Non-Qualified Share Option Agreement Under the XOMA Ltd. Restricted Share Plan
Ex.
10.6
Under
the XOMA Ltd.
Restricted
Share Plan
|
(A)
|
Optionee:
|
(E)
|
Payroll
Number:
|
|
Xxxxxx
X. Xxxxx
|
|||
|
(B)
|
Grant
Date:
|
(F)
|
Expiration
Date:
|
|
August
3, 2007
|
August
3, 2017
|
||
|
(C)
|
Shares:
|
(G)
|
Exercise
Price:
|
|
500,000
|
$2.17
|
||
|
(D)
|
Share
Installments:
|
(H)
|
Option
Type:
|
|
125,000
shares become excerisable beginning August 3, 2008
375,000
shares become exercisable in 36 monthly installments beginning September
3, 2008
|
Non-Qualified
Share Option
|
XOMA
Ltd.
(the "Company") has granted you a non-qualified option to purchase the number
of
Common Shares shown in item (C) above (the "Optioned Shares") at the Exercise
Price per share shown in item (G) above. This option is subject to
the terms of the Company's Restricted Share Plan, as amended through May 23,
2006 (the "Plan") and to the terms and conditions set forth in this
Non-Qualified Share Option Agreement Under the XOMA Ltd. Restricted Share Plan
(the "Agreement").
The
details of your option are as follows:
1. Term;
Transfer. The term of this option commences on the Grant
Date shown in item (B) above and, except as provided in Section 3 and Subsection
5(a) hereof, expires at the close of business on the Expiration Date shown
in
item (F) above, which is 10 years from the Grant Date.
This
option may be transferred or assigned to your spouse or descendent (any such
spouse or descendent, your "Immediate Family Member") or a corporation,
partnership, limited liability company or trust so long as all of the
shareholders, partners, members or beneficiaries thereof, as the case may be,
are either you or your Immediate Family Member, provided that (i) there may
be
no consideration for any such transfer and (ii) subsequent transfers of the
transferred option will be prohibited other than by will or the laws of descent
and distribution. Following transfer, the option will continue to be
subject to the same terms and conditions as were applicable immediately prior
to
transfer, provided that for purposes of this Agreement any references to "you"
will refer to the transferee. The events of termination of employment
will continue to be applied with respect to you, following which the option
will
be exercisable by the transferee only to the extent, and for the periods
specified, in this Agreement.
2. Exercise
Schedule. Provided that you remain an
employee of or consultant to the Company (as determined in accordance with
Subsection 3(f) hereof), the option granted herein will become exercisable
(a)
as to 25% of such number of shares (rounded to the nearest whole integer),
upon
the first anniversary of this date of grant, and (b) as to the remaining 75%
of
such number of shares (rounded to the nearest whole integer), in thirty-six
(36)
equal and consecutive monthly installments beginning one year and one month
after this date of grant.
Exercisable
installments may be exercised in whole or in part in increments of 25 or more
shares and, to the extent not exercised, will accumulate and be exercisable
at
any time on or before the Expiration Date or sooner termination of the option
term.
3. Effect
of Termination of Employment.
(a) If
you
cease to be an employee of the Company at any time during the option term for
any reason other than as provided in Subsections (b), (c), (d) or (e) below,
then the period for exercising this option will be limited to the three-month
period commencing with the date of such cessation of employee status; provided
that, notwithstanding the foregoing, if you cease to be an employee of the
Company and immediately thereafter become a consultant to the Company at any
time during the option term, then the period for exercising this option will
not
be limited as aforesaid but will be limited to the three-month period commencing
with the date of cessation of consultant status, if during the option term;
and
provided further, that in no event will this option be exercisable at any time
after the Expiration Date. During any such limited period of
exercisability, this option may not be exercised for more than the number of
Optioned Shares (if any) for which it is exercisable at the date of your
cessation of employee or consultant status, as the case may be. Upon
the expiration of any such limited period of exercisability or (if earlier)
upon
the Expiration Date, this option will terminate and cease to be
outstanding.
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(b) If
you
die and cease by reason thereof to be either an employee of or a consultant
to
the Company at any time during the option term, then this option will become
fully exercisable on the date of death even if the option was not fully
exercisable prior to death, and will remain exercisable for a twelve-month
period following the date of death; provided, however, that in no event shall
this option be exercisable at any time after the Expiration
Date. Upon the expiration of such twelve-month period or (if earlier)
upon the Expiration Date, this option will terminate and cease to be
outstanding. Upon your death, the option will be exercisable by the
personal representative of your estate or by the person or persons to whom
the
option is transferred pursuant to Section 1 above, provided any such
exercise occurs prior to the earlier of (i) the expiration of the
twelve-month period following the date of your death or (ii) the specified
Expiration Date of the option term.
