ExhibIT 10.1

xoma corporation
2016 INCENTIVE COMPENSATION PLAN

SECTION 1
BACKGROUND AND PURPOSE

1.1Effective Date.  The Plan is adopted effective as of February 24, 2016.  

1.2Purpose of the Plan.  The purpose of the Plan is: (1) to motivate, attract,
reward and retain highly qualified employees who are important to the Company’s
success, and (2) to provide competitive compensation incentives relating
directly to the financial performance and long-term growth of the Company.  The
Plan is intended to permit the payment of bonuses that qualify as
Performance-Based Compensation.

SECTION 2
DEFINITIONS

The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

2.1“Actual Award” means as to any Performance Period, the actual award (if any)
payable to a Participant for the Performance Period. Each Actual Award is
determined by the Payout Formula for the Performance Period, subject to the
Committee’s authority under Section 3.6 to modify the award otherwise determined
by the Payout Formula.

2.2“Affiliate” means any corporation or other entity (including, but not limited
to, partnerships and joint ventures) controlled by the Company.

2.3“Base Salary” means as to any Performance Period, the Participant’s
annualized salary rate for the Performance Period. Such Base Salary shall be
determined before both (a) deductions for taxes or benefits, and (b) deferrals
of compensation pursuant to any Company or Affiliate sponsored plans.

2.4“Board” means the Board of Directors of the Company.

2.5“Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated thereunder, and any comparable
provision of any future legislation or regulation amending, supplementing or
superseding such section or regulation.

2.6“Committee” means the Compensation Committee of the Board, or any other
committee appointed by the Board (pursuant to Section 5.1) to administer the
Plan.

2.7“Company” means XOMA Corporation, a Delaware corporation, or any successor
thereto.

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2.8“Determination Date” means as to an award intended to qualify as
Performance-Based Compensation, the latest possible date that will not
jeopardize the award’s qualification as Performance-Based Compensation. 

2.9“Employee” means any employee of the Company or of an Affiliate, whether such
employee is so employed at the time the Plan is adopted or becomes so employed
subsequent to the adoption of the Plan.

2.10“Fiscal Year” means the fiscal year of the Company.

2.11“Maximum Award” means any maximum adopted by the Committee as to any
Participant for any Performance Period.  With respect to an award intended to
qualify as Performance Based Compensation such maximum will be formalized in the
Plan document and approved by the Company’s stockholders.

2.12“Participant” means as to any Performance Period, an Employee who has been
selected by the Committee for participation in the Plan for that Performance
Period.

2.13“Payout Formula” means as to any Performance Period, the formula or payout
matrix established by the Committee pursuant to Section 3.4 in order to
determine the Actual Awards (if any) to be paid to Participants. The formula or
matrix may differ from Participant to Participant.

2.14“Performance-Based Compensation” means bonuses under the Plan qualifying as
“performance-based compensation” under Section 162(m) of the Code.

2.15“Performance Goals” means the goal(s) (or combined goal(s)) determined by
the Committee (in its discretion) to be applicable to a Participant for a Target
Award for a Performance Period. As determined by the Committee, the Performance
Goals for any Target Award applicable to a Participant may provide for a
targeted level or levels of achievement using measures including one or more of
the following measures: (i) share price, (ii) earnings per share, (iii) total
stockholder return, (iv) operating margin, (v) gross margin, (vi) return on
equity, (vii) return on assets, (viii) return on investment, (ix) operating
income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii)
revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation,
(xvi) economic value added, (xvii) market share, (xviii) net income, (xix)
personal goals, (xx) sales, (xxi) improvements in capital structure, (xxii)
earnings before interest, taxes and amortization, (xxiii) budget comparisons,
(xxiv) controllable profits, (xxv) expense management, (xxvi) improvements in
capital structure), (xxvii) profit margins, (xxviii) operating or gross margin,
(xxix) profitability of an identifiable business unit or product, (xxx) cash
flow, operating cash flow, or cash flow or operating cash flow per share, (xxxi)
reduction in costs, (xxxii) return on capital, (xxxiii) improvement in or
attainment of expense levels or working capital level, and (xxxiv) earnings
before interest, taxes, depreciation and amortization.  The performance criteria
may be applicable to the Company or an Affiliate as a whole or a segment of the
Company or an Affiliate.  In addition, with respect to awards intended to
qualify as Performance-Based Compensation, the performance criteria shall be
calculated in accordance with generally accepted accounting principles, but
excluding the effect (whether positive or negative) of any change in accounting
standards and any extraordinary, unusual or nonrecurring item, as determined by
the Committee, occurring after the establishment of the Performance Goals for
the Performance Period.  Each such adjustment, if any, shall be made solely for
the purpose of providing a consistent basis from period to period for the
calculation of the Performance Goals in order to prevent the dilution or
enlargement of a Participant’s rights with respect to an award intended to
qualify as Performance-Based Compensation. The Performance Goals may differ from
Participant to Participant and from award to award.  Awards not intended to
qualify as Performance-Based Compensation may take into account other measures,
including subjective measures.

