Document:

Discovery Collaboration Agreement

 Exhibit 10.35 
 Execution Version 
 [*] 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 [*] 
 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 without violating the terms of any agreement or other arrangement with any Third Party as of the time such Party
would first be required hereunder to grant the other Party such access, ownership, license or sublicense. 
  

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

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 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. 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. 
  

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 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. 
  

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 1.70 [*] 
 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, [*]. 
 (c) [*] 
 (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 
  

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 (ii) a non-exclusive, non-transferable license and/or right, without the right to grant
sublicenses, to: 
 (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 otherwise granted in this Agreement, to the extent such trade secrets do not form part of the
Know-How expressly licensed under this Agreement. 
  

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 (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, to

  

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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 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. 
  

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

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 “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 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. 
  

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 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. 
 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 [*]; 
  

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 (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
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. 
  

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 (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 invoices 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. 
  

 -20- 

 (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. 
 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. 
  

 -21- 

 (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 exchange 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. 
  

 -22- 

 (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 equity (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; 
  

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 (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; 
 [*] 
 (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

  

 -24- 

 
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. 
 (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. 
  

 -25- 

 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 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 [*]
after written notice thereof by the non-breaching Party ([*] 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 [*] is not practicable, if such Party
fails to commence and diligently pursue such remediation during such [*] 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 [*] 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. 
  

 -26- 

 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
limited 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

  

 -27- 

 
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. 
 (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. 
  

 -28- 

 (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 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). 
  

 -29- 

 (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). 
 (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. 
  

 -30- 

 (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 licensees, 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.] 

 

 -31- 

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

									
	By:	 	  
	 		 	By:	 	  

	Name:	 		 		 	Name:	 	
	Title:	 	Director	 		 	Title:	 	Director
				
	XOMA DEVELOPMENT CORPORATION	 		 		 	
					
	By:	 	  
	 		 		 	
	Name:	 		 		 		 	
	Title:	 		 		 		 	

  

 -32- 

 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	  		  		  	
	 United States
	  	08/466,203	  	US 5,698,417	  		  		  	

  

 -2- 

											
	 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. 

  

 -3- 

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

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

											
	 COUNTRY
	  	 APPLICATION NO.
	  	 PATENT NO.
	  	 	  	 	  	 
	 Australia
	  	2001249265	  	AU 2001249265	  		  		  	
	 Canada
	  	2,404,046	  	2,404,046	  		  		  	
	 Europe
	  	01922467.4	  	EP 1268823	  		  		  	
	 Austria
	  	01922467.4	  	AT 1268823	  		  		  	
	 Belgium
	  	01922467.4	  	BE 1268823	  		  		  	
	 Cyprus
	  	01922467.4	  	CY 1268823	  		  		  	
	 Denmark
	  	01922467.4	  	DK 1268823	  		  		  	
	 Finland
	  	01922467.4	  	FI 1268823	  		  		  	
	 France
	  	01922467.4	  	FR 1268823	  		  		  	
	 Germany
	  	01922467.4	  	DE 60131261.9-08	  		  		  	
	 Greece
	  	01922467.4	  	GR 1268823	  		  		  	
	 Ireland
	  	01922467.4	  	IE 1268823	  		  		  	
	 Italy
	  	01922467.4	  	IT 1268823	  		  		  	
	 Luxembourg
	  	01922467.4	  	LU 1268823	  		  		  	
	 Monaco
	  	01922467.4	  	MC 1268823	  		  		  	
	 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-At Market Issuance Sales Agreement

 Exhibit 10.36 
 At Market Issuance Sales Agreement 
 July 14, 2009

 Wm Smith & Co. 
 1700
Lincoln Street, Suite 2545 
 Denver CO 80203 
 Ladies and Gentlemen: 
 XOMA Ltd., a Bermuda company (the “Company”), confirms its agreement (this
“Agreement”) with Wm Smith & Co., a Colorado corporation (“Wm Smith”), as follows: 
 1. Issuance and Sale of Shares. The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through Wm Smith, acting as agent and/or
principal, up to 25,000,000 of the Company’s common shares (the “Shares”), par value $0.0005 per share (the “Common Shares”). Notwithstanding anything to the contrary contained herein, the parties hereto agree
that compliance with the limitations set forth in this Section 1 on the number of Shares issued and sold under this Agreement shall be the sole responsibility of the Company and that Wm Smith shall have no obligation in connection with such
compliance. The issuance and sale of Shares through Wm Smith will be effected pursuant to the Registration Statement (as defined below) filed by the Company and declared effective by the Securities and Exchange Commission (the
“Commission”), although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement to issue Common Shares. Wm Smith and the Company are sometimes referred to herein individually as a
“Party” and collectively as the “Parties”. 
 The Company has filed, in
accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the Commission a registration statement on Form S-3
(File No. 333-148342), including a base prospectus, with respect to equity and other offerings, including the Shares, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions
of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”). The Company will prepare a prospectus supplement (the “Prospectus Supplement”) to the
base prospectus included as part of such registration statement. The Company will furnish to Wm Smith, for use by Wm Smith, copies of the prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement,
relating to the Shares. Except where the context otherwise requires, such registration statement, as amended when it became effective, including all documents filed as part thereof or incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act and also including any other registration statement filed pursuant to Rule 462(b) under the Securities Act,
collectively, is herein called the “Registration Statement,” and the base prospectus, including all documents incorporated therein by reference, included in the Registration Statement, as it may be supplemented by the Prospectus
Supplement, in the form in which such prospectus and/or Prospectus Supplement have most recently been filed by the Company with the

 
Commission pursuant to Rule 424(b) under the Securities Act is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment
or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein. For purposes of this Agreement, all references to the
Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its IDEA system (formerly known as EDGAR) (“IDEA”). 
 2. Placements. Each time that the Company wishes to issue and sell Shares hereunder (each, a “Placement”), it will
notify Wm Smith by email notice (or other method mutually agreed to in writing by the Parties) of the number of Shares (the “Placement Shares”) to be issued, the time period during which sales are requested to be made, any
limitation on the number of Shares that may be sold in any one day or in any one transaction and any minimum price below which sales may not be made (a “Placement Notice”), the form of which is attached hereto as Schedule 1. The
Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 3 (with a copy to each of the other individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from Wm
Smith set forth on Schedule 3, as such Schedule 3 may be amended from time to time. The Placement Notice shall be effective unless and until (i) Wm Smith declines to accept the terms contained therein as a result of any suspension or limitation
of trading in the Placement Shares or in securities generally on the Exchange (as defined below) or any occurrence or event that causes a material adverse change in the operation of the Company, (ii) the entire amount of the Placement Shares
have been sold, (iii) the Company suspends or terminates the Placement Notice or (iv) this Agreement has been terminated under the provisions of Section 12. The amount of any discount, commission or other compensation to be paid by
the Company to Wm Smith in connection with the sale of the Placement Shares shall be calculated in accordance with the terms set forth in Schedule 2. It is expressly acknowledged and agreed that neither the Company nor Wm Smith will have any
obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to Wm Smith and Wm Smith does not decline such Placement Notice pursuant to the terms set forth above, and then only
upon the terms specified therein and herein. In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control. 
 3. Sale of Placement Shares by Wm Smith. Subject to the terms and conditions herein set forth, upon the Company’s issuance of a
Placement Notice, and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, Wm Smith will use its commercially reasonable efforts consistent
with its normal trading and sales practices to sell such Placement Shares up to the amount specified, and otherwise in accordance with the terms of such Placement Notice. Wm Smith will provide written confirmation to the Company no later than the
opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day, the compensation payable by the Company to Wm
Smith pursuant to Section 2 with respect

  