(c) If
you
become permanently disabled and cease by reason thereof to be either an employee
of or a consultant to the Company at any time during the option term, then
you
will have a period of twelve months (commencing with the date of such cessation
of employee or consultant status, as the case may be) during which to exercise
this option; provided, however, that in no event shall this option be
exercisable at any time after the Expiration Date. During such
limited period of exercisability, this option may not be exercised for more
than
the number of Optioned Shares (if any) for which this option is exercisable
at
the date of your cessation of employee or consultant status, as the case may
be. Upon the expiration of such limited period of exercisability or
(if earlier) upon the Expiration Date, this option will terminate and cease
to
be outstanding. You will be deemed to be permanently disabled if you
are, by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of not less than
twelve consecutive months or more, unable to perform your usual duties for
the
Company or its subsidiaries.
(d) If
you
retire at or after age fifty-five (55) and the sum of your age on the date
of
retirement plus years of full-time employment or consultancy with the Company
exceeds seventy (70) ("Retirement") and if by reason thereof you cease to be
either an employee of or consultant to the Company at any time during the option
term, then this option will become fully exercisable as of the date of
Retirement (even if the option was not fully exercisable prior to Retirement)
and will remain exercisable for a twelve-month period following the date of
Retirement. Upon the expiration of such twelve-month or shorter
period or (if earlier) on the Expiration Date, the option will terminate and
cease to be outstanding.
(e) Should
(i) your status as either an employee or a consultant be terminated for cause
(including, but not limited to, any act of dishonesty, willful misconduct,
fraud
or embezzlement or any unauthorized disclosure or use of confidential
information or trade secrets), or (ii) you make or attempt to make any
unauthorized use or disclosure of confidential information or trade secrets
of
the Company or its subsidiaries, then in any such event this option will
terminate and cease to be exercisable immediately upon the date of such
termination of employee or consultant status, as the case may be, or such
unauthorized use or disclosure of confidential or secret information or attempt
thereat.
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(f) For
purposes of this Agreement, you will be deemed to be an employee of the Company
for so long as you remain in the employ of the Company or one or more of its
subsidiaries, and you will be deemed to be a consultant to the Company for
so
long as you are actively rendering consulting services on a periodic basis
to
the Company or one or more of its subsidiaries. A legal entity will
be deemed to be a subsidiary of the Company if it is a member of an unbroken
chain of legal entities beginning with the Company, provided that each such
legal entity in the chain (other than the last legal entity) owns, at the time
of determination, shares possessing 50% or more of the total combined voting
power of all classes of shares in one of the other legal entities in such
chain.
4. Adjustment
in Option Shares.
(a) If
any
change is made to the Common Shares issuable under the Plan, whether by reason
of any share dividend, share split, combination of shares, recapitalization
or
other change affecting the outstanding Common Shares as a class without receipt
of consideration, then appropriate adjustments will be made to (i) the total
number of Optioned Shares subject to this option and (ii) the Exercise Price
payable per share, in order to reflect such change and thereby preclude the
dilution or enlargement of benefits under this Agreement. The
adjustments determined by the plan administrator (the "Plan Administrator")
will
be final, binding and conclusive.
(b) If
the
Company is the surviving or continuing entity in any merger, amalgamation or
other business combination, then this option, if outstanding under the Plan
immediately after such merger, amalgamation or other business combination,
will
be appropriately adjusted to apply and pertain to the number and class of
securities which the holder of the same number of Common Shares as are subject
to this option immediately prior to such merger, amalgamation or other business
combination would have been entitled to receive in the consummation of such
merger, amalgamation or other business combination, and an appropriate
adjustment will be made to the Exercise Price payable per share, provided the
aggregate Exercise Price payable hereunder will remain the same.
5. Corporate
Transaction.
(a) In
the
event of one or more of the following transactions ("Corporate
Transaction"):
(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, or
(iii) any
other
reorganization or business combination in which fifty percent (50%) or more
of
the Company's outstanding voting shares are transferred to different holders
in
a single transaction or a series of related transactions,
4
then
the
exercisability of this option will automatically be accelerated so that such
option may be exercised simultaneously with consummation of such Corporate
Transaction for the Applicable Percentage (as defined below) of the Optioned
Shares. No such acceleration of this option will occur, however, if
and to the extent: (x) the terms of the agreement for such Corporate Transaction
provide as a prerequisite to the consummation of such Corporate Transaction
that
outstanding options under the Plan (including this option) are to be assumed
by
the successor or parent thereof or are to be replaced with the comparable
options to purchase shares of capital stock of the successor or parent thereof,
such comparability to be determined by the Plan Administrator, or (y) the
acceleration of this option would, when added to the present value of certain
other payments in the nature of compensation which become due and payable to
you
in connection with the Corporate Transaction, result in the payment to you
of
excess parachute payments under Section 280G(b) of the Internal Revenue
Code. The existence of such excess parachute payments will be
determined by the Plan Administrator in the exercise of its reasonable business
judgment and on the basis of tax counsel provided to the
Company. Immediately following consummation of the Corporate
Transaction, this option will, to the extent not previously exercised or assumed
by the successor or its parent, terminate and cease to be
exercisable.
