XOMA CORPORATION (NASDAQ:XOMA) Files An 8-K Entry into a Material Definitive Agreement

Item1.01 Entry Into a Material Definitive Agreement

On December21, 2016, XOMA Corporation (XOMA) and its wholly owned
subsidiary XOMA (US) LLC (Seller) entered into two Royalty
Interest Acquisition Agreements (together, the Acquisition
Agreements) with HealthCare Royalty Partners II, L.P. (HCRP).

Under the first Acquisition Agreement, Seller sold its right to
receive royalties on future sales of products subject to a
License Agreement, dated August18, 2005, between Seller and Wyeth
Pharmaceuticals (now Pfizer, Inc.) (the Pfizer License Agreement)
for a payment of $6,500,000 upfront, plus the potential for
additional payments totaling $4,000,000 in the event of the
achievement of three specified net sales milestones in 2017, 2018
and 2019.

Under the second Acquisition Agreement, Seller sold all rights to
milestone payments and royalties under an Amended and Restated
License Agreement dated October27, 2006 between Seller and Dyax
Corp. (the Dyax License Agreement and, together with the Pfizer
License Agreement, the License Agreements) for a payment of
$11,500,000.

The Acquisition Agreements contain standard representations and
warranties of XOMA and Seller, including with respect to
organization, authorization, intellectual property matters and
tax matters, and certain negative covenants with respect to the
License Agreements, as well as indemnification by XOMA and Seller
of HCRP against certain losses.

On December21, 2016, Seller also entered into two Protective
Rights Agreement (together, the PRAs) with HCRP. Under each PRA,
Seller granted to HCRP, among other things, a security interest
in all of its right, title and interest in, to and under the
Sellers rights to receive payments under the License Agreements
and certain related rights and proceeds thereof. The security
interests are limited to the rights to receive payments under the
License Agreements.

The above description of the Acquisition Agreements is a summary
of their material terms, does not purport to be complete and is
qualified in its entirety by reference to the Acquisition
Agreements which will be filed as exhibits to XOMAs Annual Report
on Form 10-K for the year ending December31, 2016.

Additionally, on December21, 2016, the XOMA entities entered into
Amendment No.1 (the Amendment) to the Loan and Security
Agreement, dated February27, 2015, by and among XOMA, XOMA (US)
LLC, XOMA Commercial LLC and Hercules Technology Growth Capital,
Inc. (Hercules). Under the Amendment, Hercules agreed to release
its security interest on the assets subject to the Acquisition
Agreements. In exchange, the XOMA entities will, in January 2017,
repay $10,000,000 of the current outstanding principal balance
owed to Hercules.

The above description of the Amendment is a summary of its
material terms, does not purport to be complete and is qualified
in its entirety by reference to the Amendment which will be filed
as an exhibit to XOMAs Annual Report on Form 10-K for the year
ending December31, 2016.

Item2.01 Completion of Acquisition or Disposition of
Assets

The information set forth in Item1.01 of this Current Report on
Form 8-K is incorporated herein by reference.

Item2.05 Costs Associated with Exit or Disposal
Activities

On December19, 2016, the Board of Directors of XOMA approved a
restructuring of XOMAs business. The restructuring includes a
reduction-in-force in which XOMA will reduce its headcount by 57
positions. The restructuring is based on XOMAs decision to focus
its research and development efforts on clinical development,
with an initial focus on the XOMA 358 clinical programs.

In connection with the foregoing changes to the Companys
business, the Company anticipates it will incur aggregate
restructuring charges of approximately $5.8 million. The
aggregate projected restructuring charges consist of
approximately $5.2 million in cash payments related to one-time
termination benefits, including severance, benefit continuation
costs and outplacement services associated with the elimination
of 57 positions and approximately $0.6 million in non-cash stock
compensation expense. These charges are expected to be recognized
in the fourth quarter of 2016. The Company may incur other
charges and will record these expenses in the appropriate period
as they are determined.

Item5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers

Retirement of Chief Executive Officer

On December21, 2016, John Varian, XOMAs Chief Executive Officer
and principal executive officer, retired, effective immediately.

