form10k.htm

EXHIBIT 10.12

FORM OF

XOMA LTD.

AMENDED AND RESTATED

CHANGE OF CONTROL SEVERANCE AGREEMENT

This Amended and Restated Change of Control Severance Agreement (the “Agreement”) is made and entered into effective as of _______, 200_ (the “Effective Date”), by and between ___________ (the “Employee”) and XOMA Ltd., a Bermuda company (the “Company”).

R E C I T A L S

A. It is expected that the Company may from time to time consider the possibility of a Change of Control (as hereinafter defined). The Board of Directors of the Company (the “Board”) recognizes that such consideration could be a distraction to the Employee and could cause the Employee to consider alternative employment opportunities.

B. The Board believes that it is in the best interest of the Company and its shareholders to provide the Employee with an incentive to continue the Employee’s employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders.

C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Company and the Employee entered into a Change of Control Severance Agreement effective as of ______, 200_ (the “Original Agreement”) to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change of Control.

D. The Company and the Employee wish to enter into this Agreement to amend and restate the Original Agreement.

E. XOMA (US) LLC, a wholly-owned subsidiary of the Company, and the Employee have previously entered into an employment agreement effective as of _______, 200_, which has been amended and restated effective as of _______, 200_ (the “Existing Agreement”) and provides the Employee with certain severance benefits upon the Employee’s termination of employment.

F. The parties intend that this Agreement shall operate in addition to, and not in replacement of, the Existing Agreement.

AGREEMENT

In consideration of the mutual covenants herein contained and the continued employment of the Employee by the Company, the parties agree as follows:

1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a) “Cause” shall mean (i) the Employee has been convicted of any crime or offense constituting a felony under applicable law, including, without limitation, any act of dishonesty such as embezzlement, theft or larceny, (ii) the Employee has acted or refrained from acting in respect of any of the duties and responsibilities which have been assigned to her/him in accordance with this Agreement or the Existing Agreement and shall fail to desist from such action or inaction within thirty (30) days after the Employee’s receipt of notice from the Company of such action or inaction and the Board determines that such action or inaction constituted gross negligence or a willful act of malfeasance or misfeasance of the Employee in respect of such duties, or (iii) the Employee has breached any material term of this Agreement or the Existing Agreement and shall fail to correct such breach within thirty (30) days after the Employee’s receipt of notice from the Company of such breach.

(b) “Change of Control” shall mean the occurrence of any of the following events:

(i) a merger, amalgamation or acquisition in which the Company is not the surviving or continuing entity, except for a transaction the principal purpose of which is to change the jurisdiction of the Company’s organization;

(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company;

(iii) any other reorganization or business combination in which fifty percent (50%) or more of the Company’s outstanding voting securities are transferred to different holders in a single transaction or series of related transactions;

(iv) any approval by the shareholders of the Company of a plan of complete liquidation of the Company;

(v) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities; or

(vi) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who (A) are directors of the Company as of the date hereof, (B) are elected, or nominated for election, to the Board with the affirmative votes of the directors of the Company as of the date hereof, or (C) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transaction described in subsections (i) through (v) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

(c) “Change of Control Protection Period” shall mean the period commencing one (1) month prior to the execution of the definitive agreement for a Change of Control and eighteen (18) months following the closing of a Change of Control.

(d) “Compensation Continuation Period” shall mean the period of time commencing with termination of the Employee’s employment as a result of Involuntary Termination at any time within a Change of Control Protection Period and ending with the date ______ months following the date of the Employee’s Involuntary Termination.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(f) “Involuntary Termination” shall mean (i) the failure of a successor or an acquiring company to offer the Employee the position held by Employee on the date of this Agreement (or, if higher, a subsequent position of the Employee) with the successor or acquiring company following a Change of Control; (ii) without the Employee’s express written consent, a substantial reduction, without good business reasons, of the rights, privileges and perquisites available to the Employee immediately prior to such reduction; (iii) without the Employee’s express written consent, a material diminution in the authority, responsibilities, duties or reporting lines held or possessed by the Employee prior to the Change of Control; (iv) without the Employee’s express written consent, a reduction by the Company of the Employee’s base salary or target bonus as in effect immediately prior to such reduction; (v) without the Employee’s express written consent, a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee’s overall benefits package is significantly reduced; (vi) without the Employee’s express written consent, the relocation of the regular offices of the Employee to a facility or a location more than thirty (30) miles further from the Employee’s current location (unless such new facility or location is closer to the Employee’s residence); (vii) any purported termination of the Employee by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (viii) the failure of the Company to obtain the assumption of this Agreement by any successors contemplated in Section 7 below.

2. Term of Agreement. This Agreement shall terminate upon the date that all obligations of the parties hereto under this Agreement have been satisfied or, if earlier, on the date, prior to a Change of Control Protection Period, the Employee is no longer employed by the Company.

3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement or the Existing Agreement or as may otherwise be established under the Company’s then existing employee benefit plans or policies at the time of termination.

4. Change of Control and Severance Benefits.

(a) Option Acceleration and Extended Exercise Period. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within a Change of Control Protection Period, then the exercisability of all options granted to the Employee by the Company (including any such options granted or assumed by the surviving or continuing entity of the Change of Control) and still outstanding (the “Options”) shall automatically be accelerated so that all the Options may be exercised immediately upon such Involuntary Termination for any or all of the shares subject thereto and the post-termination exercise period of each Option shall be extended to sixty (60) months (but in no event beyond the remainder of the maximum term of the Option). The Options shall continue to be subject to all other terms and conditions of the Company’s share option plans and the applicable option agreements between the Employee and the Company.

(b) Outplacement Program. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within a Change of Control Protection Period, the Employee will immediately become entitled to participate in a twelve (12) month executive outplacement program provided by an executive outplacement service, at the Company’s expense not to exceed fifteen thousand dollars ($15,000).

(i) Cash Severance Payment Upon Involuntary Termination. If the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within a Change of Control Protection Period, then the Employee shall be entitled to receive a severance payment equal to the sum of (A) an amount equal to ____ times the Employee’s annual base salary as in effect immediately prior to the Involuntary Termination, plus (B) an amount equal to ____ times Employee’s target bonus as in effect for the fiscal year in which the Involuntary Termination occurs. Such severance payments shall be in lieu of any other severance payment to which the Employee shall be entitled as a result of such termination pursuant to this Agreement, any employment agreement with or offer letter from the Company or any of its affiliates or the Company’s or any of its affiliate’s then existing severance plans and policies. The severance payment described in Section 4(c)(i)(A) shall be paid in monthly installments over [ ] months (the “Severance Payment Period”), with the first two (2) of such monthly installments being paid sixty (60) days after the date of termination and the remaining monthly installments being paid monthly thereafter until fully paid, and the severance payments described in Section 4(c)(i)(B) shall be paid in a lump sum sixty (60) days after the date of termination; provided, however, that all of such severance payments shall be subject to the requirements of Section 4(c)(iii) and Section 9 below.

(ii) Provision of Group Health and Certain Other Benefits. In addition, during a period of ______ months following the termination of Employee’s employment as a result of an Involuntary Termination at any time within a Change of Control Protection Period, (A) the Company shall make available and pay for the full cost of the coverage (plus an additional amount to pay for the taxes on such payments, if any, plus any taxes on such additional amount, such amount to be paid no later than ten (10) days prior to the date such taxes are due) of the Employee and Employee’s spouse and eligible dependents under any group health plans of the Company on the date of such termination of employment at the same level of health (i.e., medical, vision and dental) coverage and benefits as in effect for the Employee or such covered dependents on the date immediately preceding the date of the Employee’s termination; provided, however, that (1) the Employee and Employee’s spouse and eligible dependents each constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended; and (2) the Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA; and (B) if Employee is, at the time of such termination, an eligible participant in the Company’s mortgage differential program, the Company shall continue to make mortgage assistance payments to Employee pursuant to such program as in effect at the time of such termination. Notwithstanding the foregoing, the payments by the Company for such group health coverage and/or mortgage assistance, as applicable, shall cease prior to the expiration of the ______ month period in this Section 4(c)(ii) upon the employment of the Employment by another employer. Furthermore, if, at the time of the termination of Employee’s employment as a result of an Involuntary Termination at any time within a Change of Control Protection Period, Employee is the obligor of a “forgivable” loan (i.e., a loan which by its terms is to be considered forgiven by the Company and paid by the obligor in circumstances other than actual repayment) from the Company, then, notwithstanding any provisions of such loan to the contrary, such loan shall remain outstanding, and the forgiveness thereof shall continue, for a period of ______ months following such termination in accordance with the terms of such loan in effect at the time of such termination; provided, however, that at the end of such period of ______ months, the outstanding balance of such loan shall be immediately due and payable, together with any accrued and unpaid interest thereon.