As
used
herein, “Applicable Percentage” means (i) 33.3% if the Corporate Transaction
Trigger Event (as defined below) occurs on or before September 30, 2007, (ii)
66.7% if the Corporate Transaction Trigger Event occurs on or after
October 1, 2007 and on or before December 31, 2007 and (iii) 100% in the event
the Corporate Transaction Trigger Event occurs on or after January 1, 2008,
and
“Corporate Transaction Trigger Event” means, with respect to a particular
Corporate Transaction, full execution of a “heads-of-terms”-style agreement
reflecting a fully-negotiated set of terms for such Corporate Transaction
intended to lead directly to the drafting and finalization of a definitive
agreement governing such Corporate Transaction.
(b) The
Plan
Administrator will use its best efforts to provide you with written notice
of a
Corporate Transaction at least ten business days prior to the effective
date.
(c) This
Agreement will not in any way affect the right of the Company to adjust,
reclassify, reorganize or otherwise make changes in its capital or business
structure or to merge, amalgamate, consolidate, dissolve, liquidate or sell
or
transfer all or any part of its business or assets.
6. Privilege
of Share Ownership. The holder of this
option will not have any rights of a shareholder with respect to the Optioned
Shares until such individual has exercised the option, paid the Exercise Price
and been issued a certificate for the purchased shares.
7. Manner
of Exercising Option.
(a) In
order
to exercise this option with respect to all or any part of the Optioned Shares
for which this option is at the time exercisable, you (or in the case of
exercise after your death, your executor, administrator, heir, legatee or
transferee as the case may be) must take the following actions:
5
(i) Provide
the Secretary of the Company with written notice of such exercise, specifying
the number of Optioned Shares with respect to which the option is being
exercised.
(ii) Pay
the
Exercise Price for the purchased Optioned Shares in one or more of the following
alternative forms: (A) full payment in cash or by check payable to
the Company's order; (B) full payment in Common Shares of the Company valued
at
fair market value on the exercise date (as such terms are defined below); (C)
full payment in combination of Common Shares of the Company valued at fair
market value on the exercise date and cash or check payable to the Company's
order; (D) payment effected through a broker-dealer sale and remittance
procedure pursuant to which you (I) will provide irrevocable written
instructions to the designated broker-dealer to effect the immediate sale of
the
purchased shares and remit to the Company, out of the sale proceeds, an amount
equal to the aggregate Exercise Price payable for the purchased shares plus
all
applicable Federal and State income and employment taxes required to be withheld
by the Company by reason of such purchase and (II) will provide written
directives to the Company to deliver the certificates for the purchased shares
directly to such broker-dealer; or, to the extent the Plan Administrator
specifically authorizes such method of payment at the time of exercise, (E)
payment by a full-recourse promissory note. Any such promissory note
authorized by the Plan Administrator will be substantially in the form approved
by the Plan Administrator, will bear interest at the minimum per annum rate
necessary to avoid the imputation of interest income to the Company and
compensation income to you under the Federal tax laws and will become due in
full (in one or more consecutive annual installments measured from the execution
date of the note) not later than the Expiration Date of this
option. Payment of the note will be secured by the pledge of the
purchased shares, and the pledged shares will be released only as the note
is
paid.
(iii) Furnish
to the Company appropriate documentation that the person or persons exercising
the option, if other than you, have the right to exercise this
option.
(b) For
purposes of Subsection 7(a) hereof, the fair market value per Common Share
on
any relevant date will be determined in accordance with Subsections (i) through
(iii) below, and the exercise date will be the date on which you exercise this
option in compliance with the provisions of Subsection 7(a).
(i) If
the
Common Shares are not listed or admitted to trading on any stock exchange on
the
date in question, but is traded in the over-the-counter market, the fair market
value will be the closing selling price per share of such shares on such date,
as such price is reported by the National Association of Securities Dealers
through its Nasdaq National Market. If there is no reported closing
selling price of the shares on the date in question then the closing selling
price on the last preceding date for which such quotation exists will be
determinative of fair market value.
6
(ii) If
the
Common Shares are listed or admitted to trading on any stock exchange on the
date in question, the fair market value will be the closing selling price per
share of such shares on such date on the stock exchange determined by the Plan
Administrator to be the primary market for such shares, as such price is
officially quoted on such exchange. If there is no reported closing
selling price of such shares on such exchange on the date in question, the
fair
market value will be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(iii) If
the
Common Shares are neither listed nor admitted to trading on any stock exchange
nor traded in the over-the-counter market on the date in question or if the
Plan
Administrator determines that the quotations under Subsections (i) or (ii)
above
do not accurately reflect the fair market value of such shares, the fair market
value will be determined by the Plan Administrator after taking into account
such factors as the Plan Administrator may deem appropriate, including one
or
more independent professional appraisals.
