “Controlled” means,
with respect to any (a) material, document, item of information, method, data or
other Know-How or (b) Patent Right or other intellectual property right, the
possession (whether by ownership or license, other than by a license granted
pursuant to this Agreement) by a Party or its Affiliates of the ability to grant
to the other Party access, ownership, a license and/or a sublicense as provided
herein under such item or right with-

     


    
      
         


      

      
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    out
violating the terms of any agreement or other arrangement with any Third Party
as of the time such Party would first be required hereunder to grant the other
Party such access, ownership, license or sublicense.

     

    1.23 “Disclosing Party” has
the meaning specified in Section 1.21 hereof.

     

    1.24 “Discovered” means, in
respect of an Antibody or Antibody Product, the derivation of such Antibody or
Antibody Product from the identification, determination and/or confirmation of a
Target and/or a Target’s associated ligand or receptor.

     

    1.25 “Discovery Know-How”
means the Know-How transferred to Arana or its Affiliates pursuant to Section
3.

     

    1.26 “Discovery Patent
Rights” means the Patent Rights described on Schedule 1.26, which
shall be updated from time to time by XOMA to reflect the status of such Patent
Rights or as otherwise agreed in writing by Arana and XOMA.

     

    1.27 “Discovery Product”
means an Antibody or Antibody Product Discovered as a result of, or arising out
of, the use of [*] the Discovery Know-How and/or the practice of the Discovery
Patent Rights by Arana or its Affiliates, either on their own account or on
behalf of an Arana Licensee as part of a bona fide collaboration with respect to
that Antibody or Antibody Product, including without limitation through the use
of [*] the Discovery Know-How and/or the practice of the Discovery Patent Rights
to identify, validate or otherwise use a Target and/or its associated ligand or
receptor.  As used herein, to “validate” a Target includes any
activities by which, using [*], Discovery Know-How, Discovery Patent Rights
and/or any Antibody arising therefrom, a Target is identified, determined
and/or, confirmed as being significant in a disease or other biological pathway
or used in any material manner to develop a therapeutic and/or prophylactic
compound or product.

     

    1.28 “EMEA” means the
European Medicines Agency or any successor thereto.

     

    1.29 “Event of Default”
means an event described in Section 17(b)(i) hereof.

     

    1.30 “FDA” means the United
States Food and Drug Administration, or any successor thereto.

     

    1.31 “FDC Act” means the
United States Food, Drug and Cosmetic Act (or any successor thereto), as
amended, and the rules and regulations promulgated thereunder.

     

    1.32 “Field” means the
Discovery, research, development, manufacture and/or commercialization of
Antibody Products for (a) the treatment, palliation or prevention of any disease
or condition in humans, [*].

     

    1.33 “First Commercial
Sale” means the first sale for use or consumption by the general public
of a Licensed Product in a country after Regulatory Approval has been obtained
in such country.  For the avoidance of doubt, First Commercial Sale
shall not include the sale of

     


    
      
         


      

      
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    any
Licensed Product for use in clinical trials or for compassionate use prior to
Regulatory Approval.

     

    1.34 “GAAP” means United
States generally accepted accounting principles, as they exist from time to
time, consistently applied.

     

    1.35 “ICC” has the meaning
specified in Section 18(h)(i) hereof.

     

    1.36 “Indemnitee” has the
meaning specified in Section 16(d) hereof.

     

    1.37 “Indemnitor” has the
meaning specified in Section 16(d) hereof.

     

    1.38 “Know-How” means
Confidential Information comprised of any and all know-how, trade secrets, data,
processes, techniques, procedures, compositions, materials, devices, methods,
formulas, protocols, and research, preclinical and clinical data and
information, including any and all chemical, biochemical, toxicological, and
scientific research information, whether in written, electronic, graphic or
video form or any other form or format.  Know-How shall not include
Patent Rights [*].

     

    1.39 “Laws” means all laws,
statutes, rules, regulations, ordinances and other pronouncements having the
effect of law of any federal, national, multinational, state, provincial,
county, city or other political subdivision, domestic or foreign.

     

    1.40 “Licensed Know-How”
means, collectively, the Discovery Know-How and the TAE Know-How.

     

    1.41 “Licensed Patent
Rights” means, collectively, the Discovery Patent Rights and the TAE
Patent Rights.

     

    1.42 “Licensed Product”
means an Antibody or Antibody Product that is either a Discovery Product or a
TAE Product.

     

    1.43 “Net Sales” means,
with respect to a Licensed Product, the gross amount invoiced by Arana or its
Affiliates or by any Arana Licensee for sales of such Licensed Product to
customers which are not Affiliates (or which are Affiliates but are end users of
such Licensed Product), less the following unreimbursed or non-refunded
deductions with respect thereto, determined in accordance with GAAP and
calculated in United States dollars and to the extent such amounts have not
already been deducted from the amount invoiced:  (a) amounts actually
allowed as volume or quantity discounts, rebates, price reductions, coupons,
vouchers and co-pay assistance reimbursements, returns (including recalls), [*],
and charge-backs, (b) sales, excise and turnover taxes. goods and services,
value-added and other indirect taxes, and similar duties, levies and charges
collected, charged or otherwise imposed directly upon and paid or payable by
such party and its Affiliates, and (c) all other direct expenses or discounts,
including but not limited to cash discounts, trade discounts, government and
managed care discounts, custom duties and transportation and insurance
charges.

     


    
      
         


      

      
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    In the
event the Licensed Product is sold as part of a Combination Product (as defined
below), the Net Sales from the Combination Product, for the purposes of
determining royalty payments, will be determined by [*].

     

    In the
event that the average sale price of the Licensed Product can be determined but
the average sale price of the other active compounds or active ingredients in
the Combination Product cannot be determined, Net Sales for purposes of
determining royalty payments will be calculated by [*].  If the
average sale price of the other active compounds or active ingredients can be
determined but the average price of the Licensed Product cannot be determined,
Net Sales for purposes of determining royalty payments will be calculated by
[*].

     

    In the
event that the average sales price of both the Licensed Product and the other
active compounds or active ingredients in the Combination Product cannot be
determined, the Net Sales of the Licensed Product shall be determined in
accordance with the procedures set out in Section 18(h)(i).

     

    As used
above, the term “Combination Product”
means any Licensed Product sold in conjunction with any other active
component(s) (whether packaged together or in the same therapeutic
formulation).

     

    Free
samples of Licensed Product and the disposition of Licensed Product for, or the
use of Licensed Product in, preclinical or clinical (Phase 1–3) trials or
other market-focused (Phase 4) trials in which Licensed Product is provided
to patients without any payment shall not result in any Net Sales.

     

    1.44 “Patent Rights” means
all patents and patent applications existing as of the Effective Date and all
patent applications claiming priority from the foregoing thereafter filed and
patents thereafter issued, including, without limitation, any continuations,
continuations-in-part, divisionals, provisionals or any substitute applications,
any patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplemental protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing.

     

    1.45 “Phase 1 Trial”
means a human clinical trial in any country that is intended to initially
evaluate the safety and/or pharmacological effect of a Licensed Product in
subjects or that would otherwise satisfy the requirements of 21 C.F.R.
312.21(a), or its foreign equivalent.

     

    1.46 “Phase 2 Trial”
means a human clinical trial in any country that is intended to initially
evaluate the effectiveness of a Licensed Product for a particular indication or
indications in patients with the disease or indication under study or that would
otherwise satisfy the requirements of 21 C.F.R. 312.21(b), or its foreign
equivalent.

     

    1.47 “Phase 3 Trial”
means a pivotal human clinical trial in any country, the results of which could
be used to establish safety and efficacy of a Licensed Product as a basis for a
BLA or that would otherwise satisfy the requirements of 21 C.F.R. 312.21(c) or
its foreign equivalent.

     


    
      
         


      

      
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    In the
event of a Phase 2/3 trial, initiation of Phase 3 shall be deemed to
have occurred upon a decision by Arana to continue enrollment for the pivotal
portion of such trial.

     

    1.48 “Receiving Party” has
the meaning specified in Section 1.21 hereof.

     

    1.49 “Regulatory Approval”
means any and all approvals (including any applicable governmental price and
reimbursement approvals), licenses, registrations, or authorizations of any
federal, national, multinational, state, provincial or local regulatory agency,
department bureau or other governmental entity that are necessary for the
manufacture, use, storage, import, transport, promotion, marketing and sale of a
Licensed Product in the Field in a country or group of countries.

     

    1.50 “Regulatory Authority”
means any governmental authority in a country or region that regulates the
manufacture or sale of pharmaceutical products, including the FDA, the EMEA and
the Australian Therapeutic Goods Administration, and any successors
thereto.

     

    1.51 “Representatives” has
the meaning specified in Section 18(h)(i) hereof.

     

    1.52 “Research and
Development” means, solely with respect to the use of the Transferred
Materials by Arana or its Affiliates, the conduct of activities relating to the
Discovery of Antibodies for Targets, the identification, characterization,
selection, optimization and research of Antibodies and Licensed Products and the
conduct of all tests, clinical and other studies and other activities (including
test method development, toxicology studies, statistical analysis and report
writing, preclinical and other testing, packaging and regulatory affairs,
product approval and registration activities) related thereto as are customarily
performed in the biopharmaceutical industry as part of research and development
of new products.  Research and Development may include without
limitation (a) the Discovery of Antibodies that selectively bind to and act
through Targets, (b) the development of assays for Antibodies to, inter alia, confirm the
activity of such Antibodies or Target, and (c) the performance of affinity
maturation on such Antibodies, in each case with the objective of identifying
Antibodies that have potential as Licensed Products.

     

    1.53 “Royalty-Bearing Discovery
Product” means [*].

     

    1.54 “Services” has the
meaning specified in Section 4(a) hereof.

     

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

     

    1.56 “Systems Know-How” has
the meaning specified in Section 1.55 hereof.

     

    1.57 “Systems Patent
Rights” has the meaning specified in Section 1.55 hereof.

     


    
      
         


      

      
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    1.58 “TAE Know-How” has the
meaning specified in Section 1.63 hereof.

     

    1.59 “TAE Patent Rights”
has the meaning specified in Section 1.63 hereof.

     

    1.60 “TAE Product” means an
Antibody or Antibody Product which falls within a Valid Claim of the TAE Patent
Rights at the time and in the jurisdiction of its manufacture or sale, or arose
from the practice of a Valid Claim of the TAE Patent Rights at the time and in
the jurisdiction of such activities.

     

    1.61 “Target” means a gene
and the products encoded by such gene, including, without limitation,
(a) any partial or full-length DNA sequence from such gene (including any
mutant or polymorphic forms thereof), (b) any RNA sequence (including any
post-transcriptionally modified variants thereof) encoded by any such gene,
(c) any peptide, polypeptide or protein (including any post-translationally
modified variants thereof) encoded by any such gene, (d) any derivatives or
fragments of any of the foregoing, and/or (e) any species variants or
homologs of any of the foregoing.

     

    1.62 [*]

     

    1.63 “Target Affinity Enhancement
Technology” or “TAE Technology” means
(a) the materials and Know-How (the “TAE Know-How”) and
(b) the Patent Rights (the “TAE Patent Rights”),
each as more particularly described on Schedule 1.63, that
set forth an embodiment of the technology made available by XOMA for improving
or enhancing the affinity of an Antibody.

     

    1.64 “Territory” means all
of the countries and territories of the world.

     

    1.65 “Third Party” means
any person or entity other than Arana, XOMA and their respective
Affiliates.

     

    1.66 “Third Party
Agreements” has the meaning specified in Section 15(b)(ix)
hereof.

     

    1.67 “Third Party Patents”
has the meaning specified in Section 15(b)(ix) hereof.