 2 

 
to such sales, and the Net Proceeds (as defined below) payable to the Company. Wm Smith may sell Placement Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415 of the Securities Act, including without limitation sales made directly on the NASDAQ Global Market (the “Exchange”), on any other existing trading market for the Common Shares or to or through a market maker.
Wm Smith may also sell Placement Shares in privately negotiated transactions, subject to approval by the Company. The Company acknowledges and agrees that (i) there can be no assurance that Wm Smith will be successful in selling Placement
Shares, and (ii) Wm Smith will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by Wm Smith to use its commercially reasonable efforts
consistent with its normal trading and sales practices to sell such Placement Shares as required under this Section 3. For the purposes hereof, “Trading Day” means any day on which Common Shares are purchased and sold on the
principal market on which the Common Shares are listed or quoted. 
 4. Suspension of Sales. The Company (for any reason)
or Wm Smith (for any of the reasons set forth in clause (i) of Section 2) may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the other Party set forth on Schedule 3, if receipt
of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the
individuals of the other Party set forth on Schedule 3), suspend any sale of Placement Shares; provided, however, that such suspension shall not affect or impair either Party’s obligations with respect to any Placement Shares sold hereunder
prior to the receipt of such notice. Each of the Parties agrees that no such notice under this Section 4 shall be effective against the other unless it is made to at least one of the individuals named on Schedule 3 hereto (representing such
other Party), as such Schedule may be amended from time to time. 
 5. Settlement. 
 (a) Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement
Shares will occur on the third (3rd) Trading Day (or such earlier day as is industry practice for regular-way trading) (each, a “Settlement Date”) following the respective Point of Sale (as defined below). The amount of
proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by Wm Smith at which such Placement Shares were sold,
after deduction for (i) Wm Smith’s commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof, (ii) any other amounts due and payable by the Company to Wm Smith hereunder
pursuant to Section 7(g) (Expenses) hereof, and (iii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales to the extent such amounts have been paid by Wm Smith. 
 (b) Delivery of Placement Shares. On or before each Settlement Date, the Company will, or will cause its transfer agent to, issue and
electronically transfer the Placement Shares being sold by crediting Wm Smith’s or its designee’s account at The Depository Trust Company through its Deposit and Withdrawal at Custodian System (“DWAC”) or by such other
means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall

  

 3 

 
be freely tradable, transferable, registered shares in good deliverable form. On each Settlement Date, Wm Smith will deliver the related Net Proceeds in same day funds to the account specified on
Schedule 4 or such other account designated by the Company on, or prior to, the Settlement Date. Wm Smith will be responsible for obtaining DWAC instructions or instructions for delivery by other means with regard to the transfer of Placement Shares
being sold. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver Placement Shares on a Settlement Date, in addition to and in no way limiting the rights and obligations set forth in
Section 10(a) (Indemnification and Contribution) here, it will (i) hold Wm Smith harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such
default by the Company and (ii) pay to Wm Smith any commission, discount, or other compensation to which it would otherwise have been entitled absent such default except, in each case, to the extent such failure was caused by the gross
negligence or willful misconduct of Wm Smith. 
 6. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, Wm Smith that as of the date of this Agreement and as of each Representation Date (as defined in Section 7(m) below) on which a certificate is required to be delivered pursuant to Section 7(m) of this
Agreement, as the case may be, except as may be disclosed in the Registration Statement or a Disclosure Schedule delivered in connection herewith: 
 (a) Registration Statement and Prospectus. The Company and, assuming no act or omission on the part of Wm Smith that would make such statement untrue, the transactions contemplated by this
Agreement meet the requirements for and comply with the conditions for the use of Form S-3 under the Securities Act. The Registration Statement has been filed with the Commission and has been declared effective under the Securities Act. The
Prospectus Supplement will name Wm Smith as an underwriter, acting as principal and/or agent, that the Company might engage. The Company has not received any order of the Commission preventing or suspending the use of the Registration Statement, or
threatening or instituting proceedings for that purpose. The Registration Statement and the offer and sale of Shares as contemplated hereby meet the requirements of Rule 415 under the Act and comply in all material respects with said Rule.
Copies of the Registration Statement, the Prospectus, and any such amendments or supplements and all documents incorporated by reference therein that were filed with the Commission on or prior to the date of this Agreement have been delivered, or
are available through IDEA, to Wm Smith and their counsel. The Company has not distributed and, prior to the later to occur of each Settlement Date and completion of the distribution of the Placement Shares, will not distribute any offering material
in connection with the offering or sale of the Placement Shares other than the Registration Statement and the Prospectus and any Issuer Free Writing Prospectus (as defined below) to which Wm Smith has consented (such consent not to be unreasonably
withheld). The Common Shares are currently listed on the NASDAQ Global Market under the trading symbol “XOMA”. Except as disclosed in the Registration Statement, the Company has not, in the 12 months preceding the date hereof, received
notice from the Exchange to the effect that the Company is not in compliance with the listing or maintenance requirements. 
  

 4 

 (b) No Misstatement or Omission. The Registration Statement, when it became or
becomes effective, and the Prospectus, and any amendment or supplement thereto, on the date of such Prospectus or amendment or supplement, conformed or will conform in all material respects with the requirements of the Securities Act. At each
Settlement Date, the Registration Statement and the Prospectus, as of such date, will conform in all material respects with the requirements of the Act. The Registration Statement, when it became effective, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus and any amendment or supplement thereto, on the date thereof and at each Point of Sale, did not
or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The documents incorporated by
reference in the Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not, when filed with the Commission, contain an untrue statement of a material fact or omit to state a
material fact required to be stated in such document or necessary to make the statements in such document, in the light of the circumstances under which they were made, not misleading. The foregoing shall not apply to statements in, or omissions
from, any such document made in reliance upon, and in conformity with, information furnished to the Company by Wm Smith specifically for use in the preparation thereof. “Point of Sale” means, for a Placement, the time at which an
acquiror of Placement Shares entered into a contract, binding upon such acquiror, to acquire such Shares. 
 (c) Conformity
with Securities Act and Exchange Act. The documents incorporated by reference in the Registration Statement, the Prospectus or any amendment or supplement thereto, when such documents were or are filed with the Commission under the Securities
Act or the Exchange Act or became or become effective under the Securities Act, as the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable. 
 (d) Financial Information. The consolidated financial statements and the related notes thereto included or incorporated by reference
in the Registration Statement and the Prospectus comply in all material respects with the applicable requirements of the Act and the Exchange Act, as applicable, and present fairly, the financial position of the Company as of the dates indicated and
the results of its operations and the changes in its consolidated cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout
the periods covered thereby (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim financial statements, to the extent that they may not include footnotes or may
be condensed or summary statements), and the other financial information included or incorporated by reference in the Registration Statement and the Prospectus has been derived from the accounting records of the Company and presents fairly the
information shown thereby. Any pro forma financial statements or data included or incorporated by reference in the Registration Statement and the Prospectus comply in all material respects with the requirements of Regulation S-X of the Securities
Act, including, without limitation, Article 11 thereof, and the assumptions used in the preparation of such pro forma financial statements and data are reasonable, the pro forma adjustments used therein are appropriate to give effect to the
circumstances referred to therein and the pro forma adjustments have been properly applied to the historical amounts in the compilation of those statements and data. No other financial statements or schedules of the Company or any other entity are
required by the

  

 5 

 
Act to be included in the Registration Statement or the Prospectus. All disclosures contained in the Registration Statement, the Pricing Disclosure Materials and the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by Item 10 of Regulation S-K under the Act) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Act, to the extent applicable. The Company
does not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations and any “variable interest entities” within the meaning of Financial Accounting Standards Board Interpretation No.
46), not disclosed in the Registration Statement, the Pricing Disclosure Materials and the Prospectus. 
 (e) Conformity with
IDEA Filing. The Prospectus delivered to Wm Smith for use in connection with the sale of the Placement Shares pursuant to this Agreement will be identical to the versions of the Prospectus created to be transmitted to the Commission for filing
via IDEA, except to the extent permitted by Regulation S-T. 
 (f) Organization. The Company has been duly continued into
and is validly existing as a company in good standing under the laws of Bermuda. The Company is, and will be, duly licensed or qualified as a foreign corporation for transaction of business and in good standing under the laws of each other
jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such license or qualification, and has all corporate power and authority necessary to own or hold its properties and to conduct its business as
described in the Registration Statement and the Prospectus, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect or would
reasonably be expected to have a material adverse effect on or affecting the business, properties, consolidated financial position or results of operations of the Company and its subsidiaries taken as a whole (a “Material Adverse
Effect”). 
 (g) Subsidiaries. The Company has no subsidiaries (as defined in the Securities Act) other than
those listed in Section 6(g) of the Disclosure Schedule hereto. 
 (h) No Violation. The Company is not (i) in
violation of its charter or by-laws or similar organizational documents; or (ii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the
case of clause (ii) above, for any such violation that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (i) No Material Adverse Change. Except as set forth in, incorporated by reference into or otherwise contemplated by the Registration Statement or the Prospectus, since the date of the most recent
financial statements of the Company included or incorporated by reference in the Registration Statement and the Prospectus and prior to each Settlement Date, (i) there has not been and will not have been any change in the share capital of the
Company (except for changes in the number of issued and outstanding Common Shares of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible into, Common Shares outstanding on the date
hereof) or long-term debt of the Company or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, that has resulted in or that would reasonably be expected to result in a
Material Adverse Effect to the Company taken as a whole; (ii) other than this Agreement, the Company has not entered and will not enter into any transaction or