(iii) Section 409A of the Code. Notwithstanding any provision to the contrary in this Agreement, if the Employee is deemed on the date of his or her “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company to be a “specified employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then with regard to any payment or benefit (including, without limitation, any mortgage assistance payment or loan forgiveness referred to above) that is considered deferred compensation under Section 409A payable on account of a “separation from service” that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into account any applicable exceptions to such requirement), such payment or benefit shall be made or provided on the date that is the earlier of (i) the expiration of the six (6)-month period measured from the date of the Employee’s “separation from service,” or (ii) the date of the Employee’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 4(c) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Employee in a lump sum and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. Notwithstanding any provision of this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment, references to the Employee’s “termination of employment” (and corollary terms) with the Company shall be construed to refer to Employee’s “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company.

(iv) Voluntary Resignation or Termination for Cause. If the Employee’s employment with the Company terminates as a result of the Employee’s voluntary resignation which is not an Involuntary Termination or if the Employee is terminated for Cause at any time after a Change of Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, but may be eligible for those benefits (if any) as may then be established under the Company’s then existing severance and benefits plans and policies at the time of such termination.

(d) Disability or Death. If the Employee’s employment with the Company terminates due to the Employee’s death or disability following a Change of Control, then the Employee shall not be entitled to receive severance or other benefits hereunder, except for those (if any) as may be then established under the Company’s then existing severance and benefits plans and policies at the time of such disability or death. In the event of the Employee’s death or disability after the termination of the Employee’s employment with the Company as a result of an Involuntary Termination within a Change of Control Protection Period, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees shall be entitled to receive severance or other benefits hereunder.

(e) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing of, the Employee’s termination of employment (and without duplication of any similar benefits under any employment agreement with the Company or any of its affiliates): (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the date of termination; (ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the date of termination; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the date of termination. These payments shall be made promptly upon termination, within the period of time mandated by law, and in no event later than ten (10) days after the date of termination.

5. Conditional Nature of Severance Payments.

(a) Non-Compete. The Employee shall not, to the detriment of the Company or any of its affiliates, disclose or reveal to any unauthorized person any trade secret or other confidential information relating to the Company or its affiliates or to any businesses operated by them, and the Employee confirms that such information constitutes the exclusive property of the Company. The Employee shall not otherwise act or conduct her/himself to the material detriment of the Company or its affiliates, or in a manner which is inimical or contrary to the interests thereof, and, for a period of twenty-four (24) months following the termination of Employee’s employment as a result of an Involuntary Termination at any time within a Change of Control Protection Period, shall not, directly or indirectly, engage in or render any service (whether to a person, firm or business) in direct competition with the Company; provided, however, that the Employee’s ownership of less than five percent (5%) of the outstanding stock of a corporation shall not itself be deemed to constitute such competition. The Employee recognizes that the possible restrictions on her/his activities which may occur as a result of her/his performance of her/his obligations under this Section 5(a) are required for the reasonable protection of the Company and its investments. For purposes hereof, “in direct competition” means engaged in the research, development and/or production of biological materials intended for use as therapeutic, prophylactic or diagnostic products in one or more of the same indications, and that utilize one or more of the same scientific bases (e.g., in the case of a therapeutic antibody, targets the same signal initiating pathway), as a product or product candidate the research, development and/or production of which is an active part of the Company’s business plan at the time of Employee’s termination.

(b) Non-Disparagement. The Employee and the Company agree to refrain from any defamation, libel or slander of the other and its respective officers, directors, employees, representatives, investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations and assigns or tortious interference with the contracts and relationships of the other and its respective officers, directors, employees, representatives, investors, shareholders, administrators, affiliates, divisions, subsidiaries, predecessor and successor corporations and assigns.

(c) Understanding of Covenants. The Employee represents that the Employee (i) is familiar with the foregoing covenants not to compete and not to disparage, and (ii) is fully aware of the Employee’s obligations hereunder, including, without limitation, the reasonableness of the length of time, scope and geographic coverage of the covenant not to compete.

6. Golden Parachute Excise Tax. In the event that the benefits provided for in this Agreement or otherwise payable to the Employee constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) that are subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Employee shall receive (i) a one-time payment from the Company sufficient to pay such excise tax (the “Excise Tax Gross-Up”), and (ii) an additional one-time payment from the Company sufficient to pay the additional excise tax and federal, state and local income and employment taxes arising from the Excise Tax Gross-Up made by the Company to the Employee pursuant to this Section 6 (the “Additional Gross-Up”). Unless the Company and the Employee otherwise agree in writing, the determination of the Employee’s excise tax liability and the amount required to be paid under this Section 6 shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accountants immediately prior to the Change of Control (the “Accountants”). The initial Excise Tax Gross-Up and Additional Gross-Up payments hereunder, if any, shall either be (x) paid to the Employee no later than ten (10) days prior to the due date for the payment of any excise tax, or (y) paid to the Internal Revenue Service on behalf of the Employee no later than the due date for the payment of any excise tax. In the event that the Excise Tax incurred by the Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and the Employee agree to promptly (but in no event later than the end of the calendar year in which the applicable taxes are paid to (or received from) the Internal Revenue Service) make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations concerning the application of the Code for which there is a “substantial authority” tax reporting position. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6.

7. Successors.

(a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, amalgamation, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law.

(b) Employee’s Successors. Without the written consent of the Company, the Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

8. Notices.

(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to the Employee at the home address that the Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 8. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated. The failure by the Employee to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing the Employee’s rights hereunder.

9. Execution of Release Agreement Upon Termination. As a condition of entering into this Agreement and receiving the benefits under Section 4, the Employee agrees to execute, on or before the date that is fifty (50) days following the date of termination, and not revoke a release of claims agreement substantially in the form attached hereto as Exhibit A upon the termination of the Employee’s employment with the Company. Such release shall not, however, apply to the rights and claims of the Employee under this Agreement, any indemnification agreement between the Employee and the Company (or its successor or acquirer), the bye-laws of the Company (or its successor or acquirer), the share award agreements between the Employee and the Company (or its successor or acquirer), or any employee benefit plan of which the Employee is a participant and under which all benefits due under such plan have not yet been paid or provided.

10. Arbitration.

(a) Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in San Francisco or Alameda County, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The cost of the arbitration shall be borne in full by the Company (or its successor or acquirer) but each of the Employee and the Company (or its successor or acquirer) shall bear his, her or its own legal fees and other cost in such arbitration subject to a possible award of attorneys fees and costs by the arbitrator as provided in the arbitration ruling. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

(b) The arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. The Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

(c) The Employee understands that nothing in this Section 10 modifies the Employee’s at-will employment status. Either the Employee or the Company can terminate the employment relationship at any time, with or without cause.

(d) THE EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. THE EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION TO THE EXTENT PERMITTED BY LAW, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF THE EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq;

(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

11. Miscellaneous Provisions.

(a) Mitigation. The Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source. However, the Employee shall not be entitled to receive the health coverage and benefits contemplated by this Agreement in the event that the Employee receives similar health coverage and benefits as a result of new employment during the Compensation Continuation Period.

(b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c) Integration. This Agreement represents the entire agreement and understanding between the parties with respect to the subject matter herein but shall not supersede any employment agreement between the Company or any of its affiliates and the Employee, any indemnification agreement between the Employee and the Company (or its successor or acquirer), the share award agreements between the Employee and the Company (or its successor or acquirer), or any employee benefit plan of which the Employee is a participant and under which all benefits due under such plan have not yet been paid or provided.

(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

(e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(f) Tax Withholdings. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

(g) Compliance with Section 409A of the Code.

(i) It is intended that this Agreement will comply with Section 409A of the Code and any regulations and guidelines promulgated thereunder (collectively, “Section 409A”), to the extent the Agreement is subject thereto, and the Agreement shall be interpreted on a basis consistent with such intent. If an amendment of the Agreement is necessary in order for it to comply with Section 409A of the Code, the parties hereto will negotiate in good faith to amend the Agreement in a manner that preserves the original intent of the parties to the extent reasonably possible. No action or failure to act pursuant to this Section 11(g) shall subject the Company to any claim, liability, or expense, and the Company shall not have any obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes, interest or penalties pursuant to Section 409A of the Code.

(ii) With respect to any reimbursement or in-kind benefit arrangements of the Company and its subsidiaries that constitute deferred compensation for purposes of Section 409A, except as otherwise permitted by Section 409A, the following conditions shall be applicable: (A) the amount eligible for reimbursement, or in-kind benefits provided, under any such arrangement in one calendar year may not affect the amount eligible for reimbursement, or in-kind benefits to be provided, under such arrangement in any other calendar year (except that the health and dental plans may impose a limit on the amount that may be reimbursed or paid), (B) any reimbursement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (C) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days after termination of employment”), the actual date of payment within the specified period shall be within the sole discretion of the Company. Whenever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.

(h) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

COMPANY:	XOMA LTD.