     

    1.68 “Transferred
Materials” means, collectively, [*], the Licensed Know-How, the Systems
and/or any related materials actually transferred to Arana pursuant to this
Agreement.

     

    1.69 “Valid Claim” means,
in respect of a Patent Right in the jurisdiction of that Patent Right, either
(a) a claim of an issued and unexpired patent which has not been held
permanently revoked, unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal and that is not admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise, or (b) a claim of a
pending parent patent application that was filed and is being prosecuted in good
faith and has not been abandoned or finally rejected without the possibility of
appeal or refiling.

     

    1.70 [*]

     


    
      
         


      

      
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    1.71 “[*] Materials” has the
meaning specified in Section 5(e) hereof.

     

    1.72 “[*] Specifications”
means Arana’s specifications for [*] set forth on Schedule 1.70.

     

    Section
2. COLLABORATION
OVERVIEW

     

    (a) Objectives.  Arana
and XOMA intend to collaborate in the Discovery of Antibodies and/or Antibody
Products, with (in general) XOMA constructing and/or transferring certain
materials and providing access to certain intellectual property rights and Arana
conducting various Discovery and other activities, in each case as provided in
or permitted by this Agreement (the “Collaboration”).  It
is intended that the Collaboration will be conducted as a collaborative effort
with activities by the Parties carried out primarily at each Party’s respective
facilities, except as otherwise provided herein.

     

    (b) Committee.  As
soon as practicable after the Effective Date, the Parties shall establish a
committee (the “Collaboration
Committee”) comprised of representatives designated by each of XOMA and
Arana, each of whom shall have experience and seniority sufficient to enable him
or her to make decisions on behalf of the Party he or she represents within the
scope of the authority of the Collaboration Committee as provided herein, and
each of whom shall be employed by the Party designating such
representative.  The Collaboration Committee shall be responsible for
overseeing the Parties’ interaction and performance of their respective
obligations under this Agreement.  In reaching decisions or taking
action, the Collaboration Committee shall strive for unanimity.  In
the event unanimity cannot be reached on a question of whether or not a Party
has complied with the requirements of this Agreement, the matter shall be
referred for resolution pursuant to Section 18(h)(i).  For the
avoidance of doubt, subject to the foregoing, each Party shall determine the
manner in which it exercises its independent rights and complies with its
independent obligations hereunder using its own personnel and
facilities.

     

    Section
3.   DELIVERABLES;
DELIVERY

     

    (a) Deliverables.  Within
[*] following the Effective Date, XOMA shall deliver [*], the Discovery Know-How
relating thereto, the TAE Know-How and the Systems to Arana’s Melbourne,
Australia facility, as evidenced by the Delivery and Receipt Acknowledgement in
the form attached as Exhibit A.  XOMA shall provide [*]
in the quantities, and together with the additional information, set forth in
Schedule
3(a).

     

    (b) Delivery.  Delivery
of the Transferred Materials shall be made F.O.B. XOMA’s Berkeley, California
facility, upon provision of the same to an independent carrier designated by
XOMA and reasonably acceptable to Arana.  Title and risk of loss shall
transfer to Arana upon such delivery, [*].

     


    
      
         


      

      
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    (c) Arana
Validation.

     

    (i)           Arana
shall have [*] to determine whether [*] is in accordance with the [*]
Specifications [*] (“Arana Validation”) and to notify XOMA in writing of its
determination, or [*] will be deemed to have passed the Arana
Validation.  The Arana Validation shall be performed by Arana with the
guidance of XOMA representatives, who shall be [*], it being understood that no
portion of the Arana Validation, or any activities related thereto, will be
conducted without the concurrence of XOMA’s representatives, including without
limitation the activities set forth in Schedule 3(c)(i)(A) [*], and that Arana
shall make no other use of [*] unless and until the Arana Validation is
complete.  If, prior to the end of such [*] period, Arana notifies
XOMA in writing that Arana is not satisfied with the results of the Arana
Validation, then, [*], either (x) XOMA shall have a period of [*] thereafter to
carry out work on [*] in order to bring it into accordance with the [*]
Specifications [*], or (y) terminate this Agreement by giving thirty (30) days
written notice to XOMA [*].

     

    (ii)           If
[*] set forth in clause (x) of the immediately preceding paragraph (i), then
prior to the end of such [*] period and prior to delivery of the repaired or
replacement collection of polynucleotides and associated biological material to
Arana, XOMA shall provide to Arana such data as is reasonably necessary to
determine whether such repaired or replacement collection of polynucleotides and
associated biological material is in accordance with the [*] Specifications
[*].  Arana shall have thirty (30) days following receipt of such data
by Arana to determine whether it agree that such repaired or replacement
collection of polynucleotides and associated biological material is in
accordance with the [*] Specifications [*] and to notify XOMA in writing of its
determination, or the replacement collection of polynucleotides and associated
biological material shall be deemed to have passed the Arana
Validation.  If, prior to the end of such [*] period, Arana notifies
XOMA in writing that Arana is not satisfied with the results of the Arana
Validation, then Arana may terminate this Agreement by giving thirty (30) days
written notice to XOMA [*].

     

    (iii)           Arana
shall bear all costs and expenses incurred by it in connection with the
activities conducted pursuant to this Section 3(c), will compensate XOMA for
such activities at the rate of [*] per person per hour (the amount of which
shall in any event not be less than that for the activities of [*] individual
scientists for two [*] weeks) and will reimburse XOMA for all reasonable travel,
lodging and other expenses of XOMA’s employees and consultants carrying out such
activities documented to the reasonable satisfaction of Arana [*].

     

    (d) [*]

     


    
      
         


      

      
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    Section
4. SERVICES

     

    (a) Services
Defined.  Upon the request of Arana, XOMA agrees to perform the
services described in Schedule 4(a) (the
“Services”).  XOMA
warrants that it has and/or will retain employees and/or consultants with the
skills, ability and training necessary to, and that it shall, render the
Services in a timely and professional manner consistent with industry standards
in accordance with the terms of this Section 4, including Schedule
4(a).  Subject to the foregoing, the manner and means by which XOMA
chooses to complete the Services are in XOMA’s sole discretion and
control.  XOMA’s only service obligations with respect to the
validation, implementation or use of the Transferred Materials at Arana shall be
those expressly provided in Section 3(c) and this Section 4.

     

    (b) Compensation.  In
consideration of the Services to be rendered hereunder, Arana agrees to pay XOMA
the compensation set forth in Schedule 4(a).

     

    (c) Expenses.  Arana
will reimburse XOMA for all reasonable travel, lodging and other expenses of
XOMA’s employees and consultants rendering the Services documented to the
reasonable satisfaction of Arana [*].

     

    (d) Other
Services.  XOMA (including its employees rendering the
Services) may conduct activities with and provide services to, and its
consultants rendering the Services may perform services for or be employed by,
Third Parties so long as doing so does not cause XOMA to breach its obligations
under this Section 4 or any other provision of this Agreement.

     

    (e) Term. The Parties
shall have no further rights or obligations with respect to this Section 4
(other than those accrued prior to such termination) upon the earliest of (i)
termination of this Agreement in accordance with its terms, (ii) termination of
this Section 4 by either Party upon a material breach by the other Party that is
not cured within thirty (30) days of such other Party becoming aware of such
breach, effective immediately upon written notice to the breaching Party, (iii)
termination by Arana of this Section 4, at its discretion, upon prior written
notice to XOMA [*].

     

    Section
5. GRANTS OF
RIGHTS; [*]

     

    (a) [*], TAE Technology,
Etc.  XOMA grants to Arana, on its own behalf and on behalf of
its Affiliates, in the Field throughout the Territory, subject to the terms,
conditions and limitations set forth in this Agreement:

     

    (i)           an
exclusive (except as to the use of [*] by XOMA and its Affiliates, as provided
in Section 5(f)), non-transferable license and/or right, without the right to
grant sublicenses, to use [*] to identify, isolate, modify, develop and exploit
Discovery Products; and

     

    (ii)           a
non-exclusive, non-transferable license and/or right, without the right to grant
sublicenses, to:

     


    
      
         


      

      
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    (x)           use
the Systems and/or the Discovery Know-How, and/or practice the Systems Patents
and/or the Discovery Patent Rights, in each case to Discover, identify, isolate,
modify, develop and exploit Discovery Products; and

     

    (y)           use
the TAE Technology and/or the Systems, and/or practice the TAE Patent Rights
and/or the Systems Patent Rights, in each case to alter, modify and/or express
Antibodies and Antibody Products in order to discover, identify, isolate, modify
and/or develop Licensed Products.

     

    The
grants provided for in this Section 5(a) include, to the extent required, a
right and license to Arana, its Affiliates and any Arana Licensee, subject to
the other limitations of this Agreement, to make, have made, use, sell, offer to
sell, import or export any Licensed Product.  The grant provided for
under Section 5(a)(i) includes any Patent Right (other than the BCE Patent
Rights, Arana’s rights to which are addressed in clause (b) below), copyright or
similar intellectual property right that is, as of the Effective Date, under the
Control of XOMA and/or its Affiliates and shall be subject to all applicable
limitations, restrictions and obligations provided for in this Agreement and any
limitations or restrictions contained in any license or grant of rights from or
other agreement with a Third Party the benefit of which is claimed by Arana,
provided such terms (i)
were made available in writing to Arana prior to the Effective Date, and (ii)
are expressed to apply to collaborators or licensees of XOMA in the position of
Arana under this Agreement.

     

    (b) BCE Patent
Rights.  In addition, to the extent that the conduct by Arana
of any of the activities expressly licensed by XOMA hereunder constitutes the
practice of the BCE Patent Rights, Arana and its Affiliates shall be deemed to
have a non-exclusive license, without the right to grant sublicenses, under the
BCE Patent Rights to conduct such activities solely as provided in, and as
limited by, the scope of the license grants in Section 5(a).  For the
avoidance of doubt, the license granted pursuant to this Section 5(b) shall not
include any right (i) to make or have made any quantities of any product,
including an Antibody, in a prokaryote other than as reasonably necessary to
conduct Research and Development activities, (ii) to conduct phage display other
than with the Transferred Materials and/or (iii) to conduct any activities for a
Third Party except as reasonably necessary for an Arana Licensee to make (but
not manufacture using the BCE Patent Rights), use, sell, offer to sell, import
or export a Licensed Product after the initial binding domains have been
Discovered by Arana or its Affiliates.

     

    (c) Trade
Secrets.  Arana and/or each person or entity, including
authorized Third Parties, who has been given access by Arana to the Transferred
Materials, the Systems and/or the Source Code or Software (as such terms are
defined in Section 8) acknowledges formulae, algorithms and computational
methods contained therein may constitute XOMA’s trade secret
information.  Arana shall take reasonable steps to prevent the
dissemination of the trade secret information contained therein and shall permit
the dissemination of such information only to those persons or entities with a
“need to know” such information who acknowledge their obligation to maintain the
secrecy of such trade secrets and not to use them for purposes not authorized
hereunder.  For the avoidance of doubt, Arana shall have an implied
license to the trade secrets described in this Section 5(c) as is reasonably
necessary to enjoy the benefits of the licenses other-

     


    
      
         


      

      
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    wise
granted in this Agreement, to the extent such trade secrets do not form part of
the Know-How expressly licensed under this Agreement.

     

    (d) [*] each
of XOMA and Arana shall be obligated to keep accurate books and records
sufficient to identify with reasonable specificity the uses to which [*] have
been put and the Discovery Products which have been derived from or arose out of
the use of [*].