Under Mr.Varians Officer Employment Agreement dated January4,
2012 and previously filed with the Securities and Exchange
Commission as Exhibit 10.10G to XOMAs Annual Report on Form 10-K
for the period ended December31, 2011, as a result of Mr.Varians
retirement, he is entitled to (i)a severance payment equal to his
current annual base salary, (ii)a severance payment equal to the
pro-rated portion of his current annual target bonus,
(iii)payment for benefits coverage for 12 months and
(iv)outplacement services for 12 months not to exceed $15,000 in
value. Under his Officer Employment Agreement, all payments and
benefits to Mr.Varian are subject to his compliance with
confidentiality and non-competition provisions.

Mr.Varian is also entitled to certain benefits under the terms of
a Retention Benefit Agreement dated March11, 2014, previously
filed with the Securities and Exchange Commission as Exhibit
10.28 to XOMAs Annual Report on Form 10-K for the period ended
December31, 2013. Upon his retirement, under the Retention
Benefit Agreement, each of the options and restricted stock units
held by Mr.Varian will become fully vested as of his retirement
date and each option will remain vested and exercisable for the
full term of such option until the expiration date set forth in
the applicable stock option agreement, but in no event later than
ten years following the grant date of the option.

Mr.Varian will continue to serve as a member of XOMAs Board of
Directors.

Appointment of New Chief Executive Officer

Effective December21, 2016, XOMAs Board of Directors appointed
James Neal, currently XOMAs Senior Vice President and Chief
Operating Officer, as XOMAs Chief Executive Officer and a member
of the Board of Directors. As Chief Executive Officer, Mr.Neal
will serve as XOMAs principal executive officer. In connection
with Mr.Neals promotion to Chief Executive Officer, the Board of
Directors approved a new equity compensation grant for Mr.Neal,
under which he will be granted options to purchase 100,000 shares
of XOMA common stock under the terms of XOMAs Amended and
Restated 2010 Long Term Incentive and Stock Award Plan.

Mr.Neal, 60, joined XOMA in 2009 as its Vice President, Business
Development and was promoted to his current position in 2015.
Prior to joining XOMA, Mr.Neal was Acting Chief Executive Officer
of Entelos, Inc., a leading biosimulation company. Previously in
2007, Entelos acquired Iconix Biosciences, a privately held
company where Mr.Neal served as Chief Executive Officer and
established multi-year collaborations with Bristol-Myers Squibb,
Abbott Labs, Eli Lilly and the U.S. Food and Drug Administration.
Mr.Neal earned his B.S. in Biology and his M.S. in Genetics and
Plant Breeding from the University of Manitoba, Canada, and holds
an Executive MBA degree from Washington University in St. Louis,
Missouri.

Departure of Vice President, Human Resources and Information
Technology

On December21, 2016, Chris Wells employment with XOMA as Vice
President, Human Resources and Information Technology was
terminated, effective as of June30, 2017.

Under Mr.Wells Officer Employment Agreement dated December16,
2011 he is entitled to (i)a severance payment equal to 0.75 of
his current base salary, (ii)a severance payment equal to the
pro-rated portion of his current annual target bonus (iii)payment
for benefits coverage for 9 months and (iv)outplacement services
for 12 months not to exceed $8,000 in value. Under his Officer
Employment Agreement, all payments and benefits to Mr.Wells are
subject to his compliance with confidentiality and
non-competition provisions.

Departure of Executive Vice President and Chief Scientific
Officer

On December21, 2016, Patrick J. Scannons employment with XOMA as
Vice President and Chief Scientific Officer was terminated.

Under Dr.Scannons Officer Employment Agreement dated March11,
2014, he is entitled to: (i)a severance payment equal to 0.75 of
his current base salary, (ii)a severance payment equal to the
pro-rated portion of his current annual target bonus (iii)payment
for benefits coverage for 9 months and (iv)outplacement services
for 12 months not to exceed $8,000 in value. Under his Officer
Employment Agreement, all payments and benefits to Dr.Scannon are
subject to his compliance with confidentiality and
non-competition provisions.

Dr.Scannon also resigned from his position as a member of the
Board of Directors, effective December21, 2016.

Item9.01 Financial Statements and Exhibits

About XOMA CORPORATION (NASDAQ:XOMA)