  

 6 

 
agreement, not in the ordinary course of business, that is material to the Company and its subsidiaries taken as a whole or incurred and will not incur any liability or obligation, direct or
contingent, not in the ordinary course of business, that is material to the Company and its subsidiaries taken as a whole; (iii) there has not been any material adverse change in the business, properties, financial position, or results of
operations of the Company, taken as a whole; and (iv) the Company has not sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority. 
 (j)
Capitalization. The issued and outstanding share capital of the Company has been validly issued, is fully paid and nonassessable and, other than as disclosed in or contemplated by the Registration Statement or the Prospectus, is not subject
to any statutory preemptive rights or similar rights. The Company has an authorized, issued and outstanding capitalization as set forth in the Registration Statement and the Prospectus as of the dates referred to therein (other than the grant of
additional options under the Company’s existing stock option plans, or changes in the number of issued and outstanding Common Shares of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or
convertible into, Common Shares outstanding on the date hereof) and such authorized share capital conforms to the description thereof set forth in the Registration Statement and the Prospectus. The description of the securities of the Company in the
Registration Statement and the Prospectus is complete and accurate in all material respects. Except as disclosed in or contemplated by the Registration Statement or the Prospectus, as of the date referred to therein, the Company does not have
outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or exchangeable for, or any contracts or commitments to issue or sell, any Common Shares or other securities.

 (k) Authorization; Enforceability. This Agreement has been duly authorized, executed and delivered by the Company and
is a legal, valid and binding agreement of the Company enforceable in accordance with its terms, except to the extent that (i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the indemnification and contribution provisions of Section 10 hereof may be limited by federal or state securities laws and public policy considerations in
respect thereof. 
 (l) Authorization of Placement Shares. The Placement Shares, when issued and delivered pursuant to
the terms approved by the Board of Directors or a duly designated committee thereof, against payment therefor as provided herein, will be duly and validly authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest or other claim, including any statutory or contractual preemptive rights or other similar rights, and will be registered pursuant to Section 12 of the Exchange Act. The Placement Shares, when issued, will conform
in all material respects to the description thereof set forth in or incorporated into the Prospectus. 
 (m) No Consents
Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of this

  

 7 

 
Agreement and the issuance and sale by the Company of the Placement Shares, except for the registration of the Placement Shares under the Act, the filing of the Registration Statement and the
Prospectus and such consents, approvals, authorizations, orders and registrations or qualifications as may be required under applicable state securities laws or by the by-laws and rules of the Financial Industry Regulatory Authority
(“FINRA”) or the Exchange in connection with the sale of the Placement Shares by Wm Smith or by the Bermuda Monetary Authority. 
 (n) No Preferential Rights. Except as set forth in, incorporated by reference into or otherwise contemplated by the Registration Statement and the Prospectus, (i) no person, as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”), has the right, contractual or otherwise, to cause the Company to issue or sell to such Person any Common Shares or other securities of
the Company, (ii) no Person has any preemptive rights, or any other rights (whether pursuant to a “poison pill” provision or otherwise) to purchase from the Company any Common Shares or other securities of the Company, (iii) no
Person has the right to act as an underwriter or as a financial advisor to the Company in connection with the offer and sale of the Shares, and (iv) no Person has the right, contractual or otherwise, to require the Company to register under the
Securities Act any Common Shares or other securities of the Company, or to include any such shares or other securities in the Registration Statement or the offering contemplated thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Placement Shares as contemplated thereby or otherwise. 
 (o) Independent Public
Accountant. Ernst & Young LLP, whose report on the consolidated financial statements of the Company is filed with the Commission as part of the Registration Statement and the Prospectus for the period ended December 31, 2008 (the
“Accountant”), whose report on the consolidated financial statements of the Company is filed with the Commission as part of the Prospectus for the periods December 31, 2007 and December 31, 2008, are and, during the
periods covered by their respective reports, were independent public accountants within the meaning of the Securities Act and the Public Company Accounting Oversight Board (United States). To the Company’s knowledge, the Accountant is not in
violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company. 
 (p) Enforceability of Agreements. Except as disclosed in the Registration Statement and Prospectus, the Company has not sent or received any communication regarding termination of, or intent not to
renew, any of the contracts or agreements referred to or described in, or filed as an exhibit to, the Registration Statement and Prospectus, and no such termination or non-renewal has been threatened by the Company or, to the Company’s
knowledge, any other party to any such contract or agreement. 
 (q) No Litigation. Except as set forth in the
Registration Statement or the Prospectus, there are no legal, governmental or regulatory actions, suits or proceedings pending, nor, to the Company’s knowledge, any legal, governmental or regulatory investigations, to which the Company is a
party or to which any property of the Company is the subject that, individually or in the aggregate, if determined adversely to the Company, would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the
ability of the Company to perform its obligations under this Agreement; and to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others.

  

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 (r) Licenses and Permits. Except as set forth in the Registration Statement or the
Prospectus, the Company possesses or has obtained, and at each Settlement Date will possess and will have obtained, all licenses, certificates, consents, orders, approvals, permits and other authorizations issued by, and have made all declarations
and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of its properties or the conduct of its business as described in the Registration Statement and
the Prospectus (the “Permits”), except where the failure to possess, obtain or make the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as disclosed in the
Registration Statement or the Prospectus, the Company has not received written notice of any proceeding relating to revocation or modification of any such Permit and does not have any reason to believe that such Permit will not be renewed in the
ordinary course, except where the failure to obtain any such renewal would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (s) Market Capitalization. As of the close of trading on the Exchange on the Trading Day immediately prior to the date of each
Placement Notice (i) the aggregate market value of the outstanding voting and non-voting common equity (as defined in Securities Act Rule 405) of the Company held by persons other than affiliates of the Company (pursuant to Securities Act
Rule 144, those that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company) (the “Non-Affiliate Shares”), was equal to or greater than $75
million (calculated by multiplying (x) the price at which the common equity of the Company was last sold on the Exchange on the Trading Day immediately prior to the date of this Agreement times (y) the number of Non-Affiliate Shares);
or (ii) the aggregate market value of securities sold by or on behalf of the Company during the previous 12 calendar months, including the Placement Shares, is no more than one-third the aggregate market value of the Non-Affiliate Shares.

 (t) No Material Defaults. The Company has not defaulted on any installment on indebtedness for borrowed money or on
any rental on one or more long-term leases, which defaults, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The Company has not filed a report pursuant to Section 13(a) or 15(d) of the Exchange
Act since the filing of its last Annual Report on Form 10-K, indicating that it (i) has failed to pay any dividend or sinking fund installment on preferred stock or (ii) has defaulted on any installment on indebtedness for borrowed money
or on any rental on one or more long-term leases, which defaults, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 
 (u) Certain Market Activities. Neither the Company, nor any of its respective directors, officers or controlling persons has taken, directly or indirectly, any action designed, or that has
constituted or might reasonably be expected to cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares.