     

    (e) Limitations on Use of Source
Materials and Copies.  None of XOMA or its Affiliates shall
[*], and XOMA agrees not to transfer, lend or otherwise make available [*] or
[*] Materials (in whole or part) to any person other than XOMA’s Affiliates or
Arana.  [*]  Subject only to the foregoing, Arana
acknowledges that XOMA and/or its Affiliates may, on their own behalf or on
behalf of one or more Third Parties (x) [*], and/or (y) undertake competitive
activities directed to a Target, including using copies of the Licensed Know-How
and/or the Systems.

     

    (f) Retention of Rights by
XOMA.  XOMA shall retain (i) ownership of and the right to use
[*] for itself and its Affiliates, including for the avoidance of doubt as part
of a bona fide collaboration, development, commercialization or marketing
arrangement with a Third Party, to develop, commercialize, market or distribute
Antibody Products, and (ii) the ownership and right to use, license or otherwise
exploit in any manner whatsoever the Licensed Know-How and the Systems, the
Source Code or the Software (as such terms are defined in Section 8), [*], the
Licensed Patent Rights and/or any other Patent Right, copyright or other item of
intellectual property that covers or claims the Transferred Materials and/or
their creation, construction or use.  [*] Except as otherwise
expressly provided in this Agreement, under no circumstances shall a Party
hereto, as a result of this Agreement, obtain any ownership interest in or other
right to any technology, know-how, patents, patent applications, gene or genomic
sequence data or information, products, or biological materials of the other
Party, including items owned, controlled or developed by, or licensed to, the
other Party, or transferred by the other Party to said Party, at any time
pursuant to this Agreement.

     

    Section
6. ARANA
INVENTIONS; UNBLOCKING LICENSE

     

    Without
limitation to any other right Arana may have at Law, Arana shall be free to seek
and obtain patent protection, except with respect to [*], the Discovery Patent
Rights or the BCE Patent Rights themselves, for any inventions arising out of or
relating to its authorized use or practice of the Transferred Materials, the
Licensed Patent Rights, the Licensed Know-How, the Systems Patent Rights and/or
the Systems Know-How, provided, however, that, solely to the
extent such patent or patent application relating to such invention contains
claims that would cover the use or practice of the Transferred Materials, the
Licensed Patent Rights and/or any Systems Patent Rights, or would block XOMA,
its Affiliates, licensees, partners or collaborators from full enjoyment of the
same rights as are licensed hereunder to Arana, (a) Arana shall provide written
notice of the filing of any such patent application to XOMA, and in the event
Arana elects not to prosecute any such patent application or maintain any
resulting patent, XOMA, at its own expense, but with the full assistance of
Arana, shall be free to prosecute such patent application and/or maintain such
patent, and (b) Arana shall be deemed to have granted to XOMA a non-exclusive,
fully paid-up, irrevocable, worldwide license, in order for XOMA, and any Third
Party working with XOMA, directly or without limitation as a licensee, partner
or collaborator,

     


    
      
         


      

      
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    to enjoy
the benefit, on its own behalf or on behalf of any Third Party, of the use or
practice of the Transferred Materials, the Licensed Patent Rights and/or any
patent or patent application covering the use of the Systems.  Such
license shall not extend to claims of patents or patent applications relating to
Antibodies or Antibody Products, or methods and processes involving therapeutic
or diagnostic use of Antibodies or Antibody Products.  In the event
that, after the Effective Date, Arana acquires Control of any Patent Rights to
which this Section 6 would apply because the invention disclosures in such
Patent Rights are covered by the first sentence hereof, then, subject to any
limitations and obligations of any written agreement relating to such Patent
Rights, Arana shall, at XOMA’s option, extend to XOMA the same rights to such
Patent Rights as are otherwise provided for herein.

     

    Section
7. LIMITATIONS
ON USE AND MODIFICATION

     

    (a) Certain
Transfers.  All uses of the Transferred Materials shall
initially be performed at Arana’s Melbourne, Australia facilities: provided, however, that Arana shall be
free to move the Transferred Materials to any other site of its selection that
is and will remain under its or its Affiliates’ control, it being understood
that XOMA shall have no responsibility hereunder for any such
transfer.  Any site at which the Transferred Materials will be used
shall be and shall remain accessible to employees only of Arana and its
Affiliates, shall be under the exclusive control of Arana or its Affiliates and
shall have reasonable safeguards designed to protect the Transferred Materials
from theft, destruction or unauthorized use.

     

    (b) Certain
Limitations.  Arana acknowledges, represents and warrants that
the transfers provided for by this Agreement arise out of and are part of the
Collaboration; provided, however, that the use of the
Transferred Materials and the practice of the Licensed Patent Rights and any
other Patent Rights to which rights are granted pursuant to this Agreement may,
subject to the applicable provisions of this Agreement, be used by Arana and its
Affiliates for any other purpose including the discovery, development and
subsequent commercial sale of any composition of matter in the
Field.  Notwithstanding the foregoing, the following restrictions
shall apply to the Transferred Materials:

     

    (i)           Except
by XOMA or with XOMA’s prior written consent, [*] may not be altered or
modified.

     

    (ii)           The
Transferred Materials may not be transferred or disposed of to a Third Party;
provided, however, that
[*].

     

    (iii)           Arana
shall not use the Transferred Materials or practice the Licensed Patent Rights
and any other Patent Rights to which rights are granted pursuant to this
Agreement on behalf of any Third Party, [*] or otherwise engage in activities
not directly associated with Arana’s or its Affiliates’ own internal discovery,
research and development programs; provided, however, that, so long as the
other limitations of this Agreement are satisfied, Arana may use the Transferred
Materials or practice the Licensed Patent Rights and any other Patent Rights
covered by this Agreement with respect to any Discovery Product as to which
Arana or its Affiliates has either in-licensed or acquired rights from a Third
Party where such in-license or grant of rights

     


    
      
         


      

      
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    is for
the exclusive development of such Discovery Product or variants thereof by Arana
or its Affiliates and the original licensor does not become an Arana Licensee
with respect to such Discovery Product.

     

    (iv)           Arana
acknowledges that its rights to use the Transferred Materials are subject to all
applicable limitations, restrictions and obligations provided for in the terms
of any license or grant of rights from or other agreement with a Third Party the
benefit of which is claimed by Arana, provided such terms (i) were
made available in writing to Arana prior to the Effective Date, and (ii) are
expressed to apply to collaborators or licensees of XOMA in the position of
Arana under this Agreement.

     

    (v)           None
of the grants of rights or licenses herein or the use of any of the Transferred
Materials extend to or permit Arana to work with or extend any benefit hereunder
to (A) any composition of matter, article of manufacture or Know-How arising out
of the unlawful use of any item of Know-How or practice of any Patent Right
owned or controlled by XOMA or its Affiliates that is also licensed to Arana or
(B) any Third Party who the directors of Arana know is engaged in such unlawful
use or practice.

     

    Section
8. CERTAIN
PROVISIONS RELATING TO SOFTWARE

     

    (a) Additional
Definitions.  For purposes of this Section 8, the following
terms shall have the respective meanings indicated below:

     

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

     

    (ii) “Covered Code” shall
mean the Source Code and any Modifications to the Source Code made by Arana or
any person or entity acting on Arana’s behalf.

     

    (iii) “Covered Software”
shall mean the Software and any Modifications to the Software made by Arana or
any person or entity acting on Arana’s behalf.

     

    (iv) “Modifications” shall
mean any addition to, deletion from and/or other change to the substance and/or
structure of the Source Code or the Software designated in item A.1 of Schedule
1.55 as non-encrypted.  When code is released as a series of files, a
Modification is (A) any addition to or deletion from the contents of a file
containing the Covered Code or the Covered Software and/or (B) any new file or
other representation of computer program statements that contains any part of
the Covered Code or the Covered Software.

     


    
      
         


      

      
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    (v) “Software” shall mean
the software, programs and/or computer instruction sets, other than the Source
Code, consisting of the versions thereof existing and deployed at XOMA as of the
Effective Date and more fully described in item A.1 of Schedule 1.55 and any changed
or modified versions thereof that correct significant defects contained in the
Software as of the Effective Date (“Corrected
Software”).  Expressly excluded from the definition of Software
are (A) other programs, software and/or computer instructions that XOMA derives
from such programs, software and/or computer instructions or develops, acquires
or obtains the right to sublicense during the term of this Section 8, as well as
(B) any changed, modified or enhanced versions of the Software (other than
Corrected Software).

     

    (vi) “Source Code” shall
mean the human readable form of the Software designated in item A.1 of Schedule
1.55 as non-encrypted that is suitable for modification, including all modules
it contains, plus any associated data files, interface definition files, scripts
used to control compilation and installation of an executable computer
instruction.

     

    (b) Corrected
Software.  If, within the first [*] following the Effective
Date, XOMA develops, licenses or acquires any Corrected Software, XOMA shall
promptly provide Arana with a copy thereof.  All Corrected Software
shall be deemed, in accordance with the terms and conditions of this Section 8
and without payment of additional consideration, to be included in the
definition of Software.

     

    (c) Terms and
Conditions.

     

    (i) Any
reproduction, use or dissemination of any Covered Code or Covered Software,
including without limitation, any Modifications thereof, shall be limited to
activities undertaken by employees of Arana or its Affiliates who are subject to
the confidentiality and intellectual property provisions of this
Agreement.  Notwithstanding the foregoing, Arana may employ or use
Third Parties to make Modifications or use the Covered Code or the Covered
Software for purposes reasonably related to Arana’s or its Affiliates’
legitimate use as provided for by this Agreement, including this Section
8.  Arana shall not grant any such Third Party the right to access the
Software designated in item A.1 of Schedule 1.55 as non-encrypted or the Source
Code unless and until such Third Party executes a written confidentiality
agreement that provides, in addition to the other terms and conditions of such
agreement, that (A) the Third Party will abide, for XOMA’s and Arana’s benefit,
by the limitations provided for in this Section 8 and the other provisions of
this Agreement, (B) all work will be undertaken by such Third Party in a manner
so as to establish that any such work is done as a “work made for hire” and (C)
such Third Party will assign any patent rights to Arana such that they become
Applicable Patent Rights.

     

    (ii) Arana
shall retain and reproduce in all copies of the Covered Code and the Covered
Software (A) the copyright and other proprietary notices and disclaimers of XOMA
as they appear in the Source Code and the Software, respectively, (B) all
notices in the Source Code and/or the Software that refer to this Section 8, and
(C) to the extent it does not already exist, the notice provided for
below:

     


    
      
         


      

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

     

    “This
file contains Source Code or Software or Modifications thereof as defined in and
that are subject to a software license and related terms between Arana
Therapeutics Limited and XOMA Development Corporation.  You may not
use this file except in compliance with that license and those
terms.  Please obtain a copy of the software license and related terms
between Arana and XOMA by contacting the Company Secretary, of Arana
Therapeutics Limited, and read it before using this file.

     

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

     

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

     

    (iv) Arana
will use commercially reasonable and diligent efforts to protect XOMA’s
proprietary interests in and to the Software, the Source Code and XOMA’s
Applicable Patent Rights by, as appropriate, ensuring that there is password
protection of any computer or network containing any copies of the Covered Code
or the Covered Software.  In addition, Arana will prohibit its
employees from disclosing to unauthorized Third Parties the Covered Code or the
Covered Software except under the conditions required by this Section 8 and the
acknowledgement that the Software and the Source Code constitute Confidential
Information of XOMA under this Agreement.

     

    (d) Arana Exclusive
Rights.  Arana shall own all Modifications to the Source Code
or the Software designated in item A.1 of Schedule 1.55 as non-encrypted created
by Arana pursuant to this Section 8 and shall have no obligation to share or
provide copies or updates thereof to XOMA.