	By:	:
		Name:
		[Independent Director or CEO]

EMPLOYEE:
		Name

EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

This Release of Claims Agreement (this “Agreement”) is made and entered into by and between XOMA Ltd. (the “Company”) and ________ (the “Employee”).

WHEREAS, the Employee was employed by the Company; and

WHEREAS, the Company and the Employee have entered into a Change of Control Severance Agreement effective as of ________, 2007 (the “Severance Agreement”).

NOW THEREFORE, in consideration of the mutual promises made herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Employee (collectively referred to as the “Parties”) desiring to be legally bound do hereby agree as follows:

1. Termination. The Employee’s employment with the Company terminated on ___________, 20__.

2. Consideration. Subject to and in consideration of the Employee’s release of claims as provided herein, the Company has agreed to pay the Employee certain benefits and the Employee has agreed to provide certain benefits to the Company, both as set forth in the Severance Agreement.

3. Release of Claims. The Employee agrees that the foregoing consideration represents settlement in full of all currently outstanding obligations owed to the Employee by the Company. The Employee, on the Employee’s own behalf and the Employee’s respective heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that the Employee may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date (as defined below) of this Agreement including, without limitation:

(a) any and all claims relating to or arising from the Employee’s employment relationship with the Company and the termination of that relationship;

(b) any and all claims relating to, or arising from, the Employee’s right to purchase, or actual purchase of shares of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law and securities fraud under any state or federal law;

A-1

(c) any and all claims for wrongful discharge of employment, termination in violation of public policy, discrimination, breach of contract (both express and implied), breach of a covenant of good faith and fair dealing (both express and implied), promissory estoppel, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, unfair business practices, defamation, libel, slander, negligence, personal injury, assault, battery, invasion of privacy, false imprisonment and conversion;

(d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code Section 201, et seq. and Section 970, et seq. and all amendments to each such Act as well as the regulations issued thereunder;

(e) any and all claims for violation of the federal or any state constitution;

(f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

(g) any and all claims for attorneys’ fees and costs.

The Employee agrees that the release set forth in this Section 3 shall be and remain in effect in all respects as a complete general release as to the matters released. Notwithstanding the foregoing, this release does not extend to any obligations now or subsequently incurred under this Agreement, the Severance Agreement, the Indemnification Agreement between the Employee and the Company (or its successor or acquirer), the outstanding share award agreements between the Employee and the Company (or its successor or acquirer), or any employee benefit plan of which the Employee is a participant and under which all benefits due under such plan have not yet been paid or provided.

4. Acknowledgment of Waiver of Claims under ADEA. The Employee acknowledges that the Employee is waiving and releasing any rights the Employee may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. The Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. The Employee acknowledges that the consideration given for this waiver and release agreement is in addition to anything of value to which the Employee was already entitled. The Employee further acknowledges that the Employee has been advised by this writing that (a) the Employee should consult with an attorney prior to executing this Agreement; (b) the Employee has at least twenty-one (21) days within which to consider this Agreement; (c) the Employee has seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement; and (d) this Agreement shall not be effective until the revocation period has expired. Any revocation should be in writing and delivered to the Company by the close of business on the seventh (7th) day from the date that the Employee signs this Agreement.

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5. Civil Code Section 1542. The Employee represents that the Employee is not aware of any claims against the Company other than the claims that are released by this Agreement. The Employee acknowledges that the Employee has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HER OR HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HER OR HIM MUST HAVE MATERIALLY AFFECTED HER OR HIS SETTLEMENT WITH THE DEBTOR.

The Employee, being aware of said code section, agrees to expressly waive any rights the Employee may have thereunder, as well as under any other statute or common law principles of similar effect.

6. No Pending or Future Lawsuits. The Employee represents that the Employee has no lawsuits, claims or actions pending in the Employee’s name, or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. The Employee also represents that the Employee does not intend to bring any claims on the Employee’s own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein except, if necessary, with respect to the agreements listed in the last sentence of Section 3 of this Agreement.

7. Confidentiality. The Employee agrees to use the Employee’s best efforts to maintain in confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Release Information”). The Employee agrees to take every reasonable precaution to prevent disclosure of any Release Information to third parties and agrees that there will be no publicity, directly or indirectly, concerning any Release Information. The Employee agrees to take every precaution to disclose Release Information only to those attorneys, accountants, governmental entities and family members who have a reasonable need to know of such Release Information.

8. No Adverse Cooperation. The Employee agrees the Employee will not act in any manner that might damage the business of the Company. The Employee agrees that the Employee will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless compelled under a subpoena or other court order to do so.

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9. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement.

10. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. The Employee represents and warrants that the Employee has the capacity to act on the Employee’s own behalf and on behalf of all who might claim through the Employee to bind them to the terms and conditions of this Agreement.

11. No Representations. The Employee represents that the Employee has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement.

12. Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

13. Entire Agreement. This Agreement and the Severance Agreement and the agreements and plans referenced therein represent the entire agreement and understanding between the Company and the Employee concerning the Employee’s separation from the Company, and supersede and replace any and all prior agreements and understandings concerning the Employee’s relationship with the Company and the Employee’s compensation by the Company. This Agreement may only be amended in writing signed by the Employee and an executive officer of the Company.

14. Governing Law. This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

15. Effective Date. This Agreement is effective eight (8) days after it has been signed by the Parties (the “Effective Date”) unless it is revoked by the Employee within seven (7) days of the execution of this Agreement by the Employee.

16. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

17. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

(a) they have read this Agreement;

(b) they have been represented in the preparation, negotiation and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

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(d) they are fully aware of the legal and binding effect of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

	XOMA LTD.


	By:

	Title:

	Date:


	EMPLOYEE


	Name

	Date:

XOMA Reports 2010 and Fourth Quarter Financial Results

BERKELEY, Calif., March 10, 2011 -- XOMA Ltd. (Nasdaq: XOMA), a leader in the discovery and development of therapeutic antibodies, today announced its financial results for the fourth quarter and year ended December 31, 2010 and provided a general business update.

“In 2010, we successfully secured a global joint development partnership with Servier for multiple indications of our lead product candidate, XOMA 052,” said Steven B. Engle, XOMA’s Chairman and Chief Executive Officer. “We reported positive results demonstrating XOMA 052 biological activity in the treatment of Behcet’s uveitis in a Phase 2 proof-of-concept trial and completed enrollment in two Phase 2 trials of XOMA 052 in patients with Type 2 diabetes. We also continued to make progress in our biodefense program and with our preclinical pipeline which is focused on cardio-metabolic, oncological and other diseases.

“Looking forward to a busy and exciting year, later this month we expect to report top line results from the full six months’ treatment with XOMA 052 in the Phase 2b clinical trial of XOMA 052 in patients with Type 2 diabetes and, in the second quarter of this year, top line results from the full six months’ treatment in the Phase 2a trial,” Mr. Engle said. “During the second half of the year, we plan to initiate our Phase 3 program for XOMA 052 in Behcet’s uveitis and provide further insight into our plans for XOMA 052 development in cardio-metabolic diseases.”

XOMA had total revenues of $33.6 million in 2010, compared with $98.4 million in 2009. The decrease in revenues in 2010 compared with 2009 was due primarily to several one-time transactions in 2009 including $28.1 million for the expansion of the company’s collaboration agreement with Takeda Pharmaceutical Company Limited, and $25.0 million for the sale of a royalty interest. XOMA had a net loss of $68.8 million, or $3.69 per share, for the year ended December 31, 2010, compared with net income of $0.6 million, or $0.05 per share, for the year ended December 31, 2009. Research and development expenses in 2010 increased to $77.4 million compared with $58.1 million in 2009, primarily reflecting increased spending on the Phase 2 clinical development of XOMA 052 in 2010. General and administrative expenses were generally unchanged at $23.3 million in 2010 and $23.7 million in 2009.

For the fourth quarter ended December 31, 2010, XOMA had total revenues of $9.6 million and a net loss of $17.8 million, or $0.84 per share, compared with total revenues of $21.6 million and net income of $3.0 million, or $0.22 per share for the quarter ended December 31, 2009.

At December 31, 2010, XOMA had cash and cash equivalents of $37.3 million, compared with $23.9 million at December 31, 2009. As previously reported, in January 2011, XOMA received from Servier approximately $35 million in cash related to the companies’ joint development and commercialization agreement for XOMA 052, including an upfront payment of $15 million and a EUR15 million loan.

Recent Highlights

Entered into global XOMA 052 development and commercialization partnership: This agreement with Servier, a leading independent pharmaceutical company established in 140 countries with EUR3.7 billion in 2010 sales, includes the following:

Retains for XOMA valuable commercial rights and options in the U.S. and Japan for multiple indications including Behcet’s uveitis and other inflammatory and oncology indications,

Enables acceleration of XOMA 052 into Phase 3 development in 2011 in Behcet’s uveitis, an orphan indication,

Advances the company’s strategy of focusing on near-term opportunities to develop and commercialize products in the U.S., and

Increases XOMA’s cash resources and provides additional XOMA 052 licensing opportunities for XOMA in the U.S. and Japan for diabetes and cardiovascular disease.