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With respect to awards not intended to qualify as Performance-Based
Compensation, the performance criteria may include the effect (whether positive
or negative) of any change in accounting standards and any extraordinary,
unusual or nonrecurring item, as determined by the Committee, occurring after
the establishment of the Performance Goals for the Performance Period.  

2.16“Performance Period” means any period of time which does not exceed five
Fiscal Years, as determined by the Committee in its sole discretion.

2.17“Plan” means the XOMA Corporation Incentive Compensation Plan, as set forth
in this instrument and as hereafter amended from time to time.

2.18“Shares” means shares of the Company’s common stock.

2.19“Target Award” means the target award payable under the Plan to a
Participant for the Performance Period, expressed as a percentage of his or her
Base Salary or a specific dollar amount, as determined by the Committee in
accordance with Section 3.3.

2.20“Termination of Employment” means a cessation of the employee-employer
relationship between an Employee and the Company or an Affiliate for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability, retirement, or the disaffiliation of an Affiliate,
but excluding any such termination where there is a simultaneous reemployment by
the Company or an Affiliate.

SECTION 3
SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

3.1Selection of Participants.  The Committee, in its sole discretion, shall
select the Employees who shall be Participants for any Performance Period. The
Committee, in its sole discretion, may also designate as Participants one or
more individuals (by name or position) who are expected to become Employees
during a Performance Period.  Participation in the Plan is in the sole
discretion of the Committee, and on a Performance Period by Performance Period
basis. Accordingly, an Employee who is a Participant for a given Performance
Period in no way is guaranteed or assured of being selected for participation in
any subsequent Performance Period.

3.2Determination of Performance Goals.  The Committee, in its sole discretion,
shall establish the Performance Goals for each Participant for the Performance
Period. Such Performance Goals shall be set forth in writing.  The Committee may
also provide for discretionary awards that do not require achievement of
Performance Goals.

3.3Determination of Target Awards.  The Committee, in its sole discretion, shall
establish a Target Award for each Participant. Each Participant’s Target Award
shall be determined by the Committee in its sole discretion, and each Target
Award shall be set forth in writing.

3.4Determination of Payout Formula or Formulae.  The Committee, in its sole
discretion, shall establish a Payout Formula or Formulae for purposes of
determining the Actual Award (if any) payable to each Participant. Each Payout
Formula shall (a) be in writing, (b) be based on a comparison of actual
performance to the Performance Goals, (c) provide for the payment of a
Participant’s Target Award if the Performance Goals for the Performance Period
are achieved, and (d) provide for an Actual Award greater than or less than the
Participant’s Target Award, depending upon the extent to which actual
performance exceeds or falls below the Performance Goals. The portion of an
award that is discretionary may result in an Actual Award not tied to
performance against a Performance Goal.  Notwithstanding the

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preceding, with respect to an Actual Award intended to qualify as
Performance-Based Compensation, in no event shall a Participant’s Actual Award
for any Performance Period exceed his or her Maximum Award. 

3.5Date for Determinations.  With respect to awards intended to qualify as
Performance-Based Compensation, the Committee shall make all determinations
under Section 3.1 through 3.4 on or before the Determination Date.