     

    (e) Representations and
Warranties Regarding Software and Source Code.  XOMA represents
and warrants that (i) the Source Code and the Software were made by XOMA
employees and constitute a “work made for hire” and were not authored or
distributed to Arana in violation of any agreements between XOMA and any Third
Party, including any “open source” licenses, and (ii) it is not actually aware
of any intellectual property rights of a Third Party that are infringed by the
use of the Software in accordance with this Agreement.

     


    
      
         


      

      
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    (f) Limitations on Warranties
and Support.  XOMA’s only obligations to provide to Arana
updates to, revisions to or modifications of any of the Transferred Materials
shall be those expressly provided in this Section 8.  Arana shall be
responsible for providing, at its cost, any Third Party hardware or software
required to deploy and operate the Systems.  The Covered Code or the
Covered Software may contain in whole or in part pre-release, untested or not
fully tested works, may contain errors that could cause failures or loss of
data, and may be incomplete or contain inaccuracies.  Arana expressly
acknowledges and agrees that use of the Covered Code or the Covered Software, or
any portion thereof, is at Arana’s sole and entire risk.  UNLESS
OTHERWISE STATED, THE SOURCE CODE AND THE SOFTWARE ARE PROVIDED “AS IS” AND
WITHOUT WARRANTY, UPGRADES OR SUPPORT OF ANY KIND.  UNLESS OTHERWISE
STATED, XOMA, ITS LICENSOR(S) AND CONTRIBUTORS (COLLECTIVELY REFERRED TO AS
“XOMA” FOR THE PURPOSES OF THIS SECTION 8(f)) EXPRESSLY DISCLAIM ALL WARRANTIES
AND/OR CONDITIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES AND/OR CONDITIONS OF MERCHANTABILITY, OF SATISFACTORY
QUALITY, OF FITNESS FOR A PARTICULAR PURPOSE, OF ACCURACY, OF QUIET ENJOYMENT
AND OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS.  XOMA DOES NOT WARRANT
AGAINST INTERFERENCE WITH ARANA’S ENJOYMENT OF THE COVERED CODE AND THE COVERED
SOFTWARE, THAT THE FUNCTIONS CONTAINED IN THE COVERED CODE OR THE COVERED
SOFTWARE WILL MEET ARANA’S REQUIREMENTS, THAT THE OPERATION OF THE COVERED CODE
OR THE COVERED SOFTWARE WILL BE UNINTERRUPTED OR ERROR-FREE, OR THAT DEFECTS IN
THE COVERED CODE OR THE COVERED SOFTWARE WILL BE CORRECTED.  Arana
acknowledges that neither the Covered Code nor the Covered Software is intended
for use in the operation of nuclear facilities, aircraft navigation,
communication systems or air traffic control machines, in which case the failure
of the Covered Code or the Covered Software could lead to death, personal injury
or severe physical or environmental damage.

     

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

     

    Section
9. UPFRONT
FEE

     

    In
consideration for the obligation to deliver a copy of [*] in accordance with the
[*] Specifications, Arana shall pay XOMA a one-time, fee of Six Million United
States Dollars (US$6,000,000), of which (a) Four Million United States Dollars
(US$4,000,000) shall be payable on or not later than [*] following receipt by
Arana of the Transferred Materials delivered pursuant to Section 3(a), and (b)
Two Million United States Dollars (US$2,000,000) shall be

     


    
      
         


      

      
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    payable
on the first anniversary of the  receipt by Arana of the Transferred
Materials delivered pursuant to Section 3(a), [*] in both cases subject to
receipt of an invoice issued by XOMA.

     

    Section
10. MILESTONES

     

    In
consideration for the obligation to deliver the Discovery Know-How relating to
[*] and the Systems and the transfers and grants of rights relating to the BCE
Patent Rights and the TAE Technology, Arana shall pay as follows:

     

    (a)           For
each Royalty-Bearing Discovery Product, on a Royalty-Bearing Discovery
Product-by-Royalty-Bearing Discovery Product basis, Arana shall pay XOMA the
amounts set forth below:

     

    
      	
              Event

            	
              Payment

            
	
              First
      dosing in a Phase 1 Trial

            	
              [*]

            
	
              First
      dosing in a Phase 2 Trial

            	
              [*]

            
	
              First
      dosing in a Phase 3 Trial

            	
              [*]

            
	
              Acceptance
      of first filing of BLA

            	
              [*]

            


    

    [*]

     

    (b)           For
each TAE Product, on a TAE Product-by-TAE Product basis, Arana shall pay XOMA
the amounts set forth below:

     

    
      	
              Event

            	
              Payment

            
	
              First
      dosing in a Phase 1 Trial

            	
              [*]

            
	
              First
      dosing in a Phase 2 Trial

            	
              [*]

            
	
              First
      dosing in a Phase 3 Trial

            	
              [*]

            
	
              Acceptance
      of first filing of BLA

            	
              [*]

            


    

     

    provided
that in no event shall a milestone payment be payable under this paragraph (b)
with respect to a TAE Product as to which milestone payments are also payable
pursuant to paragraph (a) above.

     

    (d)           For
the avoidance of doubt, the milestone payments due for each Licensed Product
shall be paid only once per such Licensed Product.

     


    
      
         


      

      
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    Section
11. ROYALTY
PAYMENTS

     

    In
consideration for the obligation to deliver the Discovery Know-How relating to
[*] and the Systems and the transfers and grants of rights relating to the BCE
Patent Rights and the TAE Technology, Arana shall pay as follows:

     

    (a) Rates.  Arana
shall pay XOMA a running royalty of:

     

    (i)           [*]
of the Net Sales of each Royalty-Bearing Discovery Product [*];

     

    (ii)           [*]

     

    (iii)           [*]
of the Net Sales of each TAE Product; provided that in no event shall a royalty
be payable under this clause (iii) with respect to a TAE Product as to which a
royalty is also payable pursuant to clause (i) or clause (ii)
above.

     

    (b) Multiple
Antibodies.  For the avoidance of doubt, the royalty rates
specified in Section 11(a) apply regardless of the number of Antibodies
comprised in a Licensed Product.

     

    (c) Term.  The
obligation to pay royalties on Net Sales of Discovery Products shall commence on
a country-by-country basis upon the First Commercial Sale of each Discovery
Product in such country and shall continue on a country-by-country basis
[*].  The obligation to pay royalties on Net Sales of TAE Products
shall commence on a country-by-country basis upon the First Commercial Sale of
each TAE Product in such country and shall continue on a country-by-country
basis [*].

     

    Section
12. REPORTING
AND RECORD KEEPING

     

    (a) Milestone
Reporting.  During the term of this Agreement, Arana shall
within [*] after the achievement of any milestone event referred to in
Section 10, furnish to XOMA a written notice indicating the milestone
achieved and, if applicable, the relevant indication, label expansion and/or
Regulatory Authority.  Milestone payments for each milestone event
shall be due simultaneously with Arana’s report under this Section 12(a)
for such milestone event.

     

    (b) Royalty
Reporting.

     

    (i)           All
amounts payable to XOMA under Section 11 shall be paid on a [*]
basis.  Arana shall, within [*] after the end of each
[*], deliver to XOMA a written report of the amount due to XOMA, pursuant to
Section 11, for the Net Sales in such calendar quarter, indicating
[*].  Royalty payments for each calendar quarter shall be due
simultaneously with Arana’s report under this Section 12(b) for such
quarter.

     

    (ii)           Arana
shall provide XOMA a [*] flash statement of the amount of gross sales of each
Licensed Product in the Territory during the applicable [*].  Arana
shall require any Arana Licensees to account for their Net Sales and to provide
such reports with

     


    
      
         


      

      
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    respect
thereto so that Arana can fulfill the above-mentioned obligations in this
Section 12(b).

     

    (iii)           Royalties
payable on Net Sales in countries other than the United States shall be
calculated in accordance with the standard exchange rate conversion practices
used by Arana for financial accounting purposes in respect of the calculation of
Net Sales.  If no royalty or payment is due for any royalty period
hereunder, Arana shall so report.

     

    (c) Record
Keeping.  Arana shall keep and shall require any Arana
Licensees to keep (all in accordance with GAAP), for at least [*] after
prepared, complete and accurate books and records in sufficient detail to
properly reflect all gross sales and Net Sales and to enable the royalties
payable hereunder to be determined.  Arana shall include in each
agreement with each applicable Arana Licensee a provision requiring such Arana
Licensee to make reports to Arana, to keep and maintain records of sales made
pursuant to such agreement and to grant access to such records by XOMA’s
independent registered public accounting firm to the same extent required of
Arana under this Agreement.

     

    Section
13. OTHER
PAYMENT-RELATED PROVISIONS

     

    (a) Audit.  Upon
the written request of XOMA (such request to be made no more than once every
calendar year), Arana shall permit an independent registered public accounting
firm selected by XOMA and acceptable to Arana, which acceptance shall not be
unreasonably withheld or delayed, to have access, at reasonable times and during
normal business hours, to such records of Arana as may be reasonably necessary
to verify the accuracy of an Arana payment report hereunder; provided that such records
shall be limited to those prepared since the beginning of the then current
calendar year or during the immediately preceding [*].  Each Party
shall use commercially reasonable efforts to schedule all such verifications
within [*] after XOMA makes its written request.  All such
verifications shall be conducted not more than [*] in, or with respect to, each
calendar year.  The report of XOMA’s independent registered public
accounting firm shall be made available to both Parties.  Subject to
Arana’s rights under Section 18(h), in the event XOMA’s independent
registered public accounting firm concludes that additional amounts were owed to
XOMA for such period, the additional amounts shall be paid by Arana within [*]
of the date XOMA delivers to Arana such written report so concluding, unless
such report contains manifest error.  In the event XOMA’s independent
registered public accounting firm concludes that there was an overpayment to
XOMA during such period, the overpayment shall be repaid by XOMA within [*] of
the date XOMA received such written report so concluding, unless such report
contains manifest error.  The fees charged by such independent
registered public accounting firm shall be paid by XOMA unless such audit
discloses a payment deficiency of more than [*] of the amount due under this
Agreement for the period in question, in which case Arana will bear the full
cost of such audit.  Each Party agrees that all information subject to
review under this Section 13(a), or under any agreement with an Arana
Licensee, is confidential and that XOMA shall cause its independent registered
public accounting firm to retain all such information in
confidence.  XOMA’s independent registered public accounting firm
shall only report to XOMA as to the computation of royalties or charges and
in-

     


    
      
         


      

      
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    voices
payable under this Agreement, as applicable, and shall not disclose to XOMA any
other information of Arana or any Arana Licensee.

     

    (b) Taxes.  All
payments pursuant to Section 9 shall be made free and clear of any taxes imposed
by or under the authority of any government or public authority (including
without limitation any withholding or similar tax).  If any Law
requires the withholding of amounts of income or other taxes from any other
payments made by Arana to XOMA under this Agreement, (i) Arana will (A) make
such withholding payments as required by Law and subtract such amounts from the
payments due to XOMA; and (B) submit proof of payment of the withholding tax to
XOMA at the time of making payment of the balance to XOMA; and (ii) the Parties
will use all commercially reasonable efforts to enable XOMA to obtain the
benefit of any Law or treaty that minimizes or removes the obligation to
withhold taxes.

     

    (c) Blocked
Currency.  If by Law conversion into United States dollars or
transfer of funds of a convertible currency to the United States is restricted
or forbidden, the Party owing such payment shall give the Party to which such
payment is owed prompt written notice and shall make such payment due under this
Agreement through such means or methods as are lawful in such country as the
Party to which such payment is owed may reasonably designate.  Failing
the designation by the Party to which such payment is owed of such lawful means
or methods within [*] after such written notice is given to such Party, the
Party owing such payment shall deposit such royalty payment in local currency to
the credit of the Party to which such payment is owed in a recognized banking
institution designated by such Party, or if none is designated by such Party
within the [*] period described above, in a recognized banking institution
selected by the Party owing such payment and identified in a written notice to
other Party, and such deposit shall fulfill all obligations of the Party owing
such payment to the other Party with respect to such payment.