(c) In
no
event may this option be exercised for any fractional share.
8. Compliance
with Laws and Regulations.
(a) The
exercise of this option and the issuance of Optioned Shares upon such exercise
will be subject to compliance by the Company and by you with all applicable
requirements of law relating thereto and with all applicable regulations of
any
stock exchange on which the Company's Common Shares may be listed at the time
of
such exercise and issuance.
(b) In
connection with the exercise of this option, you will execute and deliver to
the
Company such representations in writing as may be requested by the Company
in
order for it to comply with the applicable requirements of Federal and State
securities laws.
9. Restrictive
Legends. If and to the extent any
Optioned Shares acquired under this option are not registered under the
Securities Act of 1933, the certificates for such Optioned Shares will be
endorsed with restrictive legends, including (without limitation) the
following:
"The
Shares represented by this certificate have not been registered under the
Securities Act of 1933. The shares have been acquired for investment
and may not be sold or offered for sale in the absence of (a) an effective
registration statement for the shares under such Act, (b) a 'no action' letter
of the Securities and Exchange Commission with respect to such sale or offer,
or
(c) an opinion of counsel to the Company that registration under such Act is
not
required with respect to such sale or offer."
10. Successors
and Assigns. Except to the extent
otherwise provided in Section 1 and Subsection 5(a), the provisions of this
Agreement will inure to the benefit of, and be binding upon your successors,
administrators, heirs, legal representatives and assigns and the successors
and
assigns of the Company.
11. Liability
of the Company.
7
(a) If
the
Optioned Shares covered by this Agreement exceed, as of the Grant Date, the
number of Common Shares which may without shareholder approval be issued under
the Plan, then this option will be void with respect to such excess shares
unless shareholder approval of an amendment sufficiently increasing the number
of Common Shares issuable under the Plan is obtained in accordance with the
provisions of the Plan.
(b) The
inability of the Company to obtain approval from any regulatory body having
authority deemed by the Company to be necessary to the lawful issuance and
sale
of any Common Shares pursuant to this option will relieve the Company of any
liability in respect of the non-issuance or sale of such shares as to which
such
approval will not have been obtained.
12. No
Employment or Consulting
Contract. Nothing in this Agreement or
in the Plan will confer upon you any right to continue in the employ or service
of the Company for any period of time or interfere with or otherwise restrict
in
any way the rights of the Company (or any subsidiary of the Company employing
or
retaining you) or you, which rights are hereby expressly reserved by each,
to
terminate your employee or consultant status as the case may be, at any time
for
any reason whatsoever, with or without cause.
13. Notices. Any
notice required to be given or delivered to the Company under the terms of
this
Agreement will be in writing and addressed to the Company in care of its
Secretary at its principal offices. Any notice required to be given
or delivered to you will be in writing and addressed to you at the address
indicated below your signature line herein. All notices will be
deemed to be given or delivered upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be
notified.
14. Construction. This
Agreement and the option evidenced hereby are made and granted pursuant to
the
Plan and are in all respects limited by and subject to the express terms and
provisions of the Plan. Any dispute regarding the interpretation of
this Agreement will be submitted to the Plan Administrator for
resolution. The decision of the Plan Administrator will be final,
binding and conclusive. Questions regarding this option or the Plan
should be referred to the Legal Department of the Company.
15. Governing
Law. The interpretation, performance,
and enforcement of this Agreement will be governed by the laws of the State
of
California.
16. Tax
Arrangements. You hereby agree to make
appropriate arrangements with the Company or subsidiary thereof by which you
are
employed or retained for the satisfaction of all Federal, State or local income
tax withholding requirements and Federal social security employee tax
requirements applicable to the exercise of this option.
8
XOMA
Ltd.
By:
Xxxxxxxxxxx
X. Xxxxxxxx
Vice
President , General Counsel
and
Secretary
Date:
I
hereby
agree to be bound by the terms and conditions of this Agreement and the
Plan.
By:
Xxxxxx
X.
Xxxxx
00000
Xx
Xx Xxxxx Xxxxx
Xxx
Xxx,
XX 00000
Date:
If
the
optionee resides in California or another community property jurisdiction,
I, as
the optionee's spouse, also agree to be bound by the terms and conditions of
this Agreement and the Plan.
By:
Xxxxxxxx
X. Xxxxx
00000
Xx
Xx Xxxxx Xxxxx
Xxx
Xxx,
XX 00000
Date:
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