  

 9 

 (v) Broker/Dealer Relationships. Neither the Company nor any of its related entities
(i) is required to register as a “broker” or “dealer” in accordance with the provisions of the Exchange Act or (ii) directly or indirectly through one or more intermediaries, controls or is a “person associated
with a member” or “associated person of a member” (within the meaning of Article I of the NASD Manual administered by FINRA). 
 (w) No Reliance. The Company has not relied upon Wm Smith or legal counsel for Wm Smith for any legal, tax or accounting advice in connection with the offering and sale of the Placement Shares.

 (x) Taxes. The Company has filed all federal, state, local and foreign tax returns which have been required to be
filed and paid all taxes shown thereon through the date hereof, to the extent that such taxes have become due and are not being contested in good faith. Except as otherwise disclosed in or contemplated by the Registration Statement or the
Prospectus, no tax deficiency has been determined adversely to the Company which has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has no knowledge of any federal, state or
other governmental tax deficiency, penalty or assessment which has been or might be asserted or threatened against it which could have a Material Adverse Effect. 
 (y) Intellectual Property. Except as set forth in the Registration Statement or the Prospectus, the Company owns or possesses adequate enforceable rights to use all patents, patent applications,
trademarks (both registered and unregistered), service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, the “Intellectual Property”), necessary for the conduct of its business as conducted as of the date hereof, except to the extent that the failure to own or possess
adequate rights to use such Intellectual Property would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; the Company has not received any written notice of any claim of infringement or conflict which
asserted Intellectual Property rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Effect; to the Company’s knowledge, there are no pending or threatened judicial
proceedings or interference proceedings challenging the Company’s rights in or to or the validity of the scope of any of the Company’s patents, patent applications or proprietary information; to the Company’s knowledge no other entity
or individual has any right or claim in any of the Company’s patents, patent applications or any patent to be issued therefrom by virtue of any contract, license or other agreement entered into between such entity or individual and the Company
or by any non-contractual obligation, other than by written licenses granted by the Company; the Company has not received any written notice of any claim challenging the rights of the Company in or to any Intellectual Property owned, licensed or
optioned by the Company which claim, if the subject of an unfavorable decision would result in an Material Adverse Effect. 
 (z) Compliance Program. The Company has established and administers a compliance program applicable to the Company, to assist the Company and the directors, officers and employees of the Company in complying with applicable
regulatory guidelines. 
  

 10 

 (aa) Environmental Laws. Except as set forth in the Registration Statement or the
Prospectus, the Company (i) is in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (ii) has received and is in compliance with all permits, licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses as described in the Registration Statement and the Prospectus; and (iii) has not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, except, in the case of any of clauses (i), (ii) or (iii) above, for any such failure to comply or failure to receive required permits, licenses, other approvals or
liability as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (bb)
Disclosure Controls. The Company maintains systems of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is
made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, is being prepared. The Company’s
certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of a date within 90 days prior to the filing date of the Form 10-K for the year ended December 31, 2008 (such date, the “Evaluation
Date”). Since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal controls. 
 (cc) Sarbanes-Oxley. To the knowledge of
the Company, there is and has been no failure on the part of the Company and any of the Company’s directors or officers, in their capacities as such, to comply with any applicable provisions of the Sarbanes-Oxley Act and the rules and
regulations promulgated thereunder. Each of the principal executive officer and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company as
applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms, statements and other documents required to be filed by it or furnished by it to the Commission. For
purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act. 
  

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 (dd) Finder’s Fees. The Company has not incurred any liability for any
finder’s fees, brokerage commissions or similar payments in connection with the transactions herein contemplated, except as may otherwise exist with respect to Wm Smith pursuant to this Agreement. 
 (ee) Labor Disputes. No labor disturbance by or dispute with employees of the Company exists or, to the knowledge of the Company, is
threatened which would reasonably be expected to result in a Material Adverse Effect 
 (ff) Investment Company Act. The
Company, after giving effect to the offering and sale of the Placement Shares, will not be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment
Company Act of 1940, as amended (the “Investment Company Act”). 
 (gg) Underwriter Agreements. Except
as set forth in, incorporated by reference into or otherwise contemplated by the Registration Statement, the Company is not a party to any agreement with an agent or underwriter for any other “at-the-market” or continuous equity
transaction. 
 (hh) Wm Smith Purchases. The Company acknowledges and agrees that Wm Smith has informed the Company that
Wm Smith may, to the extent permitted under the Securities Act and the Exchange Act, purchase and sell Common Shares for its own account while this Agreement is in effect, provided, that (i) no such purchase or sales shall take place while a
Placement Notice is in effect (except to the extent Wm Smith may engage in sales of Placement Shares purchased or deemed purchased from the Company as a “riskless principal” or in a similar capacity) and (ii) the Company shall not be
deemed to have authorized or consented to any such purchases or sales by Wm Smith. 
 (ii) Margin Rules. Neither the
issuance, sale and delivery of the Shares pursuant to this Agreement nor the application of the proceeds thereof by the Company as described in the Registration Statement and the Prospectus will constitute a violation by the Company of Regulation T,
U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors. 
 (jj)
Insurance. The Company carries, or is covered by, insurance in such amounts and covering such risks as the Company reasonably believe are adequate for the conduct of its properties and as is customary for companies engaged in similar
businesses in similar industries. 
 (kk) No Improper Practices. Except as set forth in, incorporated by reference into
or otherwise contemplated by the Prospectus, there are no material outstanding loans or advances or material guarantees of indebtedness by the Company to or for the benefit of any of its officers or directors or any of the members of the families of
any of them. 
 (ll) Status Under the Securities Act. The Company was not and is not an ineligible issuer as defined in
Rule 405 under the Securities Act at the times specified in Rules 164 and 433 under the Act in connection with the offering of the Shares. 
  

 12 

 (mm) No Misstatement or Omission in an Issuer Free Writing Prospectus. Each issuer
free writing prospectus, as defined in Rule 405 under the Act (an “Issuer Free Writing Prospectus,” and together with the Preliminary Prospectus the “Pricing Disclosure Materials”), when considered together with the
Pricing Disclosure Materials as of the applicable Point of Sale, did not or will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty with respect to any statement contained in any Issuer Free Writing Prospectus in reliance upon and in
conformity with information concerning Wm Smith and furnished by Wm Smith to the Company expressly for use in the Issuer Free Writing Prospectus. 
 (nn) Conformity of Issuer Free Writing Prospectus. Each Issuer Free Writing Prospectus conformed or will conform in all material respects to the requirements of the Act on the date of first use,
and the Company has complied or will comply with any filing requirements applicable to such Issuer Free Writing Prospectus pursuant to the Act. Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the
completion of the public offer and sale of the Shares, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any
document incorporated by reference therein that has not been superseded or modified. The Company has not made any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus without the prior written consent of Wm Smith. The
Company has retained in accordance with the Act all Issuer Free Writing Prospectuses that were not required to be filed pursuant to the Act. 
 (oo) Pricing Disclosure Materials. The Pricing Disclosure Materials did not, as of the applicable Point of Sale contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty with respect to any
statement contained in the Pricing Disclosure Materials in reliance upon and in conformity with information concerning Wm Smith and furnished in writing by Wm Smith to the Company expressly for use in the Pricing Disclosure Materials. 
 (pp) No Conflicts. Neither the execution of this Agreement, nor the issuance, offering or sale of the Shares, nor the consummation of
any of the transactions contemplated herein and therein, nor the compliance by the Company with the terms and provisions hereof and thereof will conflict with, or will result in a breach of, any of the terms and provisions of, or has constituted or
will constitute a default under, or has resulted in or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any contract or other agreement to which the
Company may be bound or to which any of the property or assets of the Company is subject, except (i) such conflicts, breaches or defaults as may have been waived and (ii) such conflicts, breaches and defaults that would not have a Material
Adverse Effect; nor will such action result (x) in any violation of the provisions of the organizational or governing documents of the Company, or (y) in any material violation of the provisions of any statute or any order, rule or
regulation applicable to the Company or of any court or of any federal, state or other regulatory authority or other government body having jurisdiction over the Company. 
  