     

    (d) Interest on Late
Payments.  Any failure by a Party to make a payment when due
shall obligate such Party to pay interest to the receiving Party at a rate equal
to [*].  The Applicable Interest Rate shall be calculated from the
date payment was due until actually received by the receiving Party based on
actual number of days lapsed and a 360-day year.

     

    (e) Method of
Payment.  Except as provided in Section 13(c), payments to
be made by one Party to the other under this Agreement shall be payable in
United States dollars and shall be paid by wire transfer in immediately
available funds to such bank account as is designated in writing by such
Party.  Attached hereto as Schedule 13(e) is
such bank account information for payments to be made to XOMA hereunder, until
such time as XOMA designates a different bank account as provided
herein.

     

    (f) Certain
Acknowledgements.  Arana acknowledges and agrees that the
amount of milestones and royalties due hereunder and the duration of the royalty
payments herein have been chosen for the convenience of the Parties as payment
for use of the Transferred Materials during the term of this Agreement under the
terms and conditions hereof.

     


    
      
         


      

      
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    Section
14. CONFIDENTIALITY

     

    (a) Nondisclosure
Obligations.

     

    (i)           General.  Except
as otherwise provided in this Section 14, during the term of this Agreement and
for a period of [*] thereafter, or longer if required by any agreement with a
Third Party relating to such Confidential Information, each Receiving Party
shall maintain the Confidential Information of each Disclosing Party in
confidence and use it only for purposes specifically authorized under this
Agreement.  Upon the expiration or termination of this Agreement, each
Party shall promptly inform the other Party in writing if any Confidential
Information the other Party received from such Party hereunder is covered by
such a Third Party agreement with such Party and if the term of confidentiality
for such Confidential Information will extend beyond such [*]
period.

     

    (ii)           Limitations.  To
the extent it is reasonably necessary or appropriate to fulfill its obligations
or exercise its rights under this Agreement and subject to advance written
notification to the Disclosing Party: (A) a Party may disclose Confidential
Information it is otherwise obligated not to disclose under this
Section 14(a), to its Affiliates, Arana Licensees (where Arana is the
Receiving Party), a Third Party to which XOMA or an Affiliate of XOMA licenses
or grants rights, as part of a bona fide collaboration, development,
commercialization or marketing arrangement (where XOMA is the Receiving Party),
consultants, outside contractors and clinical investigators, on a strict
need-to-know basis for the purposes contemplated by this Agreement and on
condition that such entities or persons agree to keep the Confidential
Information confidential for the same time periods and to the same extent as
such Party is required to keep the Confidential Information confidential
hereunder; and (B) a Party or any Arana Licensees may disclose, using
appropriate measures to preserve confidentiality, such Confidential Information
to government or other regulatory authorities to the extent that such disclosure
is reasonably necessary to obtain authorizations to conduct clinical trials of,
and/or to commercially market, Licensed Products.  Furthermore, a
Receiving Party may request permission from the Disclosing Party to disclose
such Confidential Information to the extent that such disclosure is reasonably
necessary to obtain patents which such Receiving Party is permitted to obtain
hereunder, which permission shall not be unreasonably withheld or
delayed.

     

    (iii)           Required
Disclosure.  Subject to Section 14(c)(i), a Receiving Party may
disclose Confidential Information pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued by a court
or governmental agency or as otherwise required by Law; provided, however, that the Receiving
Party shall notify the Disclosing Party promptly upon receipt thereof, giving
(where practicable) the Disclosing Party sufficient advance notice to permit it
to oppose, limit or seek confidential treatment for such disclosure; and provided, further, that the Receiving
Party shall furnish only that portion of the Confidential Information which it
is advised by counsel is legally required whether or not a protective order or
other similar order is obtained by the Disclosing Party.  Nothing in
this Section 14(a)(iii) prevents or restricts Arana or its Affiliates from
making disclosure required by the listing rules of a stock ex-

     


    
      
         


      

      
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    change on
which its shares are listed, provided that Arana shall use
its commercially reasonable efforts to notify XOMA prior to making any such
required disclosure.

     

    (b) Injunctive
Relief.  The Parties hereto understand and agree that remedies
at law may be inadequate to protect against any breach of any of the provisions
of this Section 14 by either Party or their employees, agents, officers or
directors or any other person acting in concert with it or on its
behalf.  Accordingly, each Party shall be entitled to the granting of
injunctive relief by a court of competent jurisdiction against any action that
constitutes any such breach of this Section 14.

     

    (c) Terms of this
Agreement.  The terms of this Agreement shall be treated as the
Confidential Information of Arana and XOMA and shall not be disclosed without
the written permission of XOMA or Arana, as the case may be, except (i) as
required by securities or other applicable laws or stock exchange rules, (ii) to
a party’s accountants, attorneys and financial and other professional advisors,
(iii) so long as such disclosure is subject to confidentiality undertakings at
least as stringent as those in this Agreement, to actual or prospective
collaboration partners, (where collaboration is permitted under this Agreement)
acquirers, investors or underwriters, or (iv) as otherwise provided
herein.  The Parties hereby agree to the release of a press release in
the form attached hereto as Schedule 14(c) upon
full execution of this Agreement and that the fact of the consummation of this
Agreement, as well as the terms that are expressly described in such press
release, shall be deemed to be in the public domain.  If either Party
desires to release a separate announcement relating to this Agreement, it shall
first allow the other Party [*] to approve in writing such proposed
announcement; provided
that such approval shall not be unreasonably withheld or
delayed.  Nothing herein shall be deemed to prohibit, restrict or
limit any disclosure that is consistent in all material respects with prior
disclosures.

     

    Section
15. REPRESENTATIONS
AND WARRANTIES

     

    (a) Representations, Warranties
and Covenants of Arana.  Arana represents and warrants to and
covenants with XOMA that:

     

    (i)           Arana
is duly organized, validly existing and in good standing under the laws of
Australia;

     

    (ii)           Arana
has the full legal right, authority and power to enter into this Agreement, and
to extend the rights and licenses granted to XOMA in this
Agreement;

     

    (iii)           Arana
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement;

     

    (iv)           upon
the execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Arana, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
Parties’ rights generally and except as enforceability may be subject to general
principles of eq-

     


    
      
         


      

      
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    uity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and

     

    (v)           the
performance of Arana’s obligations under this Agreement will not conflict with
Arana’s organizational documents or result in a breach of any agreements,
contracts or other arrangements to which it is a Party or violate any court or
administrative order by which it is bound.

     

    (b) Representations, Warranties
and Covenants of XOMA.  XOMA represents and warrants to and
covenants with Arana that:

     

    (i)           XOMA
is duly organized, validly existing and in good standing under the laws of
Delaware;

     

    (ii)           XOMA
has the full legal right, authority and power to enter into this Agreement, and
to extend the rights and licenses granted to Arana in this
Agreement;

     

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

     

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

     

    (v) the
performance of its obligations under this Agreement will not conflict with
XOMA’s organizational documents or result in a breach of any agreements,
contracts or other arrangements, to which it is a Party or violate any court or
administrative order by which it is bound;

     

    (vi) the
making of the Transferred Materials by XOMA for the purposes of this Agreement
has constituted and will constitute the practice of [*] of [*] as such terms are
defined in the [*];

     

    (vii) the
Transferred Materials are not generated from use of the [*] as defined in the
[*], and the provisions of [*] of the [*] do not impose any restrictions on the
use of the Transferred Materials by Arana or its Affiliates pursuant to this
Agreement;

     

    (viii) any
Antibody identified, generated or derived by [*] from [*] use of the Transferred
Materials in accordance with this Agreement will not constitute
a [*]  for the purposes of the [*];

     


    
      
         


      

      
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    (ix) the [*]
contained in the agreements between XOMA or its Affiliates and Third Parties
made available in writing to Arana prior to the Effective Date (“Third Party
Agreements”), including without limitation those contained in [*] of the
[*], have the effect that (1) [*]; (2) [*]; and (3) [*]; and

     

    (x) each of
Schedule 1.8, Schedule 1.26, Schedule 1.55 and Schedule 1.63 is a complete and
correct list of all BCE Patent Rights, Discovery Patent Rights, System Patent
Rights and TAE Patent Rights, in each case Controlled by XOMA as of the
Effective Date; and

     

    (xi) if used
in accordance with the terms and conditions of this Agreement, the Transferred
Materials do not constitute, and any Discovery Product will not constitute, a
[*] or [*], as such terms are defined in the [*], and the provisions of [*] of
the [*] do not impose any (1) restrictions on the use of the Transferred
Materials by Arana or its Affiliates pursuant to this Agreement nor (2)
obligations on XOMA to notify [*] of any Discovery Product or to [*] any
Discovery Product to the [*] set out in [*] of the [*].

     

    (c) Limited
Liability.  EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT,
NEITHER ARANA NOR XOMA (A) MAKES ANY WARRANTY, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING WITHOUT LIMITATION MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR NON-INFRINGEMENT OR (B) WILL BE LIABLE WITH RESPECT TO ANY MATTER ARISING
UNDER THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS.

     

    Section
16. INDEMNITY

     

    (a) Arana Indemnity
Obligations.  Subject to Section 16(c), Arana agrees to
defend, indemnify and hold XOMA, its Affiliates and their respective employees,
directors, officers and agents harmless from all claims, losses, damages or
expenses (including reasonable attorneys’ fees and costs of litigation) arising
as a result of (i) any use of the Transferred Materials; (ii) actual or asserted
violations of any applicable law or regulation by Arana, any Arana Licensees and
their respective Affiliates by virtue of which any Licensed Products
manufactured, distributed or sold by Arana, any Arana Licensees or their
respective Affiliates pursuant to this Agreement shall be alleged or determined
to be adulterated, misbranded, mislabeled or otherwise not in compliance with
any applicable law or regulation; (iii) claims for bodily injury, death or
property damage attributable to the manufacture, distribution, sale or use of
any Licensed Products by Arana, any Arana Licensees or their respective
Affiliates; (iv) a recall of a Licensed Product manufactured, distributed
or sold by Arana, any Arana Licensees or their respective Affiliates ordered by
a governmental agency or required by a confirmed Licensed Product failure; (v)
Arana’s breach of any of its representations, warranties or covenants hereunder;
or (vi) gross negligence or fraud by Arana, its Affiliates or any of their
respective employees, directors, officers or agents in relation to actions or
activities under this Agreement.

     


    
      
         


      

      
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    (b) XOMA Indemnity
Obligations.  Subject to Section 16(c), XOMA agrees to
defend, indemnify and hold Arana, its Affiliates and their respective employees,
directors, officers and agents harmless from all claims, losses, damages or
expenses (including reasonable attorneys’ fees and costs of litigation) arising
as a result of (i) [*]; (ii) XOMA’s breach of any of its representations,
warranties or covenants hereunder; or (iii) gross negligence or fraud by XOMA,
its Affiliates or any of their respective employees, directors, officers or
agents in relation to actions or activities under this Agreement.

     

    (c) Limitation on Indemnity
Obligations.  Neither Party, its Affiliates or their respective
employees and agents shall be entitled to the indemnities set forth in
Sections 16(a) or 16(b) respectively, to the comparative extent the claim,
loss, damage or expense for which indemnification is sought (i) was caused by a
grossly negligent, reckless or intentional act or omission by such Party, its
directors, officers, employees or authorized agents; or (ii) arose as a direct
result of such Party’s breach of any of its representations, warranties or
covenants hereunder.