Under the collaboration agreement, Servier will provide an initial $50 million and fund 50% of development expenses beyond the initial $50 million for the Behcet’s uveitis program, and fund development in diabetes and cardiovascular disease. The agreement also includes potential milestone payments totaling approximately $470 million and tiered royalties up to a mid-teens percentage rate. The EUR15 million loan is due in full in 2016.The terms of the loan provide that, after a specified period, a significant percentage of milestone, royalty and/or upfront payments due XOMA, resulting from the successful attainment of collaboration objectives or from XOMA’s licensing of rights to a third party in the U.S. or Japan, may be applied at the option of Servier if from the collaboration or will be applied if from a third party to repay a portion of the loan.

Completed enrollment in two Phase 2 trials of XOMA 052 in patients with Type 2 diabetes: To date, more than 600 patients have been enrolled in clinical trials of XOMA 052, including 74 patients in the Phase 2a trial and 420 patients in the multicenter, randomized, placebo-controlled Phase 2b dose-ranging trial. Later this month, XOMA plans to report top line results from the Phase 2b trial, including hemoglobin A1c levels and C-reactive protein, following six months’ treatment with XOMA 052 at one of four dose levels or placebo. Hemoglobin A1c is a measure indirectly reflecting blood glucose levels as averaged over a 90 to 120 day period and C-reactive protein is a biomarker of cardiovascular risk.

Announced an interim review of three-month data from Phase 2a clinical trial of XOMA 052: This trial was designed to evaluate the overall safety and kinetics and was not designed to show statistically significant differences in measures of biological activity. A total of 74 patients with Type 2 diabetes, including 55 treated with XOMA 052 at a single dose level and 19 on placebo, were treated. At the three month interim review, XOMA 052 was shown to be well-tolerated with no drug-related serious adverse events and demonstrated evidence of biological activity, including a reduction in C-reactive protein levels and a modest reduction in hemoglobin A1c levels. In the final three months of the trial, patients in the XOMA 052 group receive the same, higher or lower dose level, and patients in the placebo group will continue to receive placebo. XOMA anticipates reporting the results from the full six months’ treatment in this trial during the second quarter of 2011.

Received two new patents covering XOMA 052: The patents cover methods of treatment for Type 1 diabetes and certain cancers, including multiple myeloma, using XOMA 052 or other IL-1 beta antibodies with similar binding characteristics to XOMA 052. XOMA now has eight issued U.S. and European patents for the XOMA 052 program, demonstrating success in building a strong intellectual property portfolio to protect innovation around XOMA 052.

Awarded approximately $1 million in grants under Patient Protection and Affordable Care Program: All four of XOMA’s grant applications were awarded the maximum allocation, providing funding for ongoing XOMA programs that address unmet medical needs in the areas of inflammation including diabetes and cardiovascular disease, biodefense, metabolic diseases and cancer.

Reported XOMA 3AB results at national biodefense meeting: Several presentations highlighted advances in the development of XOMA 3AB, a novel combination of three antibodies in one product that bind to distinct regions of botulinum toxin type A, one of the most deadly bioterror threats. These included an invited oral presentation describing the successful lyophilization of XOMA 3AB, and studies demonstrating the stability of this formulation over time stored at a wide range of temperatures. The presentations were made at the Fifth Annual Public Health Emergency Medical Countermeasures Enterprise (PHEMCE) Stakeholders Workshop in Washington, DC.

Guidance

XOMA will not be providing specific guidance on overall revenues or cash receipts for 2011 so as to best manage its ongoing business development discussions and other activities. The company currently expects that cash used in operating activities in 2011 may range from $30 million to cash neutral.

Investor Conference Call and Webcast

XOMA will host a conference call and webcast today, March 10, 2011, at 4:30 p.m. ET. The webcast can be accessed via the Investors section of XOMA’s website at http://investors.xoma.com/events.cfm and will be available for replay until close of business on June 10, 2011. Telephone numbers for the live audiocast are 877-369-6589 (U.S./Canada) and 408-377-0122 (international). A telephonic replay will be available beginning approximately two hours after the conclusion of the call until close of business on March 17, 2011. Telephone numbers for the replay are 800-642-1687 (U.S./Canada) and 706-645-9291 (international), passcode 49375680.

XOMA 052 and Interleukin-1 Inhibition

XOMA 052 is a potent monoclonal antibody with the potential to improve the treatment of patients with a wide variety of inflammatory diseases and other diseases including cancer. XOMA 052 binds strongly to interleukin-1 beta (IL-1 beta), a pro-inflammatory cytokine involved in Behcet’s uveitis, diabetes, cardiovascular disease, rheumatoid arthritis, gout, and other auto-inflammatory diseases. The IL-1 pathway is a well-validated therapeutic target, with three marketed IL-1 inhibitors that have been used by more than 200,000 patients overall. By binding to IL-1 beta, XOMA 052 inhibits the activation of the IL-1 receptor, thereby preventing the cellular signaling events that produce inflammation.

To date, nearly 600 patients have been enrolled in XOMA 052 clinical trials. The Phase 2 trials follow a successful 98 patient Phase 1 program in Type 2 diabetes in which XOMA 052 was shown to be well-tolerated, demonstrated evidence of biological activity in diabetes measures and cardiovascular risk biomarkers, evidence of improved insulin sensitivity, and had a half-life that may provide convenient dosing of once per month or less frequently. The company has also demonstrated the potential for XOMA 052 in in vivo models of beta cell sparing and cardiovascular disease and in an in vitro model using human myeloma or plasma cell cancer cells.

XOMA has completed a successful proof-of-concept Phase 2 trial of XOMA 052 in patients with Behcet's uveitis. As previously reported, all seven patients displayed rapid reduction of intraocular inflammation and improvement in visual acuity or other ophthalmic measures after a single treatment with XOMA 052 and following discontinuation of immunosuppressive drugs such as cyclosporine and/or azathioprine. Follow-up results demonstrated that each of the five patients re-treated with XOMA 052 due to a recurring uveitis exacerbation responded again to XOMA 052 treatment and maintained their response for several months. The drug was well-tolerated, and no drug-related adverse events were reported.

About Behcet’s Disease and Behcet’s Uveitis

Behcet's (pronounced beh-CHETS) disease causes chronic inflammation of the blood vessels, or vasculitis, among other complications. Uveitis is a vasculitis of the blood vessels in the eye which can be vision-threatening. Behcet's uveitis is one of the most severe forms of uveitis which can lead to blindness and affects approximately 50% of Behcet's disease patients.

XOMA estimates that there are 250,000 patients diagnosed with Behcet's disease worldwide including 20,000 in the U.S. Onset of the disease occurs most commonly in adults in their twenties, thirties and forties, and is typically more severe in men.

Without immediate treatment, major exacerbations of Behcet's uveitis may lead to retinal detachment, macular edema, vitreous hemorrhage, glaucoma and eventual blindness. The effects of these exacerbations on vision are cumulative. Patients often experience multiple exacerbations per year, requiring treatment to control the frequency and severity of attacks of this chronic disease. No therapies are approved in the U.S. to treat Behcet's disease. It is treated with corticosteroids and immunosuppressive drugs, which can have significant side effects, including diabetes and hypertension, and can contribute to other eye diseases like glaucoma and the formation of cataracts. These drugs also can adversely affect the neurological, pulmonary, gastrointestinal, hematological and cardiovascular systems.

About XOMA

XOMA is a leader in the discovery and development of novel antibody therapeutics. The company's proprietary product pipeline includes:

XOMA 052, a potentially best-in-class antibody that binds to the inflammatory cytokine interleukin-1 beta, or IL-1 beta. XOMA 052 is entering Phase 3 clinical development in Behcet’s uveitis, an orphan indication, and is in Phase 2 clinical development for diabetes with cardiovascular disease biomarkers. Les Laboratoires Servier is XOMA’s development and commercialization partner for XOMA 052.

XOMA 3AB, a novel combination of three antibodies in one product under development to prevent and treat botulism poisoning caused by exposure to botulinum neurotoxin Type A, among the most deadly bioterror threats. XOMA 3AB is under development through funding provided by the National Institute of Allergy and Infectious Diseases of the National Institutes of Health (Contract # HHSN266200600008C).

A preclinical pipeline with candidates in development for autoimmune, cardio-metabolic, inflammatory and oncologic diseases.

XOMA has a premier antibody discovery and development platform that incorporates an unmatched collection of antibody phage display libraries and proprietary expression and manufacturing technologies that it uses for its own pipeline and in collaborations with pharmaceutical and biotechnology companies. XOMA technologies have contributed to the success of marketed antibody products including LUCENTIS® for wet age-related macular degeneration and CIMZIA® for rheumatoid arthritis and Crohn’s disease. XOMA’s fully integrated product development infrastructure extends from preclinical science to approval and is located in Berkeley, California. For more information, please visit www.xoma.com.