 13 

 (qq) Share Transfer Taxes. On each Settlement Date, all share transfer or other taxes
(other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or
will have been fully complied with. 
 7. Covenants of the Company. The Company covenants and agrees with Wm Smith that:

 (a) Registration Statement Amendments. After the date of this Agreement and during any period in which a Prospectus
relating to any Placement Shares is required to be delivered by Wm Smith under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act): (i) the Company will notify Wm
Smith promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has
been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for additional information, (ii) the Company will prepare and file with the Commission, promptly upon Wm Smith’s
request, any amendments or supplements to the Registration Statement or Prospectus that, in Wm Smith’s reasonable opinion, may be necessary in connection with the distribution of the Placement Shares by Wm Smith (provided, however, that the
failure of Wm Smith to make such request shall not relieve the Company of any obligation or liability hereunder, or affect Wm Smith’s right to rely on the representations and warranties made by the Company in this Agreement and provided,
further, that the only remedy Wm Smith shall have with respect to the failure to make such filing shall be to cease making sales under this Agreement until such amendment or supplement is filed); (iii) the Company will not file any amendment or
supplement to the Registration Statement or Prospectus relating to the Placement Shares or a security convertible into the Placement Shares unless a copy thereof has been submitted to Wm Smith within a reasonable period of time before the filing and
Wm Smith has not reasonably objected thereto (provided, however, that the failure of Wm Smith to make such objection shall not relieve the Company of any obligation or liability hereunder, or affect Wm Smith’s right to rely on the
representations and warranties made by the Company in this Agreement and provided, further, that the only remedy Wm Smith shall have with respect to the failure by the Company to obtain such consent shall be to cease making sales under this
Agreement) and the Company will furnish to Wm Smith at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available
via IDEA; and (iv) the Company will cause each amendment or supplement to the Prospectus to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act or, in the case of any document to be
incorporated therein by reference, to be filed with the Commission as required pursuant to the Exchange Act, within the time period prescribed (the determination to file or not file any amendment or supplement with the Commission under this
Section 7(a), based on the Company’s reasonable opinion or reasonable objections, shall be made exclusively by the Company). 
  

 14 

 (b) Notice of Commission Stop Orders. The Company will advise Wm Smith, promptly
after it receives notice thereof, of the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Placement Shares for offering or
sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop
order should be issued. The Company will advise Wm Smith promptly after it receives any request by the Commission for any amendments to the Registration Statement or any amendment or supplements to the Prospectus or any Issuer Free Writing
Prospectus or for additional information related to the offering of the Shares or for additional information related to the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus. 
 (c) Delivery of Prospectus; Subsequent Changes. During any period in which a Prospectus relating to the Placement Shares is required
to be delivered by Wm Smith under the Securities Act with respect to the offer and sale of the Placement Shares, (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will
comply in all material respects with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If the Company has omitted any information from the Registration Statement pursuant to Rule 430A under
the Act, it will use commercially reasonable efforts to comply with the provisions of and make all requisite filings with the Commission pursuant to said Rule 430A and to notify Wm Smith promptly of all such filings. If during such period any event
occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify Wm Smith to suspend the offering of Placement
Shares during such period and the Company will promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance; provided, however, that the
Company may delay any such amendment or supplement, if in the judgment of the Company, it is in the best interests of the Company to do so. 
 (d) Listing of Placement Shares. During any period in which the Prospectus relating to the Placement Shares is required to be delivered by Wm Smith under the Securities Act with respect to the
offer and sale of the Placement Shares, the Company will use commercially reasonable efforts to cause the Placement Shares to be listed on the Exchange and to qualify the Placement Shares for sale under the securities laws of such jurisdictions as
Wm Smith reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign
corporation or dealer in securities or file a general consent to service of process in any jurisdiction. 
  

 15 

 (e) Delivery of Registration Statement and Prospectus. The Company will furnish to Wm
Smith and its counsel (at the expense of the Company) copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus
that are filed with the Commission during any period in which a Prospectus relating to the Placement Shares is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to
be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as Wm Smith may from time to time reasonably request and, at Wm Smith’s request, will also furnish copies of the Prospectus to each
exchange or market on which sales of the Placement Shares may be made; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus) to Wm Smith to the extent such document is available on IDEA.

 (f) Earnings Statement. The Company will make generally available to its security holders as soon as practicable, but
in any event not later than 18 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the provisions of Section 11(a) and Rule 158 of the Securities Act. 
 (g) Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, in
accordance with the provisions of Section 12 hereunder, will pay all expenses incident to the performance of its obligations hereunder, including, but not limited to, expenses relating to (i) the preparation, printing and filing of the
Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment and supplement thereto, (ii) the preparation, issuance and delivery of the Placement Shares, (iii) the qualification of the
Placement Shares under securities laws in accordance with the provisions of Section 7(d) of this Agreement, including filing fees, (iv) to the extent required by Section 7(e), the printing and delivery to Wm Smith of copies of the
Prospectus and any amendments or supplements thereto, and of this Agreement, (v) the fees and expenses incurred in connection with the listing or qualification of the Placement Shares for trading on the Exchange, (vi) filing fees and
expenses, if any, of the Commission and the FINRA Corporate Financing Department. The Company shall also reimburse Wm Smith for its reasonable, out-of-pocket legal expenses actually incurred in connection with the negotiation and execution of this
Agreement in an amount not to exceed $20,000. Wm Smith will pay all other expenses incident to the performance of its obligations hereunder. 
 (h) Use of Proceeds. The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.” 
 (i) Notice of Other Sales. Without the prior written consent of Wm Smith (not to be unreasonably withheld), the Company will not,
directly or indirectly, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of any Common Shares (other than the Shares offered pursuant to the provisions of this Agreement) or securities convertible into or
exchangeable for Common Shares, warrants or any rights to purchase or acquire, Common Shares at any time that sales of the Shares have been made but not settled or at any time the Company has outstanding with Wm Smith any instructions to sell Shares
but such instructions have not been fulfilled, suspended or cancelled (or, if the Placement Notice has been terminated or suspended prior to the sale of all Shares covered by a Placement Notice, the date of such

  

 16 

 
suspension or termination); and will not directly or indirectly in any other “at-the-market” or continuous equity transaction offer to sell, sell, contract to sell, grant any option to
sell or otherwise dispose of any Common Shares (other than the Shares offered pursuant to the provisions of this Agreement) or securities convertible into or exchangeable for Common Shares, warrants or any rights to purchase or acquire, Common
Shares prior to the later of the termination of this Agreement and the sixtieth (60th) day immediately following the final Settlement Date with respect to Placement Shares sold pursuant to such Placement Notice; provided, however, that such
restrictions will not be required in connection with the Company’s issuance or sale of (i) Common Shares, options to purchase Common Shares or Common Shares issuable upon the exercise of options, pursuant to any employee or director share
option or benefits plan, share ownership plan or dividend reinvestment plan (but not shares subject to a waiver to exceed plan limits in its dividend reinvestment plan) of the Company whether now in effect or hereafter implemented, (ii) Common
Shares issuable upon conversion of securities or the exercise of warrants, options or other rights in effect or outstanding, and disclosed in filings by the Company available on IDEA or otherwise in writing to Wm Smith and (iii) Common Shares
pursuant to that certain Common Share Purchase Agreement, dated October 21, 2008, by and between Azimuth Opportunity Ltd. and XOMA Ltd at any time that Placement Notice is pending. 
 (j) Change of Circumstances. The Company will, at any time that sales of the Shares have been made but not settled or at any time the
Company has outstanding with Wm Smith any instructions to sell Shares but such instructions have not been fulfilled, suspended or cancelled (or, if the Placement Notice has been terminated or suspended prior to the sale of all Shares covered by a
Placement Notice, the date of such suspension or termination) advise Wm Smith promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion,
certificate, letter or other document required to be provided to Wm Smith pursuant to this Agreement. 
 (k) Due Diligence
Cooperation. The Company will cooperate with any reasonable due diligence review conducted by Wm Smith or its agents in connection with the transactions contemplated hereby, including, without limitation, providing information and making
available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, as Wm Smith may reasonably request. 
 (l) Required Filings Relating to Placement of Placement Shares. The Company agrees that on such dates as the
Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act (each and every filing under Rule 424(b), a “Filing
Date”), which prospectus supplement will set forth, within the relevant period, the maximum amount of Placement Shares to be sold through Wm Smith, the compensation payable by the Company to Wm Smith with respect to such Placement
Shares and such other information that the Company deems necessary, and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or
regulations of such exchange or market. 
  