3.6Determination of Actual Awards.  After the end of each Performance Period,
the Committee shall certify in writing the extent to which the Performance Goals
applicable to each Participant for the Performance Period were achieved or
exceeded. The Actual Award for each Participant shall be determined by applying
the Payout Formula to the level of actual performance that has been certified by
the Committee and adding to the result any discretionary component.
Notwithstanding any contrary provision of the Plan, the Committee, in its sole
discretion, may (a) eliminate or reduce the Actual Award payable to any
Participant below that which otherwise would be payable under the Payout
Formula, and (b) determine whether, to what extent and under what circumstances
a Participant will receive an Actual Award in the event the Participant incurs a
Termination of Employment prior to the date the Actual Award is to be paid.  In
addition, notwithstanding any contrary provision of the Plan, with respect to an
Actual Award not intended to qualify as Performance-Based Compensation, the
Committee, in its sole discretion, may increase the Actual Award payable to any
Participant above that which otherwise would be payable under the Payout
Formula.  To the extent in compliance with Section 162(m) of the Code for awards
intended to qualify as Performance-Based Compensation, for any Performance
Period, the Committee may make such other or additional awards to any
Participant as it deems appropriate, so long as the aggregate awards made under
the Plan do not exceed the maximum reserved pool of cash available for awards
for the Performance Period (if a maximum has been established by the Committee).

SECTION 4
PAYMENT OF AWARDS

4.1Right to Receive Payment.  Each Actual Award that may become payable under
the Plan shall be paid solely from the general assets of the Company or the
Affiliate that employs the Participant (as the case may be), as determined by
the Committee. Nothing in this Plan shall be construed to create a trust or to
establish or evidence any Participant’s claim of any right to payment of an
Actual Award other than as an unsecured general creditor with respect to any
payment to which he or she may be entitled.  If the Committee determines as of
the date of grant of an award that the award is intended to qualify as
Performance-Based Compensation, no amount will be paid pursuant to such award
until any stockholder approval required under Section 162(m) of the Code has
been obtained.

4.2Timing of Payment.  Subject to Section 3.6 and Section 6.7, payment of each
Actual Award shall be made as soon as administratively practicable.  It is
intended that, absent special circumstances, performance will be determined
within fifteen (15) days of the end of a Performance Period, and the Actual
Award will be paid within fifteen (15) days after the Committee makes its
determination. In no event will payment be made later than March 15 of the
calendar year following the calendar year which includes the last day of the
Performance Period during which the award was earned.

4.3Form of Payment.  Each Actual Award normally shall be paid in cash (or its
equivalent) in a single lump sum. However, the Committee, in its sole
discretion, may declare any Actual Award, in whole or in part, payable in Shares
of restricted stock, restricted stock units, options and/or other stock awards
granted under one of the Company’s stock plans. The number of Shares of
restricted stock,

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restricted stock units, options and/or other stock awards granted shall be
determined in the sole discretion of the Committee.  

SECTION 5
ADMINISTRATION

5.1Committee is the Administrator.  The Plan shall be administered by the
Committee. With respect to awards intended to qualify as Performance-Based
Compensation, the Committee shall consist of not less than two (2) members of
the Board. The members of the Committee shall be appointed from time to time by,
and serve at the pleasure of, the Board. With respect to awards intended to
qualify as Performance-Based Compensation, each member of the Committee shall
qualify as an “outside director” under Section 162(m) of the Code. If it is
later determined that one or more members of the Committee do not so qualify,
actions taken by the Committee prior to such determination shall be valid
despite such failure to qualify.

5.2Committee Authority.  It shall be the duty of the Committee to administer the
Plan in accordance with the Plan’s provisions. The Committee shall have all
powers and discretion necessary or appropriate to administer the Plan and to
control its operation, including, but not limited to, the power to (a) determine
which Employees shall be granted awards, (b) prescribe the terms and conditions
of awards, (c) interpret the Plan and the awards, (d) adopt such procedures and
subplans as are necessary or appropriate to permit participation in the Plan by
Employees who are foreign nationals or employed outside of the United States,
(e) bifurcate the Plan and treat Participants differently as provided by
Section 8.1, (f) adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith, and (g) interpret, amend or
revoke any such rules.

5.3Decisions Binding.  All determinations and decisions made by the Committee,
the Board, and any delegate of the Committee pursuant to the provisions of the
Plan shall be final, conclusive, and binding on all persons, and shall be given
the maximum deference permitted by law.