     

    (d) Procedure.  If
a Party or any of its Affiliates or their respective employees or agents
(collectively, the “Indemnitee”) intends
to claim indemnification under this Section 16, the Indemnitee shall promptly
notify the other Party (the “Indemnitor”) of any
loss, claim, damage, liability or action in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall assume the
defense thereof with counsel selected by the Indemnitor and reasonably
acceptable to the Indemnitee; provided, however, that an Indemnitee
shall have the right to retain its own counsel, with the fees and expenses to be
paid by the Indemnitee, if representation of such Indemnitee by the counsel
retained by the Indemnitor would be inappropriate due to actual or potential
differing interests between such Indemnitee and any other Party represented by
such counsel in such proceedings.  The Indemnitor shall have the right
to settle or compromise any claims for which it is providing indemnification
under this Section 16; provided that the consent of
the Indemnitee (which shall not be unreasonably withheld or delayed) shall be
required in the event any such settlement or compromise would adversely affect
the interests of the Indemnitee.  The indemnity agreement in this
Section 16 shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Indemnitor.  The failure to deliver notice to the Indemnitor
within a reasonable time after the commencement of any such action, if
prejudicial to the Indemnitor’s ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Section 16
resulting from such failure, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Section 16.  The Indemnitee under
this Section 16, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification.

     

    Section
17. EXPIRATION
AND TERMINATION

     

    (a) Term of
Agreement.   The term of this Agreement shall commence on
the Effective Date and shall continue until the latest of the following to
occur: (i) payment by Arana and receipt by XOMA of the last amount to be paid by
Arana to XOMA pursuant to the terms hereof; (ii) cessation by Arana, its
Affiliates and Arana Licensees of the use of [*] or (iii) the
cessation

     


    
      
         


      

      
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    by Arana,
its Affiliates and Arana Licensees of the exercise of the rights granted to them
pursuant to Sections 5(a) and 5(b).  Arana agrees to notify XOMA
promptly upon any cessation of such use or exercise of rights.

     

    (b) Events of
Default.

     

    (i)           An
“Event of
Default” by either Party shall have occurred upon (i) the occurrence of a
material breach of this Agreement if such Party fails to remedy such breach
within sixty (60) days after written notice thereof by the non-breaching
Party (ten (10) business days in the event of a Party’s failure to make a
payment required hereunder) or, if remediation of such breach (other than a
payment breach) within sixty (60) days is not practicable, if such Party fails
to commence and diligently pursue such remediation during such sixty (60) day
period, or (ii) the commencement of any proceeding in or for bankruptcy,
insolvency, dissolution or winding up by or against such Party that is not
dismissed or otherwise disposed of within sixty (60) days
thereafter.

     

    (ii)           In
partial consideration for the grant of rights hereunder, Arana agrees that,
except to the extent compelled to do so by legal process and subject to any
specific contractual obligations of Arana existing on the Effective Date in
circumstances constituting, in the reasonable, written opinion of counsel to
Arana, a breach thereof, it will not contest, direct another to contest or
knowingly assist another in contesting the validity or enforceability of any of
the Patent Rights licensed hereunder.  The Parties agree that this
covenant is a material term of this Agreement, and breach of this covenant will
constitute a material breach of this Agreement.

     

    (c) Effect of an Event of
Default.  In the event of an Event of Default, the
non-defaulting Party shall have the right, at its option exercisable in its sole
discretion, in addition to any other rights or remedies available to it at law
or in equity and subject to the limitations set forth in Sections 15(c) and
18(h) hereof, to, by written notice to the other Party, terminate this Agreement
in its entirety.

     

    (d) Effect of Expiration or
Termination of Agreement.  The expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination.  In no way limiting the generality of
the foregoing, the provisions of Sections 1, 5(c), 5(f), 6, 10, 11, 12, 13,
14, 15, 16, 17(d) and 18 shall survive the expiration or termination of this
Agreement.  For the avoidance of doubt, and subject to obtaining a
license of any necessary Patent Rights (including without limitation from XOMA),
Arana may continue to develop and commercialize existing Licensed Products or
potential Licensed Products subject to Arana’s payment obligations under this
Agreement.

     

    Section
18. MISCELLANEOUS

     

    (a) Force
Majeure.  Neither Party shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any obligation under this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party, including but not
lim-

     


    
      
         


      

      
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    ited to
fire, floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided, however, that the Party so
affected shall use reasonable commercial efforts to avoid or remove such causes
of nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed.  Either Party shall provide
the other Party with prompt written notice of any delay or failure to perform
that occurs by reason of force majeure.  The Parties shall mutually
seek a resolution of the delay or the failure to perform as noted
above.

     

    (b) Assignment.  This
Agreement may not be assigned or otherwise transferred, in whole or in part, by
either Party without the consent of the other Party; provided, however, that either Arana or
XOMA may, without such consent, assign its rights and obligations under this
Agreement (i) to any Affiliate, or (ii) in connection with a merger,
consolidation or sale of such portion of a Party’s assets that includes rights
under this Agreement to an unrelated Third Party; provided, further, that such Party’s
rights and obligations under this Agreement shall be assumed by its successor in
interest in any such transaction and shall not be transferred separate from all
or substantially all of its other business assets, including those business
assets that are the subject of this Agreement.   Any purported
assignment in violation of the preceding sentence shall be void.  Any
permitted assignee shall assume all obligations of its assignor under this
Agreement, unless the Parties otherwise agree; provided, however, that this section
will not relieve the assignor from any of its obligations as a surety even after
the assignment.

     

    (c) Bankruptcy.  All
rights and licenses granted under this Agreement by one Party to the other Party
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of
Title XI of the United States Code (the “Bankruptcy Code”),
licenses of rights to “intellectual property” as defined under
Section 101(56) of the Bankruptcy Code.  The Parties agree that
the licensing Party under this Agreement shall retain and may fully exercise all
of its rights and elections under the Bankruptcy Code in the event of a
bankruptcy by the other Party.  The Parties further agree that in the
event of the commencement of a bankruptcy proceeding by or against one Party
under the Bankruptcy Code, the other Party, to the extent permitted under
applicable Laws, shall be entitled to complete access to any such intellectual
property pertaining to the rights granted in the licenses hereunder of the Party
by or against whom a bankruptcy proceeding has been commenced and all
embodiments of such intellectual property.

     

    (d) Severability.  Each
Party hereby agrees that it does not intend to violate any public policy, Law,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries.  Should one or more
provisions of this Agreement be or become invalid, the Parties hereto shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the Parties would have
entered into this Agreement with such valid provisions in lieu of such invalid
provisions.  In case such valid provisions cannot be agreed upon, the
invalidity of one or several provisions of this Agreement shall not affect the
validity of this Agreement as a whole, unless the invalid provisions are of such
essential importance to this Agreement that it is to be reasonably assumed that
the Parties would not have entered into this Agreement without the invalid
provisions.

     


    
      
         


      

      
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    (e) Notices.  Any
consent, notice or report required or permitted to be given or made under this
Agreement by one of the Parties hereto to the other shall be in writing,
delivered personally or by facsimile (and promptly confirmed by telephone,
personal delivery or courier) or courier, postage prepaid (where applicable),
addressed to such other Party at its address indicated below, or to such other
address as the addressee shall have last furnished in writing to the addressor
and shall be effective upon receipt by the addressee.

     

    
      	
              If
      to Arana:

            	
              Arana
      Therapeutics Limited

            
	 
      	
              Level
      2

            
	 
      	
              37
      Epping Road

            
	 
      	
              Macquarie
      Park

            
	 
      	
              New
      South Wales 2113

            
	 
      	
              Australia

            
	 
      	
              Attention:  Company
      Secretary

            
	 
      	
              Telephone:
      +61 (2) 8061 9900

            
	 
      	
              Facsimile:
      +61 (2) 8061 9999

            
	 
      	 
      
	
              If
      to XOMA:

            	
              XOMA
      Development Corporation

            
	 
      	
              2910
      Seventh Street

            
	 
      	
              Berkeley,
      California  94710

            
	 
      	
              USA

            
	 
      	
              Attention:  Legal
      Department

            
	 
      	
              Telephone:  +1
      (510) 204-7200

            
	 
      	
              Facsimile:  +1
      (510) 649-7571

            


    

    
      	
               
      

            	 


    

     

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

            


    

     

    
      	 
      	
              Cahill
      Gordon & Reindel LLP

            
	 
      	
              80
      Pine Street

            
	 
      	
              New
      York, New York  10005

            
	 
      	
              USA

            
	 
      	
              Attention:  Geoffrey
      E. Liebmann

            
	 
      	
              Telephone:  +1
      (212) 701-3000

            
	 
      	
              Facsimile:  +1
      (212) 269-5420

            


    

    


    (f) Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the laws of [*], without reference to the conflicts of law
principles thereof; provided,
that the interpretation and application of provisions hereof relating to
the existence, ownership, validity or scope of the intellectual property rights
of either Party, as well as any dispute relating to such provisions or rights,
shall be governed by and construed in accordance with the laws of the State of
New York.

     

    (g) Forum Selection; Consent to
Jurisdiction.  Subject to Section 18(h), any litigation based
hereon, or arising out of, under, or in connection with this Agreement, shall be
brought and maintained exclusively in the courts located within London, England;
provided, that any
litigation based on, or arising out of, under or in connection with the
interpretation and application of

     


    
      
         


      

      
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    provisions
hereof relating to the existence, ownership, validity or scope of the
intellectual property rights of either Party shall be brought and maintained
exclusively in the courts located within New York, New York.  The
Parties hereby expressly and irrevocably submit to the jurisdiction of the
courts located within London, England and New York, New York, as applicable, for
the limited purpose of any such litigation as set forth above.  The
Parties further irrevocably consent to the service of process by registered
mail, postage prepaid, or by personal service.  The Parties hereby
expressly and irrevocably waive, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in an inconvenient forum.

     

    (h) Dispute
Resolution.

     

    (i) In the
event of any controversy or claim arising out of or relating to this Agreement
the Parties hereby agree that they will first attempt in good faith to resolve
such controversy or claim promptly by negotiations.  If such a
controversy or claim should arise hereunder, the matter shall be referred to the
chief executive officers of XOMA and Arana, or their respective designees (the
“Representatives”).  If
the matter has not been resolved within [*] of the first meeting of the
Representatives (which period may be extended by mutual agreement) concerning
such matter, either Party may initiate arbitration by giving notice to that
effect to the other Party simultaneously with filing a notice with the
International Chamber of Commerce or its successor organization (“ICC”) in accordance
with its International Arbitration Rules.  Such dispute shall then be
settled by arbitration in London, England or, in the case of any dispute based
on, or arising out of, under or in connection with the provisions hereof
relating to the intellectual property rights of either Party, in New York, New
York, to be conducted in the English language and in accordance with the
International Arbitration Rules of the ICC or other rules agreed to by the
Parties, by a panel of three neutral arbitrators who shall be selected by the
Parties using the procedures for arbitrator selection of the ICC.

     

    (A)           The
panel shall render its decision and award, including a statement of reasons upon
which such award is based, within [*] after the arbitration
hearing.  The decision of the panel shall be determined by majority
vote among the arbitrators, shall be in writing and shall be binding upon the
Parties, final and non-appealable.  Judgment upon the award rendered
by the panel may be entered in any court having jurisdiction thereof in
accordance with Section 18(g).

     

    (B)           Except
as provided in Section 18(h)(ii), the procedures specified in this
Section 18(h) shall be the sole and exclusive procedures for the resolution
of disputes between the Parties arising out of or relating to this Agreement;
provided that a Party,
without prejudice to the above procedures, may seek injunctive relief or other
provisional judicial relief if in its sole judgment such action is necessary to
avoid irreparable damage.  Despite such actions seeking injunctive or
other provisional judicial relief, the Parties will continue to participate in
good faith in the procedures specified in this Section 18(h).