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 (m) Representation Dates; Certificate. During the term of this Agreement, on the date
of each Placement Notice given hereunder and each time the Company (i) files the Prospectus relating to the Placement Shares or amends or supplements the Registration Statement or the Prospectus relating to the Placement Shares (other than a
prospectus supplement filed in accordance with Section 7(l) of this Agreement) by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of document(s) by reference to the Registration Statement or the
Prospectus relating to the Placement Shares; (ii) files an annual report on Form 10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q under the Exchange Act or (iv) files a report on Form 8-K containing amended
financial information (other than an earnings release, to “furnish” information pursuant to Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the reclassifications of certain
properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) under the Exchange Act (each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a
“Representation Date”); the Company shall furnish Wm Smith with a certificate, in the form attached hereto as Exhibit 7(m). The requirement to provide a certificate under this Section 7(m) shall be waived for any Representation
Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a
Representation Date) and the next occurring Representation Date; provided, however, that such waiver shall not apply for any Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the foregoing, if the Company
subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide Wm Smith with a certificate under this Section 7(m), then before the Company delivers the Placement Notice
or Wm Smith sells any Placement Shares, the Company shall provide Wm Smith with a certificate, in the form attached hereto as Exhibit 7(m), dated the date of the Placement Notice. 
 (n) Legal Opinion. No later than ten Trading Days following the date of each Placement Notice given hereunder, the Company shall
cause to be furnished to Wm Smith a written opinion of Conyers Dill and Pearman (“Bermuda Company Counsel”), or other counsel reasonably satisfactory to Wm Smith, in form and substance satisfactory to Wm Smith and its counsel, dated
the date of the Placement Notice, substantially similar to the form attached hereto as Exhibit 7(n)(1)(A) and a written opinion of Cahill Gordon & Reindel LLP (“Company Counsel”), or other counsel reasonably satisfactory to
Wm Smith, in form and substance satisfactory to Wm Smith and its counsel, dated the date of the Placement Notice, substantially similar to the form attached hereto as Exhibit 7(n)(1)(B), respectively, modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented; provided, however, the Company shall be required to furnish to Wm Smith no more than one opinion from each Counsel hereunder per calendar quarter; provided, further, that in
lieu of such opinions for subsequent Placement Notices, counsel may furnish Wm Smith with a letter (a “Reliance Letter”) to the effect that Wm Smith may rely on a prior opinion delivered under this Section 7(n) to the same
extent as if it were dated the date of such letter (except that statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented as of the date of the Placement Notice).

 (o) Comfort Letter. No later than ten Trading Days following the date the Company files this Agreement and thereafter
within five Trading Days following each subsequent date the Company files an annual report on Form 10-K under the Exchange Act,

  

 18 

 
during any period in which the Prospectus relating to the Placement Shares is required to be delivered by Wm Smith (including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Act) and with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause its independent accountants to furnish Wm
Smith letters (the “Comfort Letters”), dated the date the Comfort Letter is delivered; provided, that if requested by Wm Smith, the Company shall cause a Comfort Letter to be furnished to Wm Smith within ten Trading Days of the date
of occurrence of any restatement of the Company’s financial statements. The Comfort Letter from the Company’s independent accountants shall be in a form and substance satisfactory to Wm Smith, (i) confirming that they are an
independent public accounting firm within the meaning of the Securities Act and the PCAOB, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered
by accountants’ “comfort letters” to underwriters in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort Letter with any
information that would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.

 (p) Market Activities. The Company will not, directly or indirectly, (i) take any action designed to cause or
result in, or that constitutes or might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares or (ii) sell, bid for, or purchase the
Shares, or pay anyone any compensation for soliciting purchases of the Shares other than Wm Smith. 
 (q) Investment Company
Act. The Company will conduct its affairs in such a manner so as to reasonably ensure that it will not be or become, at any time prior to the termination of this Agreement, an “investment company,” as such term is defined in the
Investment Company Act, assuming no change in the Commission’s current interpretation as to entities that are not considered an investment company. 
 (r) No Offer to Sell. Other than an Issuer Free Writing Prospectus approved in advance by the Company and Wm Smith in its capacity as principal or agent hereunder, neither Wm Smith nor the Company
(including its agents and representatives, other than Wm Smith in its capacity as such) will make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Act), required to be filed with the
Commission, that constitutes an offer to sell or solicitation of an offer to buy Shares hereunder. 
 8. Covenants of Wm
Smith. 
 (a) Wm Smith covenants and agrees that it is duly registered as a broker-dealer under FINRA, the Exchange Act and
the applicable statutes and regulations of each state in which the Shares will be offered and sold, except such states in which Wm Smith is exempt from registration or such registration is not otherwise required. Wm Smith shall continue, for the
term of this Agreement, to be duly registered as a broker-dealer under FINRA, the Exchange Act and the applicable statutes and regulations of each state in which the Shares will be offered and sold, except such states in which Wm Smith is exempt
from registration or such registration is not otherwise required, during the term of this Agreement. 
  

 19 

 (b) Wm Smith covenants and agrees that neither Wm Smith nor any of its affiliates nor any
entity managed or controlled by Wm Smith or any of its affiliates shall enter into a short position with respect to Common Shares of the Company, including in any account of Wm Smith’s or in any account directly or indirectly managed or
controlled by Wm Smith or any of its affiliates or any entity managed or controlled by Wm Smith or any of its affiliates. 
 9.
Conditions to Wm Smith’s Obligations. The obligations of Wm Smith hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein, to the
due performance by the Company of its obligations hereunder, to the completion by Wm Smith of a due diligence review satisfactory to Wm Smith in its reasonable judgment, and to the continuing satisfaction (or waiver by Wm Smith in its sole
discretion) of the following additional conditions: 
 (a) Registration Statement Effective. The Registration Statement
shall have become effective and shall be available for the (i) resale of all Placement Shares issued to Wm Smith and not yet sold by Wm Smith and (ii) the sale of all Placement Shares contemplated to be issued by any Placement Notice.

 (b) No Material Notices. None of the following events shall have occurred and be continuing: (i) receipt by the
Company of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective
amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or documents so that, in the case of the Registration Statement, it will not contain any
materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus, it will not contain any materially
untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
 (c) No Misstatement or Material Omission. The Registration Statement or Prospectus, or any amendment or supplement thereto, shall not
contain an untrue statement of fact that in Wm Smith’s reasonable opinion based on advice of counsel is material, or omits to state a fact that in Wm Smith’s reasonable opinion is material based on advice of counsel and is required to be
stated therein or is necessary to make the statements therein not misleading. 
  

 20 

 (d) Material Changes. Except as contemplated in the Prospectus, or disclosed in the
Company’s reports filed with the Commission, there shall not have been any downgrading in or withdrawal of the rating assigned to any of the Company’s securities (other than asset backed securities) by any rating organization or a public
announcement by any rating organization that it has under surveillance or review its rating of any of the Company’s securities (other than asset backed securities), the effect of which, in the case of any such action by a rating organization
described above, in the reasonable judgment of Wm Smith (without relieving the Company of any obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement
Shares on the terms and in the manner contemplated in the Prospectus. 
 (e) Legal Opinion. Wm Smith shall have received
the opinions of Company Counsel and Bermuda Company Counsel required to be delivered pursuant Section 7(n) on or before the date on which such delivery of such opinion is required pursuant to Section 7(n). 
 (f) Comfort Letter. Wm Smith shall have received the Comfort Letter required to be delivered pursuant Section 7(o) on or before
the date on which such delivery of such opinion is required pursuant to Section 7(o). 
 (g)
Representation Certificate. Wm Smith shall have received the certificate required to be delivered pursuant to Section 7(m) on or before the date on which delivery of such certificate is required pursuant to Section 7(m). 