5.4Delegation by the Committee.  The Committee, in its sole discretion and on
such terms and conditions as it may provide, may delegate all or part of its
authority and powers under the Plan to one or more directors and/or officers of
the Company; provided, however, that the Committee may delegate its authority
and powers only with respect to awards that are not intended to qualify as
Performance-Based Compensation and only to the extent consistent with the rules
and regulations of the principal securities market on which the Company’s
securities are listed or qualified for trading.

SECTION 6
GENERAL PROVISIONS

6.1Tax Withholding.  The Company or an Affiliate, as determined by the
Committee, shall withhold all applicable taxes from any Actual Award, including
any federal, state and local taxes.

6.2No Effect on Employment.  Nothing in the Plan shall interfere with or limit
in any way the right of the Company or an Affiliate, as applicable, to terminate
any Participant’s employment or service at any time, with or without cause. For
purposes of the Plan, transfer of employment of a Participant between the
Company and any one of its Affiliates (or between Affiliates) shall not be
deemed a Termination of Employment. Employment with the Company and its
Affiliates is on an at-will basis only. Except as may be provided in an
employment contract with the Participant, the Company expressly reserves the
right, which may be exercised at any time and without regard to when during or
after a Performance Period such exercise occurs, to terminate any individual’s
employment or service with or

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without cause, and to treat him or her without regard to the effect which such
treatment might have upon him or her as a Participant. 

6.3Participation.  No Employee shall have the right to be selected to receive an
award under this Plan, or, having been so selected, to be selected to receive a
future award. Participation in this Plan shall not give any Employee the right
to participate in any other benefit, stock or deferred compensation plan of the
Company or any Affiliate.

6.4Successors.  All obligations of the Company under the Plan, with respect to
awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business or assets of the Company.

6.5Beneficiary Designations.  If permitted by the Committee, a Participant under
the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid
award shall be paid in the event of the Participant’s death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Committee. In the
absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate.

6.6Nontransferability of Awards.  No award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution, or to the limited extent
provided in Section 6.6. All rights with respect to an award granted to a
Participant shall be available during his or her lifetime only to the
Participant.

6.7Deferrals.  The Committee, in its sole discretion, may permit a Participant
to defer receipt of the payment of cash or stock that would otherwise be
delivered to a Participant under the Plan. Any such deferral elections shall be
subject to such rules and procedures as shall be determined by the Committee in
its sole discretion.

SECTION 7
AMENDMENT, TERMINATION AND DURATION

7.1Amendment, Suspension or Termination.  The Board or the Committee, each in
its sole discretion, may amend or terminate the Plan, or any part thereof, at
any time and for any reason. No award may be granted during any period of
suspension or after termination of the Plan.

7.2Duration of the Plan.  The Plan shall commence on the date specified herein,
and subject to Section 7.1 (regarding the Board’s or the Committee’s right to
amend or terminate the Plan), shall remain in effect thereafter.

SECTION 8
LEGAL CONSTRUCTION

8.1Section 162(m) Conditions; Bifurcation of Plan.  With respect to awards
intended to qualify as Performance-Based Compensation, it is the intent of the
Company that the Plan and the awards paid under the Plan satisfy any applicable
requirements of Section 162(m) of the Code, and, with respect to such awards,
any provision, application or interpretation of the Plan inconsistent with this
intent shall be disregarded. The provisions of the Plan may be bifurcated by the
Board or the Committee at any time so that certain provisions of the Plan, or
any award, required in order to satisfy the requirements of Section 162(m) of
the Code are only applicable to awards intended to qualify as Performance-Based

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Compensation.  Notwithstanding the foregoing, the Committee may, in its sole
discretion, grant awards under the Plan that are not intended to qualify as
Performance-Based Compensation. 

8.2Gender and Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

8.3Severability.  In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

8.4Requirements of Law.  The granting of awards under the Plan shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

8.5Governing Law.  The Plan and all awards shall be construed in accordance with
and governed by the laws of the State of California, but without regard to its
conflict of law provisions.

8.6Captions.  Captions are provided herein for convenience only, and shall not
serve as a basis for interpretation or construction of the Plan.

 

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