     


    
      
         


      

      
        -31-

        
          

        

      

      
         


      

    


    


     

    (C)           The
arbitrators shall issue with the rulings a written determination as to how the
fees and expenses of the arbitration, along with the reasonable legal fees and
expenses of each Party (including all attorneys’ fees, witness fees and
expenses), shall be allocated between the Parties.  The arbitrators
shall allocate such fees and expenses in a way that bears a reasonable
relationship to the outcome of the arbitral proceeding, with the Party
prevailing on more issues, or issues of greater value or gravity, recovering a
relatively larger share of its legal fees and expenses.

     

    (ii) Without
limiting or otherwise restricting the Parties’ respective rights and obligations
expressly set forth in the other provisions of this Agreement, the Parties agree
that any dispute between them over the inventorship, ownership, validity,
enforceability or infringement of any Patent Rights related to the Collaboration
(including without limitation all Patent Rights in respect of or arising out of
the use of the Transferred Materials) and Controlled by either Party that cannot
be resolved between them after following the procedures set forth in the first
two sentences of Section 18(h)(i) shall be presented only to a court of
competent jurisdiction for resolution pursuant to
Section 18(g).

     

    (iii) The
application of the United Nations Convention on Contracts for the International
Sale of Goods is expressly excluded.

     

    (i) Entire
Agreement.  This Agreement, together with the schedules,
exhibits and appendices hereto and any confidentiality agreement(s) executed in
contemplation of this Agreement, contains the entire understanding of the
Parties with respect to the subject matter hereof.  All express or
implied agreements and understandings, either oral or written, heretofore made
are expressly merged in and made a part of this Agreement.  This
Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by both Parties hereto.

     

    (j) Headings.  The
captions to the several Sections hereof and Schedules hereto are not a part of
this Agreement, but are merely guides or labels to assist in locating and
reading the several Sections hereof and Schedules hereto.

     

    (k) No
Partnership.  It is expressly agreed that the relationship
between Arana, on the one hand, and XOMA, on the other hand, shall not
constitute a partnership, joint venture or agency.  Subject to Section
14(c), neither Arana, on the one hand, nor XOMA, on the one hand, shall have the
authority to make any statements, representations or commitments of any kind, or
to take any action, which shall be binding on the other, without the prior
consent of the other Party to do so.

     

    (l) Exports.  The
Parties acknowledge that the export of technical data, materials or products is
subject to the exporting Party receiving any necessary export licenses and that
the Parties cannot be responsible for any delays attributable to export controls
which are beyond the reasonable control of either Party.  Arana and
XOMA agree not to export or re-export, directly or indirectly, any information,
technical data, the direct product of such data, samples or equipment received
or generated under this Agreement in violation of any applicable export control
laws or governmental regulations.  Arana and XOMA agree to obtain
similar covenants from their licen-

     


    
      
         


      

      
        -32-

        
          

        

      

      
         


      

    


    sees,
sublicensees, or corporate partners, as the case may be, and contractors with
respect to the subject matter of this Section 18(l).

     

    (m) Waiver.  The
waiver by either Party hereto of any right hereunder or the failure to perform
or of a breach by the other Party shall not be deemed a waiver of any other
right hereunder or of any other breach or failure by said other Party whether of
a similar nature or otherwise.
 

     

    (n) Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  An executed counterpart may be delivered by facsimile or
other electronic means.

     

    (o) Business
Days.  Where an act is required to be performed or a payment
required to be made on a day that is not a business day in the principal place
of business of the Party required to perform such act or make such payment, the
act will be required to be performed or the payment will be required to be made
on the following business day.

     

    
      	
               
      

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

            


    

     


    
      
         


      

      
        -33-

        
          

        

      

      
         


      

    


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

     

    


     

    ARANA
THERAPEUTICS LIMITED

    


    


    
      	
              By:           _____________________________

                          Name:

                          Title:  Director

               

               

            	
              By:           _____________________________

                          Name:

                          Title:  Director

               

               

            


    

    


    


    XOMA
DEVELOPMENT CORPORATION

    


    


    By:           ____________________________

                Name:

                Title:

    


    



    
      
         


      

      
        -34-

        
          

        

      

      
         


      

    


    Schedule
1.8

     

    Bacterial Cell Expression
Patent
Rights

     

    
      	
               
      

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

            


    

    


    Inventors:                      Robinson,
Liu, Horwitz, Wall, Better

     

    
      	
              1)

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

            


    

     

    
      	
              COUNTRY

            	
              APPLICATION NO.

            	
              PATENT NO.

            
	
              Australia

            	
              65981/86

            	
              AU
      606,320

            
	
              Denmark

            	
              3385/87

            	
              DK
      175680

            
	
              Canada

            	
              521,909

            	
              Abandoned

            
	
              Europe

            	
              86906676.1

            	
              0247091
      Abandoned

            
	
              Europe

            	
              92115754.1

            	
              Abandoned

            
	
              Japan

            	
              505887/1986

            	
              Abandoned

            
	
              Taiwan

            	
              75105650

            	
              51922

            
	
              *United
      States

            	
              06/793,980

            	
              Abandoned

            
	
              *United
      States

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

            	
              Abandoned

            


    

    *Cases
abandoned in favor of a continuing application.

     

    
      	
              2)

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

            


    

     

    
      	
              COUNTRY

            	
              APPLICATION NO.

            	
              PATENT NO.

            
	
              Australia

            	
              23244/88

            	
                AU
      632,462

            
	
              Canada

            	
              572,398

            	
                CA
      1,341,235

            
	
              Denmark

            	
              192/90

            	
                DK
      174824

            
	
              Denmark

            	
              200301155

            	
                DK
      175654

            
	
              Denmark

            	
              200301156

            	
                DK
      175581

            
	
              Europe

            	
              EP
      88907510.7

            	
                EP
      0371998

            
	
              Austria

            	
              EP
      88907510.7

            	
                AT
      0102249

            
	
              Belgium

            	
              EP
      88907510.7

            	
                BE
      0371998

            
	
              France

            	
              EP
      88907510.7

            	
                FR
      0371998

            
	
              Germany

            	
              EP
      88907510.7

            	
                DE
      3888186.1

            
	
              Italy

            	
              EP
      88907510.7

            	
                IT
      0371998

            
	
              Luxembourg

            	
              EP
      88907510.7

            	
                LU
      0371998

            
	
              Netherlands

            	
              EP
      88907510.7

            	
                NL
      0371998

            
	
              Sweden

            	
              EP
      88907510.7

            	
                SE
      0371998

            
	
              Switzerland/

                              Liechtenstein

            	
              EP
      88907510.7

            	
                CH
      0371998

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              United Kingdom

            	
              EP
      88907510.7

            	
                GB
      0371998

            
	
              Europe

            	
              EP
      93100041.8

            	
                EP
      0550400

            
	
              Austria

            	
              EP
      93100041.8

            	
                AT0140266E

            
	
              Belgium

            	
              EP
      93100041.8

            	
                BE
      0550400

            
	
              France

            	
              EP
      93100041.8

            	
                FR
      0550400

            
	
              Germany

            	
              EP
      93100041.8

            	
                DE
      3855421.6

            
	
              Italy

            	
              EP
      93100041.8

            	
                IT
      0550400

            
	
              Luxembourg

            	
              EP
      93100041.8

            	
                LU
      0550400

            
	
              Netherlands

            	
              EP
      93100041.8

            	
                NL
      0550400

            
	
              Sweden

            	
              EP
      93100041.8

            	
                SE
      0550400

            
	
              Switzerland/

                                 Liechtenstein

            	
              EP
      93100041.8

            	
                CH
      0550400

            
	
              United Kingdom

            	
              EP
      93100041.8

            	
                GB
      0550400

            
	
              Europe

            	
              EP
      95119798.7

            	
                EP
      0731167

            
	
              Austria

            	
              EP
      95119798.7

            	
                AT
      0197315

            
	
              Belgium

            	
              EP
      95119798.7

            	
                BE
      0731167

            
	
              France

            	
              EP
      95119798.7

            	
                FR
      0731167

            
	
              Germany

            	
              EP
      95119798.7

            	
                DE
      3856440.8

            
	
              Italy

            	
              EP
      95119798.7

            	
                IT
      0731167

            
	
              Luxembourg

            	
              EP
      95119798.7

            	
                LU
      0731167

            
	
              Netherlands

            	
              EP
      95119798.7

            	
                NL
      0731167

            
	
              Sweden

            	
              EP
      95119798.7

            	
                SE
      0731167

            
	
              Switzerland/

                                 Liechtenstein

            	
              EP
      95119798.7

            	
                CH
      0731167

            
	
              United Kingdom

            	
              EP
      95119798.7

            	
                GB
      0731167

            
	
              Japan

            	
              506481/88

            	
                JP
      2991720

            
	
              *United
      States

            	
              07/077,528

            	 
      


    

    *Cases
abandoned in favor of a continuing application.

     

    
      	
              3)

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

            


    

     

    
      	
              COUNTRY

            	
              APPLICATION NO.

            	
              PATENT NO.

            
	
              *United
      States

            	
              07/501,092

            	
              Abandoned

            
	
              *United
      States

            	
              07/870,404

            	
              Abandoned

            
	
              *United
      States

            	
              07/987,555

            	
              Abandoned

            
	
              *United
      States

            	
              08/020,671

            	
              Abandoned

            
	
              United
      States

            	
              08/235,225

            	
              US
      5,618,920

            
	
              United
      States

            	
              08/299,085

            	
              US
      5,595,898

            
	
              United
      States

            	
              08/450,731

            	
              US
      5,693,493

            


    


    
      
         


      

      
        -2- 


        
          

        

      

      
         


      

    


    


    
      	
              United
      States

            	
              08/466,203

            	
              US
      5,698,417

            
	
              United
      States

            	
              08/467,140

            	
              US
      5,698,435

            
	
              United
      States

            	
              08/472,691

            	
              US
      6,204,023

            
	
              *United
      States

            	
              09/722,315

            	
              Abandoned

            
	
              *United
      States

            	
              09/722,425

            	
              Abandoned

            
	
              *United
      States

            	
              10/040,945

            	
              Abandoned

            
	
              United
      States

            	
              11/582,563

            	
              Abandoned

            


    

    *Cases
abandoned in favor of a continuing application.

     

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

    


    Inventors:                      Lei,
Wilcox

     

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

     

    
      	
              COUNTRY

            	
              APPLICATION NO.

            	
              PATENT NO.

            
	
              Australia

            	
              29377/89

            	
              AU
      627443

            
	
              Canada

            	
              587,885

            	
              CA
      1,338,807

            
	
              Europe

            	
              EP
      89901763.6

            	
              EP
      0396612

            
	
              Austria

            	
              EP
      89901763.6

            	
              AT
      0140731

            
	
              Belgium

            	
              EP
      89901763.6

            	
              BE
      0396612

            
	
              France

            	
              EP
      89901763.6

            	
              FR
      0396612

            
	
              Germany

            	
              EP
      89901763.6

            	
              DE
      689 26 882

            
	
              Italy

            	
              EP
      89901763.6

            	
              IT
      0396612

            
	
              Luxembourg

            	
              EP
      89901763.6

            	
              LU
      0396612

            
	
              Netherlands

            	
              EP
      89901763.6

            	
              NL
      0396612

            
	
              Sweden

            	
              EP
      89901763.6

            	
              SE
      0396612

            
	
              Switzerland/Liechtenstein

            	
              EP
      89901763.6

            	
              CH
      0396612

            
	
              United Kingdom

            	
              EP
      89901763.6

            	
              GB
      0396612

            
	
              Japan

            	
              501661/89

            	
              JP
      2980626

            
	
              *United
      States

            	
              07/142,039

            	
              Abandoned

            
	
              United
      States

            	
              08/472,696

            	
              US
      5,846,818

            
	
              United
      States

            	
              08/357,234

            	
              US
      5,576,195

            


    

    *Cases
abandoned in favor of a continuing application.