(h) No Suspension. Trading in the Shares shall not have been suspended on the Exchange. 
 (i) Securities Act Filings Made. All filings with the Commission required by Rule 424 under the Securities Act to have been filed
prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424. 
 (j) Approval for Listing. The Company shall have submitted a notification for listing of the Placement Shares on the Exchange at, or prior to, the issuance of any Placement Notice. 
 (k) No Termination Event. There shall not have occurred any event that would permit Wm Smith to terminate this Agreement pursuant to
Section 12(a). 
 10. Indemnification and Contribution. 
 (a) Company Indemnification. The Company agrees to indemnify and hold harmless Wm Smith, the directors, officers, partners, employees
and agents of Wm Smith and each person, if any, who (i) controls Wm Smith within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under common control with Wm Smith
(a “Wm Smith Affiliate”) from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all reasonable investigative, legal and other expenses incurred in connection with, and
any and all reasonable amounts paid in settlement (in accordance with Section 10(c)) of, any action, suit or proceeding

  

 21 

 
between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which Wm
Smith, or any such person, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of
or are based, directly or indirectly, on (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or in any Issuer Free Writing Prospectus or in any application or other document executed by or on behalf of the Company or based on written information furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities laws thereof or filed with the Commission, (ii) the omission or alleged omission to state in any such document a material fact required to be stated in it or necessary to make the statements in it not
misleading or (iii) any breach by any of the indemnifying parties of any of their respective representations, warranties and agreements contained in this Agreement; provided, however, that this indemnity agreement shall not apply to the extent
that such loss, claim, liability, expense or damage arises from the sale of the Placement Shares pursuant to this Agreement and is caused directly or indirectly by an untrue statement or omission made in reliance on and in conformity with
information relating to Wm Smith or otherwise from the gross negligence or willful misconduct of Wm Smith. This indemnity agreement will be in addition to any liability that the Company might otherwise have. 
 (b) Wm Smith Indemnification. Wm Smith agrees to indemnify and hold harmless the Company and its directors and each officer of the
Company who signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or is under
common control with the Company (a “Company Affiliate”) against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 10(a), as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendments thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with information
relating to Wm Smith and furnished to the Company by Wm Smith or otherwise from the gross negligence or willful misconduct of Wm Smith. 
 (c) Procedure. Any party that proposes to assert the right to be indemnified under this Section 10 will, promptly after receipt of notice of commencement of any action against such party in
respect of which a claim is to be made against an indemnifying party or parties under this Section 10, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this Section 10 and (ii) any liability that it may have to any indemnified party
under the foregoing provision of this Section 10 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects jointly with any other indemnifying party similarly notified, to assume the defense of the
action, with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its

  

 22 

 
election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at
the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has
not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements
and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party
promptly as they are incurred. An indemnifying party will not, in any event, be liable for any settlement of any action or claim effected without its written consent. No indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 10 (whether or not any indemnified party is a party thereto),
unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding and does not include an admission of fault or culpability
or a failure to act by or on behalf of such indemnified party. 
 (d) Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 10 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or Wm
Smith, the Company and Wm Smith will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than Wm Smith, such as persons who control the Company within the meaning of the Securities Act, officers of the
Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and Wm Smith may be subject in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and Wm Smith on the other. The relative benefits received by the Company on the one hand and Wm Smith on the other hand shall be deemed to be in the same proportion as the total net proceeds from the sale of
the Placement Shares (before deducting expenses) received by the Company bear to the total compensation received by Wm Smith (before deducting expenses) from the sale of Placement Shares on behalf of the Company. If, but only if, the allocation
provided by the foregoing sentence is not

  

 23 

 
permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and Wm Smith, on the other, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state
a material fact relates to information supplied by the Company or Wm Smith, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and Wm Smith
agree that it would not be just and equitable if contributions pursuant to this Section 10(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 10(d) shall be deemed to include, for the
purpose of this Section 10(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim to the extent consistent with Section 10(c) hereof.
Notwithstanding the foregoing provisions of this Section 10(d), Wm Smith shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 10(d), any person who controls a party to
this Agreement within the meaning of the Securities Act, and any officers, directors, partners, employees or agents of Wm Smith, will have the same rights to contribution as that party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 10(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 10(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party from whom contribution is
sought. Except for a settlement entered into pursuant to the last sentence of Section 10(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required
pursuant to Section 10(c) hereof. 
 11. Representations and Agreements to Survive Delivery. The indemnity and
contribution agreements contained in Section 10 of this Agreement and all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of (i) any
investigation made by or on behalf of Wm Smith, any controlling persons, or the Company (or any of their respective officers, directors or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or
(iii) any termination of this Agreement. 
  

 24 

 12. Termination. 
 (a) Wm Smith shall have the right by giving notice as hereinafter specified at any time to terminate this Agreement if (i) any Material
Adverse Effect has occurred that, in the reasonable judgment of Wm Smith, may materially impair the ability of Wm Smith to sell the Placement Shares hereunder, (ii) the Company shall have failed, refused or been unable to perform any agreement
on its part to be performed hereunder; provided, however, in the case of any failure of the Company to deliver (or cause another person to deliver) any certification, opinion, or letter required under Sections 7(m), 7(n), or 7(o), Wm Smith’s
right to terminate shall not arise unless such failure to deliver (or cause to be delivered) continues for more than thirty days from the date such delivery was required; or (iii) any suspension or limitation of trading in the Placement Shares
or in securities generally on the Exchange shall have occurred. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification),
Section 11 (Survival of Representations), Section 17 (Applicable Law; Consent to Jurisdiction) and Section 18 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination. If Wm Smith elects to
terminate this Agreement as provided in this Section 12(a), Wm Smith shall provide the required notice as specified in Section 13 (Notices). 
 (b) The Company shall have the right, by giving 60 days notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such
termination shall be without liability of any party to any other party except that the provisions of Section 7(g), Section 10, Section 11, Section 17 and Section 18 hereof shall remain in full force and effect
notwithstanding such termination. 
 (c) Wm Smith shall have the right, by giving 60 days notice as hereinafter specified to
terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g), Section 10,
Section 11, Section 17 and Section 18 hereof shall remain in full force and effect notwithstanding such termination. 
 (d) Unless earlier terminated pursuant to this Section 12, this Agreement shall automatically terminate upon the issuance and sale of the maximum amount of the Shares set forth in Section 1 through Wm Smith on the terms and
subject to the conditions set forth herein; provided that the provisions of Section 7(g), Section 10, Section 11, Section 17 and Section 18 hereof shall remain in full force and effect notwithstanding such termination.

 (e) This Agreement shall remain in full force and effect unless terminated pursuant to Sections 12(a), (b), (c), or
(d) above or otherwise by mutual agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 7(g), Section 10, Section 11, Section 17 and
Section 18 shall remain in full force and effect. 
 (f) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such termination shall not be effective until the close of business on the date of receipt of such notice by Wm Smith or the Company, as the case may be. If such termination shall
occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement. 
  

 25 

 13. Notices. All notices or other communications required or permitted to be given by
any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified, and if sent to Wm Smith, shall be delivered to: 
 Wm Smith & Co. 
 1700 Lincoln Street, Suite 2545 
 Denver, CO 80203 
 Attention: William S. Smith 
 Facsimile: 303-831-0881 
 with a copy to: 
 Holme Roberts & Owen LLP 
 1700 Lincoln Street, Suite 4100 
 Denver, CO 80203 
 Attention: Garth B. Jensen 
 Facsimile: 303-866-0200 
 and if to the Company, shall be delivered to: 
 XOMA Ltd.