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

Forward-Looking Statements

Certain statements contained herein concerning anticipated levels of cash utilization, timing of initiation or availability of results of clinical trials, interim or other results of early-stage clinical trials or additional licensing opportunities, 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.

Among other things, the anticipated levels of cash utilization may be other than as expected due to unanticipated changes in XOMA's research and development programs, unavailability of additional arrangements or higher than anticipated transaction costs; the timing of initiation or availability of results of clinical trials may be delayed or may never occur as a result of actions or inaction by our present or future collaboration partners, complications in the design, implementation or third-party approval of clinical trials, complications in the collection or interpretation of statistical data or unanticipated safety issues; results of early-stage clinical trials may not be supported by later findings, larger trials and/or other actions required for regulatory approval may not be economically feasible, and final results of clinical trials may in any event not be consistent with preclinical or interim results; and additional licensing opportunities may not be available on acceptable terms or at all.

These and other risks, including those related to the generally unstable nature of current economic and market conditions; the results of discovery and pre-clinical 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); changes in the status of existing collaborative or licensing relationships; the ability of collaborators, licensees and other third parties to meet their obligations and their discretion in decision-making; XOMA's ability to meet the demands of the United States government agency with which it has entered into its government contracts; competition; market demand for products; scale-up, manufacturing and marketing capabilities; availability of additional licensing or collaboration opportunities; international operations; share price volatility; XOMA's financing needs and opportunities; uncertainties regarding the status of biotechnology patents; uncertainties as to the costs of protecting intellectual property; and risks associated with XOMA's status as a Bermuda company, are described in more detail in XOMA's most recent filing on Form 10-K and in other SEC filings. Consider such risks carefully when considering XOMA's prospects.

** Tables Follow **

XOMA Ltd.

Company and Investor Contact:

Carol DeGuzman

510-204-7270

deguzman@xoma.com

Canale Communications

Media Contact:

Carolyn Hawley

619-849-5375

carolyn@canalecomm.com

XOMA Ltd.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three months ended December 31,						Year ended December 31,
	2010			2009			2010			2009
Revenues:
License and collaborative fees	$	433		$	14,546		$	2,182		$	43,822
Contract and other revenue		9,150			6,830			27,174			25,492
Royalties		18			221			4,285			29,116
Total revenues		9,601			21,597			33,641			98,430
Operating expenses:
Research and development		19,134			14,659			77,413			58,131
Selling, general and administrative		6,520			4,764			23,250			23,736
Restructuring		37			-			82			3,603
Total operating expenses		25,691			19,423			100,745			85,470
(Loss) income from operations		(16,090	)		2,174			(67,104	)		12,960
Other income (expense):
Investment and interest income		2			2			16			49
Interest expense		(104	)		(110	)		(385	)		(4,888	)
Loss on debt extinguishment		-			-			-			(3,645	)
Other (expense) income		(1,556	)		561			(1,256	)		1,801
Net (loss) income before taxes		(17,748	)		2,627			(68,729	)		6,277
Provision for income tax (expense) benefit		(10	)		356			(27	)		(5,727	)
Net (loss) income	$	(17,758	)	$	2,983		$	(68,756	)	$	550
Basic and diluted net (loss) income per common share	$	(0.84	)	$	0.22		$	(3.69	)	$	0.05

Shares used in computing basic net (loss) income per common share		21,195			13,313			18,613			10,993
Shares used in computing diluted net (loss) income per common share		21,195			13,645			18,613			11,313

XOMA Ltd.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,
	2010		2009
ASSETS
Current assets:
Cash and cash equivalents	$	37,304	$	23,909
Trade and other receivables, net		20,864		7,231
Prepaid expenses and other current assets		712		1,012
Total current assets		58,880		32,152
Property and equipment, net		14,869		20,270
Other assets		503		402
Total assets	$	74,252	$	52,824

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	3,581	$	2,942
Accrued liabilities		10,650		8,639
Deferred revenue		17,044		2,114
Warrant liability		4,245		4,760
Other current liabilities		8		223
Total current liabilities		35,528		18,678
Deferred revenue – long-term		1,086		2,894
Interest bearing obligations – long-term		13,694		13,341
Other long-term liabilities		353		385
Total liabilities		50,661		35,298
Shareholders’ equity		23,591		17,526
Total liabilities and shareholders' equity	$	74,252	$	52,824

Bermuda	52-2154066
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2910 Seventh Street, Berkeley, California 94710	(510) 204-7200
(Address of principal executive offices, including zip code)	(Telephone Number)

Title of each class	Name of each exchange on which registered
Common Shares, U.S. $0.0075 par value	The NASDAQ Global Market
Preference Share Purchase Rights

PART I

Item 1.	Business	1
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	33
Item 2.	Properties	33
Item 3.	Legal Proceedings	33
Item 4.	Reserved	34
	Supplementary Item: Executive Officers of the Registrant	34

PART II

Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	35
Item 6.	Selected Financial Data	36
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	53
Item 8.	Financial Statements and Supplementary Data	53
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	53
Item 9A.	Controls and Procedures	54
Item 9B.	Other Information	55

PART III

Item 10.	Directors, Executive Officers, and Corporate Governance	56
Item 11.	Executive Compensation	56
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	56
Item 13.	Certain Relationships and Related Transactions, and Director Independence	56
Item 14.	Principal Accountant Fees and Services	56

PART IV

Item 15.	Exhibits and Financial Statement Schedules	57

SIGNATURES		58

INDEX TO FINANCIAL STATEMENTS		F-1

INDEX TO EXHIBITS		i

Active Biotech AB	Centocor Ortho Biotech (now a member of Johnson & Johnson)	MorphoSys AG

Affimed Therapeutics AG	Crucell Holland B.V. (now a member of Johnson & Johnson)	Novartis AG

Affitech AS	Dompe, s.p.a.	Pfizer Inc.

Alexion Pharmaceuticals, Inc.	Dyax Corp.	Takeda Pharmaceutical Company Ltd.

Applied Molecular Evolution, Inc. (now a subsidiary of Eli Lilly and Company)	Eli Lilly and Company	The Medical Research Council

Avecia Limited	Genentech, Inc. (now a member of the Roche Group)	UCB S.A.

Aventis Pharma Deutschland GmbH (Hoechst) (now Sanofi-Aventis)	Invitrogen Corporation	Verenium Corporation

Bayer Healthcare AG	Merck & Co., Inc.	Wyeth Pharmaceuticals Division (now a member of Pfizer Inc.)

BioInvent International AB	Mitsubishi Tanabe Pharma Corporation	ZymoGenetics, Inc. (now a member of Bristol-Myers Squibb Company)

Program	Description	Indication	Status	Developer
XOMA 052	HE™ antibody to IL-1 beta	Behcet’s uveitis, Type 2 diabetes, Type 1 diabetes and cardiovascular disease	Phase 2 for Behcet’s uveitis, Type 2 diabetes, Type 1 diabetes and cardiovascular disease	Proprietary (in collaboration with Servier)
XOMA 3AB	Therapeutic antibodies to multiple botulinum neurotoxins	Botulism poisoning	Preclinical	Proprietary (NIAID-funded)
Multiple preclinical programs	Fully human monoclonal antibodies to undisclosed disease targets	Inflammatory, autoimmune, infectious and oncological diseases	Preclinical	Proprietary

Product/Candidate	Competitors
XOMA 052	Biovitrum AB Eli Lilly and Company MedImmune Novartis AG Regeneron Pharmaceuticals, Inc.
XOMA 3AB	Cangene Corporation Emergent BioSolutions, Inc.