    


     

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

    


    Inventor:                      Better

    


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

     


    
      
         


      

      
        -3- 


        
          

        

      

      
         


      

    


    


     

    
      	
              COUNTRY

            	
              APPLICATION NO.

            	
              PATENT NO.

            
	
              Australia

            	
              2001249265

            	
              AU
      2001249265

            
	
              Canada

            	
              2,404,046

            	
              2,404,046

            
	
              Europe

            	
              01922467.4

            	
              EP
      1268823

            
	
              Austria

            	
              01922467.4

            	
              AT
      1268823

            
	
              Belgium

            	
              01922467.4

            	
              BE
      1268823

            
	
              Cyprus

            	
              01922467.4

            	
              CY
      1268823

            
	
              Denmark

            	
              01922467.4

            	
              DK
      1268823

            
	
              Finland

            	
              01922467.4

            	
              FI
      1268823

            
	
              France

            	
              01922467.4

            	
              FR
      1268823

            
	
              Germany

            	
              01922467.4

            	
              DE
      60131261.9-08

            
	
              Greece

            	
              01922467.4

            	
              GR
      1268823

            
	
              Ireland

            	
              01922467.4

            	
              IE
      1268823

            
	
              Italy

            	
              01922467.4

            	
              IT
      1268823

            
	
              Luxembourg

            	
              01922467.4

            	
              LU
      1268823

            
	
              Monaco

            	
              01922467.4

            	
              MC
      1268823

            
	
              Netherlands

            	
              01922467.4

            	
              NL
      1268823

            
	
              Portugal

            	
              01922467.4

            	
              PT
      1268823

            
	
              Spain

            	
              01922467.4

            	
              ES
      1268823

            
	
              Sweden

            	
              01922467.4

            	
              SE
      1268823

            
	
              Switzerland

            	
              01922467.4

            	
              CH
      1268823

            
	
              Turkey

            	
              01922467.4

            	
              TR
      1268823

            
	
              United
      Kingdom

            	
              01922467.4

            	
              GB
      1268823

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              Hong
      Kong

            	
              07021559.5-08109183.0

            	
              Pending
      – Published 1120824A

            
	
              Japan

            	
              2001-570798

            	
              Pending
      – Published 2003-528616

            
	
              *United
      States

            	
              60/192,129

            	
              Abandoned

            
	
              *United
      States

            	
              60/192,238

            	
              Abandoned

            
	
              United
      States

            	
              09/811,933

            	
              US
      6,803,210

            
	
              United
      States

            	
              10/963,414

            	
              Abandoned

            


    

    *Cases
abandoned in favor of a continuing application.

    


    


    [*]


    
      
         


      

      
        -4- 


        
          

        

      

      
         


      

    


    Schedule
1.26

     

    Discovery Patent
Rights

     

    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
1.55

     

    Systems

     

    A.           Materials/Know-How

    


    [*]

    


    B.           Patent
Rights

    


    [*]

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
1.63

     

    Targeted Affinity
Enhancement Technology

     

    A.           Materials/Know-How

    


    [*]

    


    B.           Patent
Rights

    


    [*]

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
1.70

     

    [*]
Specifications

     

    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
3(a)

     

    [*] - Quantities and Additional
Information

     

    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
4(a)

     

    Services

     

    A.           Description
of Services to be Performed:

    


    
      	
               
      

            	
              1.

            	
              [*]

            


    

    
      	
               
      

            	
              2.

            	
              Technical
      support for the TAE Technology

            


    

    
      	
               
      

            	
              3.

            	
              Technical
      support for the Systems

            


    

    


    B.           Compensation:

    


    [*]

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
13(e)

     

    Wire Transfer Instructions
for XOMA

     

    [*]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Schedule
14(c)

     

    Form of Press
Release

     

    XOMA
Announces $6 Million Antibody Discovery Collaboration with Arana
Therapeutics

     

    BERKELEY,
Calif., September 9, 2009 -- XOMA Ltd. (Nasdaq: XOMA) and Arana Therapeutics
Limited, a wholly-owned subsidiary of Cephalon, Inc. (Nasdaq: CEPH) have entered
into a collaboration involving multiple proprietary XOMA antibody research and
development technologies, including a new antibody phage display library, and a
suite of integrated information and data management systems. Arana has agreed to
pay XOMA a fee of $6 million and XOMA will be entitled to milestone payments and
royalties on product sales. Under the terms of the collaboration, XOMA will be
fully reimbursed for all services it may provide to Arana under the
agreement.

     

    “We
selected XOMA because of their ability to provide a complete suite of validated
technologies that will further enable us to accelerate our antibody development
programs toward the clinic,” said Steffen Nock, Acting Chief Executive Officer
of Arana. “We believe the advantages of these technologies, including XOMA’s
next-generation antibody libraries, will increase our capacity to
cost-effectively develop novel therapeutics.”

     

    “We are
pleased to partner with Arana, a company with a strong presence and capabilities
in the antibody field,” said Steven B. Engle, XOMA’s Chairman and Chief
Executive Officer. “This monetization of our proprietary technologies and
products demonstrates the value of our extensive antibody expertise and
increases the return on our research and development efforts.”

     

    XOMA has
developed integrated capabilities in antibody discovery, engineering and
manufacturing, including maintaining the largest collection of commercially
available antibody phage display libraries. The company also has expertise in
the construction of large, novel and diverse libraries for screening and
optimization that enable the selection of antibodies with very specific binding,
affinity and potency characteristics to an antigen of choice.

     

     The
new, proprietary antibody library covered by the agreement with Arana, recently
validated by XOMA, is one of a series of proprietary antibody libraries being
developed by XOMA scientists to overcome existing limitations in library design
by combining “best-in-class” techniques with XOMA’s own proprietary and
patent-protected technologies. Access to multiple libraries may offer a number
of benefits to XOMA and its partners because it enables the use of libraries
best suited to the needs of a particular discovery project. This increases the
probability of technical and business success in finding rare and unique
functional antibodies directed to targets of interest.

     

    About
XOMA

     

    XOMA
discovers, develops and manufactures therapeutic antibodies designed to treat
inflammatory, autoimmune, infectious and oncological diseases. The Company's
proprietary product pipeline includes XOMA 052, an anti-IL-1 beta antibody, and
XOMA 3AB, a biodefense anti-botulism antibody candidate.

     

    XOMA has
multiple revenue streams resulting from the licensing of its antibody
technologies, product royalties, development collaborations, and biodefense
contracts. XOMA's technologies have contributed to the success of marketed
antibody products, including LUCENTIS(r) (ranibizumab injection) for wet
age-related macular degeneration and CIMZIA(r) (certolizumab pegol) for
rheumatoid arthritis and Crohn's disease.

     

    The
company has a premier antibody discovery and development platform that
incorporates leading, unmatched capabilities in antibody phage display and a
unique collection of antibody display libraries, as well as XOMA’s proprietary
Targeted Affinity Enhancement technology for antibody humanization and bacterial
cell expression and manufacturing technologies. Bacterial cell expression is a
key breakthrough biotechnology for the discovery and manufacturing of antibodies
and other proteins. As a result, more than 50 pharmaceutical and biotechnology
companies have signed BCE licenses.

     

    The
company’s integrated processes use proprietary informatics systems
that:

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    
      	
              ·  

            	
              Increase
      efficiencies for data management and
analysis

            


    

    
      	
              ·  

            	
              Support
      rational data-driven decisions thus reducing costly
  errors

            


    

    
      	
              ·  

            	
              Increase
      capacity for multiple antibody programs with limited
    resources

            


    

    
      	
              ·  

            	
              Accelerate
      product development and

            


    

    
      	
              ·  

            	
              Support
      intellectual property filings.

            


    

     

    In
addition to developing its own products, XOMA develops products with premier
pharmaceutical companies including Novartis AG, Schering-Plough Research
Institute and Takeda Pharmaceutical Company Limited. XOMA has a fully integrated
product development infrastructure and a team of approximately 190 employees at
its Berkeley, California location. For more information, please visit http://www.xoma.com.

     

    Forward-looking
Statements

     

    Certain
statements contained herein concerning product development and capabilities of
XOMA’s technologies or that otherwise relate to future periods, are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based on assumptions that may not prove accurate. Actual results
could differ materially from those anticipated due to certain risks inherent in
the biotechnology industry and for companies engaged in the development of new
products in a regulated market. These risks, including those related to XOMA’s
ability to renegotiate the requirements of its loan agreements; the declining
and generally unstable nature of current economic conditions; the results of
discovery research and preclinical testing; the timing or results of pending and
future clinical trials (including the design and progress of clinical trials;
safety and efficacy of the products being tested; action, inaction or delay by
the FDA, European or other regulators or their advisory bodies; and analysis or
interpretation by, or submission to, these entities or others of scientific
data); uncertainties regarding the status of biotechnology patents;
uncertainties as to the cost of protecting intellectual property; changes in the
status of the existing collaborative and licensing relationships; the ability of
collaborators, licensees and other third parties to meet their obligations;
market demand for products; scale up and marketing capabilities; competition;
international operations; share price volatility; XOMA's financing needs and
opportunities; and risks associated with XOMA's status as a Bermuda company, are
described in more detail in XOMA's most recent annual report on Form 10-K and in
other SEC filings. Consider such risks carefully in considering XOMA's
prospects.

     

    The XOMA
Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5960

     

    CONTACT:
XOMA, Ltd.

    Company
and Investor Contact:

    Carol
DeGuzman

    510-204-7270

    deguzman@xoma.com

    Porter
Novelli Life Sciences

    Media
Contact:

    Carolyn
Hawley

    619-849-5375

    chawley@pnlifesciences.com

    



    
      
         


      

      
         
-2-

        
          

        

      

      
         


      

    


    Exhibit
A

     

    Form of Delivery and Receipt
Acknowledgement

    


    XOMA
DEVELOPMENT CORPORATION

    2910
Seventh Street

    Berkeley,
California  94710

     

    __________,
2009

     

    Arana
Therapeutics Limited

    Level 5,
Building 4

    399 Royal
Parade

    Parkville  Vic  3052

    Australia

    


    Ladies
and Gentlemen:

    


    Referring
to the Discovery Collaboration Agreement effective as of June __, 2009 between
Arana Therapeutics Limited (“Arana”) and XOMA
Development Corporation (“XOMA”), relating to,
among other things, the delivery to Arana of certain materials, know-how and
computer systems, XOMA hereby delivers each of the materials, protocols,
software, user manuals and other items listed on the attached Transfer Inventory
List.

     

    Kindly
acknowledge receipt of the items hereinabove referred to in the space provided
below.

     

    Very
truly yours,

     

    XOMA
DEVELOPMENT CORPORATION

    


    
      	
               
      

            	
              By:   _____________________________

            


    

    
      	
               
      

            	
              Name:

            


    

    
      	
               
      

            	
              Title:

            


    

     


    
      
         


      

      
        -3- 


        
          

        

      

      
         


      

    


    Arana
hereby acknowledges receipt of the items hereinabove referred to.

     

    
      	
               
      

            	
              Dated:
      __________, 2009

            


    

     

    
      	
               
      

            	
              ARANA
      THERAPEUTICS LIMITED

            


    

    


    By:           ______________________________

    Name:

    Title:

    


    
 

     

     

    -4-

     

    [*]