 2910 Seventh Street 
 Berkeley, CA 94710 
 Attention: Christopher J. Margolin 
 Facsimile: (510) 649-7471

 with a copy to: 
 Cahill Gordon & Reindel LLP 
 80 Pine Street 

New York, New York 10005 
 Attention: Geoffrey E. Liebmann 
 Facsimile: (212) 269-5420

 Each party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York City time,
on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the Exchange and commercial banks in the City of New
York are open for business. 
 An electronic communication (“Electronic Notice”) shall be deemed written notice
for purposes of this Section 13 if sent to the electronic mail address specified by the receiving party under separate cover. Electronic Notice shall be deemed received at the time the party sending

  

 26 

 
Electronic Notice receives verification of receipt by the receiving party. Any party receiving Electronic Notice may request and shall be entitled to receive the notice on paper, in a
nonelectronic form (“Nonelectronic Notice”) which shall be sent to the requesting party within ten (10) days of receipt of the written request for Nonelectronic Notice. 
 14. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and Wm Smith and their
respective successors and the affiliates, controlling persons, officers and directors referred to in Section 10 hereof. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns
of such party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party; provided, however, that Wm Smith may assign its rights
and obligations hereunder to an affiliate of Wm Smith without obtaining the Company’s consent. 
 15. Adjustments for
Stock Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any share subdivision, bonus issue or similar event effected with respect to the Shares.

 16. Entire Agreement; Amendment; Severability. This Agreement (including all schedules and exhibits attached hereto
and Placement Notices issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof.
Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and Wm Smith. In the event that any one or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and
provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement. 
 17. Applicable
Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt
requested) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. 
  

 27 

 18. Waiver of Jury Trial. The Company and Wm Smith each hereby irrevocably waives any
right it may have to a trial by jury in respect of any claim based upon or arising out of this agreement or any transaction contemplated hereby. 
 19. 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.
Delivery of an executed Agreement by one party to the other may be made by facsimile transmission. 
 [Remainder of Page
Intentionally Blank] 
  

 28 

 If the foregoing correctly sets forth the understanding between the Company and Wm Smith,
please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and Wm Smith. 
  

			
	Very truly yours,
	
	XOMA Ltd.
		
	By:	 	  

	Name:	 	Christopher J. Margolin
	Title:	 	Vice President, General Counsel and Secretary

  

			
	ACCEPTED as of the date first-above written:
	
	WM SMITH & CO.
		
	By:	 	  

	Name:	 	Patrice McNicoll
	Title:	 	Managing Director

  

 29 

 SCHEDULE 1 
  

 
 FORM OF
PLACEMENT NOTICE 
  
  
  

			
	From:	  	[                                ]
		
	To:	  	Wm Smith & Co.
		  	Attention: William Smith and Patrice McNicoll
		
	Subject:	  	At Market Issuance—Placement Notice

 Gentlemen: 
 Pursuant to the terms and subject to the conditions contained in the At Market Issuance Sales Agreement between XOMA Ltd. (the “Company”), and Wm Smith & Co. (“Wm
Smith”) dated July 14, 2009, the Company hereby requests that Wm Smith sell up to          shares of the Company’s common shares, par value $0.0005 per share, at a minimum market
price of $         per share, during the time period beginning [month, day, time] and ending [month, day, time]. 

 SCHEDULE 2 
  

 
 Compensation

  
  
 The Company shall pay to Wm Smith in cash, upon each sale of Shares pursuant to this Agreement an amount equal to 3% of the gross proceeds
but no less than $0.02 per share from each sale of Shares pursuant to this Agreement. 

 SCHEDULE 3 
 Company 
  

			
	Christopher J Margolin	  	margolin@xoma.com
		
	Fred Kurland	  	
		
	Steve Engle	  	

 Wm Smith 
  

			
	Bill Smith	  	bsmith@wmsmith.com
		
	Patrice McNicoll	  	pMcNicoll@wmsmith.com

 SCHEDULE 4 
 Account Information 

 Disclosure Schedule 
 Section 6(g) 
 Subsidiaries

 XOMA (Bermuda) Ltd. 
 XOMA
Development Corporation 
 XOMA Ireland Limited 
 XOMA Technology Ltd. 
 XOMA (US) LLC 
 XOMA Limited (UK) 

 EXHIBIT 7(m) 
 Form of Representation Date Certificate 
 This
Officers Certificate (this “Certificate”) is executed and delivered in connection with Section 7(m) of the At Market Issuance Sales Agreement (the “Agreement”), dated July 14, 2009, and entered into
between XOMA Ltd. (the “Company”) and Wm Smith & Co. (“Wm Smith”). All capitalized terms used but not defined herein shall have the meanings given to such terms in the Agreement 
 The undersigned, a duly appointed and authorized officer of the Company, having been authorized by the Company to execute this certificate,
hereby certifies as follows: 
 1. As of the date of this Certificate, (i) the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) neither the Prospectus nor the Pricing Disclosure Materials contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and
(iii) no event has occurred as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein not untrue or misleading. 
 2. Each of the representations and warranties of the Company contained in the Agreement were, when originally made, and are, as of the date
of this Certificate, true and correct in all material respects. 
 3. Each of the covenants required to be performed by the
Company in the Agreement on or prior to the date of the Agreement, this Representation Date, and each such other date as set forth in the Agreement, has been duly, timely and fully performed in all material respects and each condition required to be
complied with by the Company on or prior to the date of the Agreement, this Representation Date, and each such other date as set forth in the Agreement or in the Waivers has been duly, timely and fully complied with in all material respects.

 4. Except as set forth in, incorporated by reference into or otherwise contemplated by the Registration Statement or the
Prospectus, since the date of the most recent financial statements of the Company included or incorporated by reference in the Registration Statement and the Prospectus there has not been any material adverse change in the business, properties,
financial position, or results of operations of the Company, taken as a whole. 
 5. No stop order suspending the effectiveness
of the Registration Statement or of any part thereof has been issued, and no proceedings for that purpose have been instituted or are pending or threatened by any securities or other governmental authority (including, without limitation, the
Commission). 
 6. No order suspending the effectiveness of the Registration Statement or the qualification or registration of
the Shares under the securities or Blue Sky laws of any jurisdiction are

 
in effect and no proceeding for such purpose is pending before, or threatened, to the Company’s knowledge or in writing by, any securities or other governmental authority (including, without
limitation, the Commission). 
 The undersigned has executed this Officer’s Certificate as of the date first written above.

  

			
	XOMA LTD.
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

 2 

 EXHIBIT 7(n)(1)(A) 
 Form Of Legal Opinion of Conyers Dill & Pearman 
 Capitalized terms used and not defined herein shall have the meanings ascribed to them in the At Market Issuance Sales Agreement (the “Agreement”) 
 (i) The Common Shares have been duly authorized in accordance with the Company’s memorandum of continuance and bye-laws. 
 (ii) When issued and paid in accordance with the terms of the Agreement, the Common Shares will be validly issued, fully paid and
non-assessable (meaning that no further sums are required to be paid by the holders thereof in connection with the issue of such shares). 
 (iii) The Company has been duly continued to Bermuda and is existing under the laws of Bermuda in good standing (meaning solely that it has not failed to make any filing with any Bermuda governmental
authority, or to pay any Bermuda government fee or tax, which would make it liable to be struck off the Register of Companies and thereby cease to exist under the laws of Bermuda). 
 (iv) The Company has the necessary corporate power and authority to enter into and perform its obligations under the Agreement. The
execution and delivery of the Agreement by the Company and the performance by the Company of its obligations thereunder, will not violate the memorandum of continuance or bye-laws of the Company nor any applicable law, regulation, order or decree in
Bermuda. 
 (v) The Company has taken all corporate action required to authorise its execution, delivery and performance of the
Agreement. The Agreement has been duly executed and delivered by or on behalf of the Company, and constitutes the valid and binding obligations of the Company in accordance with the terms thereof. 

 EXHIBIT 7(n)(1)(B) 
 Form Of Legal Opinion of Cahill Gordon & Reindel LLP 
 Capitalized terms used and not defined herein shall have the meanings ascribed to them in the At Market Issuance Sales Agreement (the “Agreement”) 
 (i) Assuming the due authorization, execution and delivery thereof by the Company and the Wm Smith, the Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in accordance with its terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity). 
 (ii) The Registration Statement, Prospectus and the Prospectus Supplement (other than the financial statements
and schedules and other financial data included or incorporated by reference therein, as to which we express no opinion), as of their respective effective and issue dates, complied as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder. 
 The opinion of counsel shall include, or will be accompanied by
letter containing, standard Rule 10b-5 negative assurance language.

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