Name	Age	Title
Steven B. Engle	56	Chairman, Chief Executive Officer and President
Patrick J. Scannon, M.D., Ph.D.	63	Executive Vice President and Chief Medical Officer
Fred Kurland	60	Vice President, Finance and Chief Financial Officer
Christopher J. Margolin, Esq.	64	Vice President, General Counsel and Secretary

	Price Range
	High		Low

2010
First Quarter	$	11.70	$	6.00
Second Quarter		12.60		6.15
Third Quarter		6.45		2.45
Fourth Quarter		7.48		2.24

2009
First Quarter	$	14.10	$	5.55
Second Quarter		20.10		6.00
Third Quarter		16.20		10.65
Fourth Quarter		12.60		9.45

As of December 31,	XOMA Ltd.		Nasdaq Composite Index		AMEX Biotechnology Index
2005	$	100.00	$	100.00	$	100.00
2006		137.50		109.52		110.77
2007		211.88		120.27		115.51
2008		38.75		71.51		95.04
2009		43.75		102.89		138.36
2010		21.38		120.29		190.57

	Year Ended December 31,
	2010			2009			2008			2007			2006
	(In thousands, except per share amounts)
Consolidated Statement of Operations Data
Total revenues (1)	$	33,641		$	98,430		$	67,987		$	84,252		$	29,498
Total operating costs and expenses		100,663			81,867			106,721			86,796			70,182
Restructuring costs		82			3,603			-			-			-
(Loss) income from operations		(67,104	)		12,960			(38,734	)		(2,544	)		(40,684	)
Other income (expense), net (2)		(1,625	)		(6,683	)		(6,894	)		(9,782	)		(11,157	)
Net (loss) income before taxes		(68,729	)		6,277			(45,628	)		(12,326	)		(51,841	)
Income tax expense (benefit), net (3)		27			5,727			(383	)		-			-
Net (loss) income	$	(68,756	)	$	550		$	(45,245	)	$	(12,326	)	$	(51,841	)
Basic and diluted net (loss) income per common share	$	(3.69	)	$	0.05		$	(5.11	)	$	(1.45	)	$	(8.10	)

	Year ended December 31,						2009-2010			2008-2009
	2010		2009		2008		Increase (Decrease)			Increase (Decrease)
NIAID 3	$	21,211	$	5,051	$	4,162	$	16,160		$	889
Takeda		3,568		7,549		4,369		(3,981	)		3,180
SRI International		1,594		331		-		1,263			331
Merck/Schering-Plough		468		7,586		10,780		(7,118	)		(3,194	)
NIAID 2		203		1,581		1,325		(1,378	)		256
AVEO		79		675		3,161		(596	)		(2,486	)
Novartis		-		2,459		6,602		(2,459	)		(4,143	)
Other		51		260		74		(209	)		186
Total revenues	$	27,174	$	25,492	$	30,473	$	1,682		$	(4,981	)

Contractual Obligations	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Operating leases (a)	$	13,390	$	5,119	$	7,533	$	738	$	-
Debt Obligations(b)
Principal		13,694		-		-		13,694		-
Interest		1,514		336		673		505		-
Total	$	28,598	$	5,455	$	8,206	$	14,937	$	-

	Maturity	Carrying Amount (in thousands)		Fair Value (in thousands)		Weighted Average Interest Rate
December 31, 2010
Cash and cash equivalents	Daily to 90 days	$	37,304	$	37,304		0.09	%

December 31, 2009
Cash and cash equivalents	Daily to 90 days	$	23,909	$	23,909		0.38	%

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Shareholders' Equity (Net Capital Deficiency)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to the Consolidated Financial Statements	F-7

	XOMA LTD.

	By:	/s/ STEVEN B. ENGLE
		Steven B. Engle
		Chairman of the Board, Chief Executive Officer and President

Signature	Title	Date


/s/ Steven B. Engle	Chairman of the Board, Chief Executive Officer and President	March 10, 2011
(Steven B. Engle)	(Principal Executive Officer)

/s/ Fred Kurland	Vice President, Finance and Chief Financial Officer	March 10, 2011
(Fred Kurland)	(Principal Financial Officer and Principal Accounting Officer)

/s/ Patrick J. Scannon	Executive Vice President, Chief Scientific Officer	March 10, 2011
(Patrick J. Scannon, M.D., Ph.D.)

/s/ W. Denman Van Ness	Lead Independent Director	March 10, 2011
(W. Denman Van Ness)

/s/ William K. Bowes, Jr.	Director	March 10, 2011
(William K. Bowes, Jr.)

/s/ Peter Barton Hutt	Director	March 10, 2011
(Peter Barton Hutt)

/s/ John Varian	Director	March 10, 2011
(John Varian)

/s/ Timothy P. Walbert	Director	March 10, 2011
(Timothy P. Walbert)

/s/ Jack L. Wyszomierski	Director	March 10, 2011
Jack L. Wyszomierski

	Preferred Shares				Common Shares				Paid-In		Accumulated Comprehensive Income			Accumulated			Total Shareholders’ Equity (Net Capital
	Shares		Amount		Shares		Amount		Capital		(Loss)			Deficit			Deficiency)
Balance, December 31, 2007		3	$	1		8,797	$	66	$	740,119	$	(9	)	$	(739,859	)	$	318
Exercise of share options, contributions to 401(k) and incentive plans	─		─			38	─			1,389	─			─				1,389
Share-based compensation expense under SFAS 123R	─		─		─		─			4,934	─			─				4,934
Sale of shares of common stock	─		─			529		4		7,192	─			─				7,196
Comprehensive income (loss):
Net change in unrealized loss on investments	─		─		─		─		─			7		─				7
Net loss	─		─		─		─		─		─				(45,245	)		(45,245	)
Comprehensive loss	─		─		─		─		─		─			─				(45,238	)
Balance, December 31, 2008		3		1		9,364		70		753,634		(2	)		(785,104	)		(31,401	)
Exercise of share options, contributions to 401(k) and incentive plans	─		─			135		1		1,358	─			─				1,359
Share-based compensation expense under SFAS 123R	─		─		─		─			4,395	─			─				4,395
Sale of shares of common stock	─		─			4,036		30		42,591	─			─				42,621
Comprehensive income:
Net change in unrealized loss on investments	─		─		─		─		─			2		─				2
Net income	─		─		─		─		─		─				550			550
Comprehensive income	─		─		─		─		─		─			─				552
Balance, December 31, 2009		3		1		13,536		101		801,978		-			(784,554	)		17,526
Exercise of share options, contributions to 401(k) and incentive plans	─		─			94		1		945	─			─				946
Share-based compensation expense under SFAS 123R	─		─		─		─			4,913	─			─				4,913
Sale of shares of common stock	─		─			14,469		109		66,232	─			─				66,341
Exercise of warrants	─		─			392		3		2,618	─			─				2,621
Comprehensive loss:
Net loss	─		─		─		─		─		─				(68,756	)		(68,756	)
Comprehensive loss	─		─		─		─		─		─			─				(68,756	)
Balance, December 31, 2010		3	$	1		28,491	$	214	$	876,686	$	─		$	(853,310	)	$	23,591

	Year ended December 31,
	2009
Numerator
Net income used for basic and diluted net income per share	$	550

Denominator
Weighted average shares outstanding used for basic net income per share		10,993
Effect of dilutive share options		66
Effect of convertible preference shares		254
Weighted average shares outstanding and dilutive securities used for diluted net income per share		11,313

	December 31, 2010
	Cost Basis		Unrealized Gains		Unrealized Losses		Estimated Fair Value

Cash	$	29,536	$	-	$	-	$	29,536
Cash equivalents		7,768		-		-		7,768
Total cash and cash equivalents	$	37,304	$	-	$	-	$	37,304

	Balance as of December 31, 2009		Charges		Cash Payments			Adjustments		Balance as of December 31, 2010
Facilities consolidation	$	374	$	39	$	(202	)	$	32	$	243
Total	$	374	$	39	$	(202	)	$	32	$	243

	Balance as of December 31, 2008		Charges		Cash Payments			Adjustments			Balance as of December 31, 2009
Employee severance and benefits	$	-	$	3,289	$	(3,098	)	$	(191	)	$	-
Facilities consolidation		-		491		(124	)		7			374
Total	$	-	$	3,780	$	(3,222	)	$	(184	)	$	374

	Fair Value Measurements at December 31, 2010 Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total			(Level 1)		(Level 2)		(Level 3)
Repurchase agreements	$	1,428		$	1,428	$	-	$	-
Money market funds		6,340			6,340		-		-
Warrant liabilities		(4,245	)		-		-		(4,245	)
Total	$	3,523		$	7,768	$	-	$	(4,245	)

	December 31, 2010			December 31, 2009
Expected volatility		93.5 - 94.9	%		77.0 - 77.7	%
Risk-free interest rate		2.0	%		2.4 - 2.7	%
Expected term	3.9 - 4.1 years			4.4 - 5.0 years

	Warrant Liabilities
Balance at December 31, 2008	$	-
Initial fair value of warrants		6,541
Change in fair value of warrant liabilities included in other income (expense)		(1,781	)
Balance at December 31, 2009		4,760
Initial fair value of warrants		4,382
Reclassification of warrant liability to equity upon exercise of warrants		(2,615	)
Change in fair value of warrant liabilities included in other income (expense)		(2,282	)
Balance at December 31, 2010	$	4,245

	Unvested Number of Shares			Weighted- Average Grant- Date Fair Value
Unvested balance at December 31, 2009		696,786		$	20.85
Granted		978,264			3.58
Vested		(574,699	)		8.86
Forfeited		(28,173	)		14.62
Unvested balance at December 31, 2010		1,072,178			5.69

	Operating Leases
2011		5,219
2012		4,883
2013		2,865
2014		785
Thereafter		-
Minimum lease payments	$	13,752

	Consolidated Statements of Operations
	Quarter Ended
	March 31			June 30			September 30			December 31
	(In thousands, except per share amounts)
2010
Total revenues (1)	$	7,202		$	5,942		$	10,897		$	9,601
Total operating costs and expenses (2)		23,140			24,372			27,542			25,691
Other income (expense), net		(5,847	)		2,866			3,013			(1,657	)
Net loss		(21,785	)		(15,580	)		(13,633	)		(17,758	)
Basic net loss per common share	$	(1.36	)	$	(0.93	)	$	(0.69	)	$	(0.84	)
Diluted net loss per common share	$	(1.36	)	$	(0.93	)	$	(0.69	)	$	(0.84	)

2009
Total revenues (1)	$	39,704		$	9,706		$	27,423		$	21,597
Total operating costs and expenses (2)		25,930			19,474			20,643			19,423
Other expense, net (3)		(1,735	)		(529	)		(4,872	)		453
Net income (loss)		6,239			(10,210	)		1,538			2,983
Basic net income (loss) per common share	$	0.66		$	(1.02	)	$	0.14		$	0.22
Diluted net income (loss) per common share	$	0.64		$	(1.02	)	$	0.13		$	0.22

Exhibit Number		Index to Exhibits

1.1		Underwriting Agreement dated February 2, 2010 (Exhibit 10.1)1

3.1		Memorandum of Continuance of XOMA Ltd. (Exhibit 3.4)2

3.2		Bye-Laws of XOMA Ltd. (as amended) (Exhibit 3.2)3

4.1		Shareholder Rights Agreement dated as of February 26, 2003 by and between XOMA Ltd. and Mellon Investor Services LLC as Rights Agent (Exhibit 4.1)3

4.1A		Amendment to Shareholder Rights Agreement dated December 21, 2010 between XOMA Ltd. and Wells Fargo Bank, N.A. as Rights Agent*

4.2		Resolution Regarding Preferences and Rights of Series A Preference Shares (Exhibit A to Exhibit 4.1)3

4.3		Resolution Regarding Preferences and Rights of Series B Preference Shares (Exhibit B to Exhibit 3)4

4.4		Indenture between XOMA Ltd. and Wells Fargo Bank, National Association, as trustee, relating to the Company’s 6.50% Convertible SNAPs SM due February 1, 2012 (Exhibit 2)5

4.5		Form of Warrant (May 2009 Warrants) (Exhibit 10.2)6

4.5A		Form of Amended and Restated Warrant (May 2009 Warrants) (Exhibit 10.5)1

4.6		Form of Warrant (June 2009 Warrants) (Exhibit 10.2)7

4.6A		Form of Amended and Restated Warrant (June 2009 Warrants) (Exhibit 10.6)1

4.7		Form of Warrant (February 2010 Warrants) (Exhibit 10.2)1

10.1		1981 Share Option Plan as amended and restated (Exhibit 10.1)8

10.1A		Form of Share Option Agreement for 1981 Share Option Plan (Exhibit 10.1A)9

10.2		Restricted Share Plan as amended and restated (Exhibit 10.2)8

10.2A		Form of Share Option Agreement for Restricted Share Plan (Exhibit 10.2A)9

10.3		2007 CEO Share Option Plan (Exhibit 10.7)10

10.4		1992 Directors Share Option Plan as amended and restated (Exhibit 10.3)8

10.4A		Form of Share Option Agreement for 1992 Directors Share Option Plan (initial grants) (Exhibit 10.3A)9

10.4B		Form of Share Option Agreement for 1992 Directors Share Option Plan (subsequent grants) (Exhibit 10.3B)9

10.5		2002 Director Share Option Plan (Exhibit 10.10)11

10.6		2010 Long Term Incentive and Share Award Plan (Exhibit 10.5)8

10.6A		Form of Share Option Agreement for 2010 Long Term Incentive and Share Award Plan (Exhibit 10.5A)8

10.7		Management Incentive Compensation Plan as amended and restated (Exhibit 10.3)12

10.7A		CEO Incentive Compensation Plan (Exhibit 10.4A)9

10.7B		Bonus Compensation Plan (Exhibit 10.4B)9

10.8		1998 Employee Share Purchase Plan as amended and restated (Exhibit 10.4)8

10.9		Form of Amended and Restated Indemnification Agreement for Officers (Exhibit 10.6)13

10.9A		Form of Amended and Restated Indemnification Agreement for Employee Directors (Exhibit 10.7)13

10.9B		Form of Amended and Restated Indemnification Agreement for Non-employee Directors (Exhibit 10.8)13

10.10		Amended and Restated Employment Agreement entered into between XOMA (US) LLC and Steven B. Engle, dated as of December 30, 2008 (Exhibit 10.7)14

10.10A		Amended and Restated Employment Agreement entered into between XOMA (US) LLC and Patrick J. Scannon, dated as of December 30, 2008 (Exhibit 10.7A)14

10.10B		Amended and Restated Employment Agreement entered into between XOMA (US) LLC and Fred Kurland, dated as of December 29, 2008 (Exhibit 10.7B)14

10.10C		Amended and Restated Employment Agreement entered into between XOMA (US) LLC and Christopher J. Margolin, dated as of December 30, 2008 (Exhibit 10.7C)14

10.10D		Amended and Restated Employment Agreement entered into between XOMA (US) LLC and Charles C. Wells, dated as of December 30, 2008 (Exhibit 10.7D)14

10.11		Consulting Agreement effective as of August 3, 2007 between XOMA (US) LLC and John L. Castello (Exhibit 10.8)10

10.12		Form of Change of Control Severance Agreement entered into between XOMA Ltd. and certain of its executives, with reference schedule*

10.13		Lease of premises at 890 Heinz Street, Berkeley, California dated as of July 22, 1987 (Exhibit 10.12)15

10.14		Lease of premises at Building E at Aquatic Park Center, Berkeley, California dated as of July 22, 1987 and amendment thereto dated as of April 21, 1988 (Exhibit 10.13) 15

10.15		Lease of premises at Building C at Aquatic Park Center, Berkeley, California dated as of July 22, 1987 and amendment thereto dated as of August 26, 1987 (Exhibit 10.14)15

10.16		Letter of Agreement regarding CPI adjustment dates for leases of premises at Buildings C, E and F at Aquatic Park Center, Berkeley, California dated as of July 22, 1987 (Exhibit 10.15)15

10.17		Lease of premises at 2910 Seventh Street, Berkeley, California dated March 25, 1992 (Exhibit 10.16)15

10.17A		Fifth amendment to lease of premises at 2910 Seventh Street, Berkeley, California dated June 1, 2006 (Exhibit 10.58)16

10.18		Lease of premises at 5860 and 5864 Hollis Street, Emeryville, California dated as of November 2, 2001 (with addendum) (Exhibit 10.19)17

10.19		Lease of premises at 2850 Seventh Street, Second Floor, Berkeley, California dated as of December 28, 2001 (with addendum and guaranty) (Exhibit 10.20)17

10.20		Amended and Restated Research and License Agreement dated September 1, 1993, between the Company and New York University (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.28)15

10.20A		Third Amendment to License Agreement dated June 12, 1997, between the Company and New York University (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.28A)15

10.20B		Fourth Amendment to License Agreement dated December 23, 1998, between the Company and New York University (Exhibit 10.22B)18

10.20C		Fifth Amendment to License Agreement dated June 25, 1999, between the Company and New York University (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.21C)19

10.20D		Sixth Amendment to License Agreement dated January 25, 2000, between the Company and New York University (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.1)20

10.20E		Seventh Amendment to License Agreement by and among New York University, XOMA Technology Limited and XOMA Ireland Limited effective as of November 10, 2004 (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 3)21

10.21		Second Amended and Restated Collaboration Agreement dated January 12, 2005, by and between XOMA (US) LLC and Genentech, Inc. (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)22

10.21A		Agreement related to LUCENTIS® License Agreement and RAPTIVA® Collaboration Agreement dated September 9, 2009, by and between XOMA (Bermuda) Ltd., XOMA (US) LLC and Genentech, Inc. (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.18A)23

10.22		License Agreement by and between XOMA Ireland Limited and MorphoSys AG, dated as of February 1, 2002 (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.43)24

10.23		Amended and Restated License Agreement by and between XOMA Ireland Limited and DYAX Corp., dated as of October 27, 2006 (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.32)13

10.24		License Agreement by and between XOMA Ireland Limited and Cambridge Antibody Technology Limited, dated as of December 22, 2002 (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.46)3

10.25		License Agreement, dated as of December 29, 2003, by and between Diversa Corporation and XOMA Ireland Limited (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 2)25

10.25A		GSSM License Agreement, effective as of May 2, 2008, by and between Verenium Corporation and XOMA Ireland Limited (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed seperately with the Securities and Exchange Commission)*

10.26		Agreement, dated February 27, 2004, by and between Chiron Corporation and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.50)26

10.26A		Research, Development and Commercialization Agreement, dated as of May 26, 2005, by and between Chiron Corporation and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.2)27

10.26B		Secured Note Agreement, dated as of May 26, 2005, by and between Chiron Corporation and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.3)27

10.26C		Amended and Restated Research, Development and Commercialization Agreement, executed November 7, 2008, by and between Novartis Vaccines and Diagnostics, Inc. (formerly Chiron Corporation) and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)28

10.26D		Manufacturing and Technology Transfer Agreement, executed December 16, 2008, by and between Novartis Vaccines and Diagnostics, Inc. (formerly Chiron Corporation) and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)28

10.27		Collaboration Agreement, dated as of September 23, 2004, by and between Aphton Corporation and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 2)29

10.28		Agreement dated March 8, 2005, between XOMA (US) LLC and the National Institute of Allergy and Infectious Diseases (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.53)22

10.28A		Agreement dated July 28, 2006, between XOMA (US) LLC and the National Institute of Allergy and Infectious Diseases (Exhibit 10.60)16

10.28B		Agreement dated September 15, 2008, between XOMA (US) LLC and the National Institute of Allergy and Infectious Diseases (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.39)30

10.28C		Second Amendment to Agreement dated September 15, 2008, between XOMA (US) LLC and the National Institute of Allergy and Infectious Diseases (Exhibit 10.24C) 31

10.29		License Agreement, effective as of June 20, 2005, by and between Merck & Co., Inc. and XOMA Ireland Limited (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.4)27

10.30		Form of Dealer Manager Agreement relating to the Company’s 6.50% Convertible SNAPs SM due February 1, 2012 (Exhibit 1.1)32

10.30A		Form of Placement Agreement relating to the Company’s 6.50% Convertible SNAPs SM due February 1, 2012 (Exhibit 1.2)32

10.31		Collaboration Agreement dated as of May 22, 2006, by and between Schering Corporation, acting through its Schering-Plough Research Institute division, and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.59)16

10.32		Collaboration Agreement, dated as of November 1, 2006, between Takeda Pharmaceutical Company Limited and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.46)13

10.32A		First Amendment to Collaboration Agreement, effective as of February 28, 2007, between Takeda Pharmaceutical Company Limited and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.48)33

10.32B		Second Amendment to Collaboration Agreement, effective as of February 9, 2009, among Takeda Pharmaceutical Company Limited and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)28

10.33		Loan Agreement, dated as of November 9, 2006, between Goldman Sachs Specialty Lending Holdings, Inc., XOMA (US) LLC and XOMA Ltd. (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.47)13

10.33A		Amended & Restated Loan Agreement, dated as of May 9, 2008 between Goldman Sachs Specialty Lending Holdings, Inc., XOMA Ltd. and XOMA (US) LLC (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.37)34

10.34		License Agreement, effective as of August 27, 2007, by and between Pfizer Inc. and XOMA Ireland Limited (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 2)35

10.35		Common Stock Purchase Agreement, dated as of October 21, 2008, by and between XOMA Ltd. and Azimuth Opportunity Ltd. (Exhibit 10.1)36

10.35A		Common Stock Purchase Agreement, dated as of July 23, 2010, by and between XOMA Ltd. and Azimuth Opportunity Ltd. (Exhibit 10.1) 37

10.36		Securities Purchase Agreement dated May 15, 2009, between XOMA Ltd. and the investors named therein (Exhibit 10.1)6

10.36A		Engagement Letter dated May 15, 2009 (Exhibit 10.3)6

10.36B		Securities Purchase Agreement dated June 5, 2009, between XOMA Ltd. and the investors named therein (Exhibit 10.1)7

10.36C		Engagement Letter dated June 4, 2009 (Exhibit 10.3)7

10.37		Discovery Collaboration Agreement dated September 9, 2009, by and between XOMA Development Corporation and Arana Therapeutics Limited (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.35) 38

10.38		At Market Issuance Sales Agreement dated July 14, 2009, between XOMA Ltd. and Wm Smith & Co. (Exhibit 10.36) 23

10.38A		At Market Issuance Sales Agreement dated October 26, 2010, between XOMA Ltd. and Wm Smith & Co. and McNicholl, Lewis & Vlak LLC (Exhibit 10.1) 39

10.38B		At Market Issuance Sales Agreement dated February 4, 2011, between XOMA Ltd. and McNicholl, Lewis & Vlak LLC (Exhibit 1.2) 40

10.39		Discovery Collaboration Agreement dated October 29, 2009, by and between XOMA Development Corporation and The Chemo-Sero-Therapeutic Research Institute (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)28

10.40		Warrant Amendment Agreement dated February 2, 2010 (May 2009 Warrants) (Exhibit 10.3)1

10.40A		Form of Warrant Amendment Agreement dated February 2, 2010 (June 2009 Warrants) (Exhibit 10.4)1

10.41		Royalty Purchase Agreement, dated as of August 12, 2010, by and among XOMA CDRA LCC, XOMA (US) LLC, XOMA Ltd. and the buyer named therein (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission) (Exhibit 10.38) 31

10.42		Collaboration and License Agreement dated as of December 30, 2010, by and between XOMA Ireland Limited, Les Laboratoires Servier and Institut de Recherches Servier (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)*

10.42A		Loan Agreement dated as of December 30, 2010, by and between XOMA Ireland Limited and Les Laboratoires Servier (with certain confidential information omitted, which omitted information is the subject of a confidential treatment request and has been filed separately with the Securities and Exchange Commission)*

21.1		Subsidiaries of the Company*

23.1		Consent of Independent Registered Public Accounting Firm*

31.1		Certification of Steven B. Engle, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification of Fred Kurland, filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification of Steven B. Engle, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification of Fred Kurland, furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

99.1		Press Release dated March 10, 2011 furnished herewith

Footnotes:

*		Filed herewith.
1		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed February 2, 2010.
2		Incorporated by reference to the referenced exhibit to the Company’s Registration Statement on Form S-4 filed November 27, 1998, as amended.
3		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
4		Incorporated by reference to the referenced exhibit to the Company’s Amendment No. 1 to Form 8-K/A filed April 18, 2003.
5		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed February 13, 2006.
6		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed May 19, 2009.
7		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed June 10, 2009.
8		Incorporated by reference to the referenced exhibit to the Company’s Registration Statement on Form S-8 (File No. 333-171429) filed December 27, 2010.
9		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as amended.
10		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed August 7, 2007.
11		Incorporated by reference to the referenced exhibit to the Company’s Registration Statement on Form S-8 (File No. 333-151416) filed June 4, 2008.
12		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed November 6, 2007.
13		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
14		Incorporated by reference to the referenced exhibit to the Company’s Amendment No. 2 to Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009.
15		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as amended.
16		Incorporated by reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006.
17		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
18		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
19		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
20		Incorporated by reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000.
21		Incorporated by reference to the referenced exhibit to the Company’s Amendment No. 1 on Form 8-K/A filed November 30, 2004.
22		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.
23		Incorporated by reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended Septemer 30, 2009 filed November 9, 2009.
24		Incorporated by reference to the referenced exhibit to Amendment No. 2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002 filed on December 12, 2002.
25		Incorporated by reference to the referenced exhibit to the Company’s Amendment No. 2 on Form 8-K/A filed March 19, 2004.
26		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003.
27		Incorporated by reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005.
28		Incorporated by reference to the referenced exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
29		Incorporated by reference to the referenced exhibit to the Company’s Amendment No. 1 on Form 8-K/A filed October 26, 2004.
30		Incorporated by reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008.
31		Incorporated by reference to the referenced exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010 filed on November 4, 2010.
32		Incorporated by reference to the referenced exhibit to Amendment No. 2 to the Company’s Registration Statement on Form S-4 filed January 11, 2006.
33		Incorporated by reference to the referenced exhibit to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007 filed on March 5, 2010.
34		Incorporated by reference to the referenced exhibit to Amendment No. 2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008 filed on March 5, 2010.
35		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed September 13, 2007.
36		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed October 22, 2008.
37		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed July 23, 2010.
38		Incorporated by reference to the referenced exhibit to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed on March 5, 2010.
39		Incorporated by reference to the referenced exhibit to the Company’s Current Report on Form 8-K filed October 26, 2010.
40		Incorporated by reference to the referenced exhibit to the Company’s Registration Statement on Form S-3 (File No. 333-172197) filed February 11, 2011.

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

			ACCEPTED AND AGREED:

			Wells Fargo Bank, N.A.

			By:
			Name:	Jeffrey E. Seadschlag
			Title:	Vice President

Name	Paragraph 1(d)	Paragraph 4(c)(i)		Paragraph 4(c)(ii)
Steven B. Engle	24 months	2.0	24 months	24 months
Patrick J. Scannon, MD, PhD	18 months	1.5	18 months	18 months
Fred Kurland	18 months	1.5	18 months	18 months
Christopher J. Margolin	18 months	1.5	18 months	18 months
Charles C. Wells	18 months	1.5	18 months	18 months