Exhibit 4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of January 28, 1999 (this "Agreement"), by
and between XOMA LTD., a Bermuda company (the "Company"), [Buyer] (the "Buyer"),
and BRIAN W. PUSCH, not in his individual capacity but as Escrow Agent (the
"Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer have executed and delivered, one to the
other, a Subscription Agreement, dated as of January 28, 1999 (the "Subscription
Agreement"), pursuant to which, among other things, the Company has agreed to
sell to the Buyer, and the Buyer has agreed to purchase from the Company, upon
the terms and subject to the conditions of the Subscription Agreement, shares
(the "Purchased Shares") which are Common Shares, $.0005 par value, of the
Company (the "Common Shares"), and the Company has further agreed, under certain
circumstances, from time to time to issue additional Common Shares ("Reset
Shares") to the Buyer; and
WHEREAS, pursuant to the Subscription Agreement, the Company has agreed
with the Buyer, among other things, to execute and deliver this Agreement, and
to initially deposit all Purchased Shares and Reset Shares issued by the Company
for the account of the Buyer with the Escrow Agent for the purposes set forth in
Section 3 and Section 7 of the Subscription Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows (capitalized terms used herein without definition have
the meanings given them in the Subscription Agreement):
1. Deposit of Shares. Upon the closing of the sale of the Initial Shares to
the Buyer or its assignee in accordance with the Subscription Agreement, the
Company shall, and hereby authorizes the Closing Escrow Agent to, deposit with
the Escrow Agent for the separate account of the Buyer or its assignee one or
more certificates representing the Buyer's Initial Shares. Upon each issuance,
if any, of Reset Shares pursuant to Section 3 of the Subscription Agreement, the
Company shall deposit with the Escrow Agent for the account of the
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Buyer or its assignee one or more certificates representing such Reset Shares.
All Common Shares held by the Escrow Agent from time to time, including any
Reset Shares or additional Common Shares distributed or received by the Escrow
Agent as a stock dividend, stock split or other distribution on the Common
Shares held by the Escrow Agent, are referred to herein as the "Escrow Shares."
The Escrow Shares shall, if sent electronically through the DWAC system, be
registered in street name and, if delivered in certificated form, be registered
in the name of the Escrow Agent or shall be accompanied by duly executed stock
powers in blank with any necessary signature guarantees. The Company shall not
be liable for any failure on the part of the Escrow Agent or the Buyer to take
actions necessary to receive such shares electronically through the DWAC system.
The Escrow Agent shall be entitled, in its discretion, to retain possession of
certificates for the Escrow Shares or to deposit the Escrow Shares in a
segregated brokerage account maintained in the name of the Escrow Agent with
PaineWebber Incorporated or another brokerage firm which is a member of the
National Association of Securities Dealers, Inc.
2. Beneficial Ownership of Escrow Shares. As provided in Section 7 of the
Subscription Agreement, except for Escrow Shares which are due to the Company as
specified in a Reset Notice (as defined below) pursuant to Section 3 of the
Subscription Agreement which have not been released to the Company ("Company
Escrow Shares"), the Buyer shall be the sole beneficial owner of and shall have
the sole right to vote the Escrow Shares in the Buyer's account, and the escrow
provisions of this Agreement and the Subscription Agreement shall not in any way
limit or affect the ownership or the right to dispose of such Escrow Shares by
the Buyer and shall not in any manner create any lien, pledge, charge, equity,
encumbrance, claim or right of the Company of any nature whatsoever in or with
respect to such Escrow Shares. In the event of any dispute or uncertainty
regarding the existence or amount of any Company Escrow Shares, all Escrow
Shares in question shall be deemed beneficially owned by the Buyer until
designated as Company Escrow Shares by delivery by the Buyer or a court of
competent jurisdiction of a Reset Notice or other written confirmation thereof
to the Escrow Agent and the Company.
3. Release of Escrow Shares to the Buyer. (a) At any time after the earlier
of (i) the SEC Effective Date and (ii) Reset Date No. 1 which time is not during
a Reset Period, the Buyer shall have the sole and exclusive right to direct the
Escrow Agent to release to or upon the order of the Buyer any or all Escrow
Shares in the Buyer's account which are not Com-
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pany Escrow Shares by delivering a Release Notice, in the form attached hereto
as Exhibit A (each, a "Release Notice"), to the Escrow Agent. No Escrow Shares
may be released by the Escrow Agent during a Reset Period unless the Escrow
Agent is jointly instructed to do so by the Company and the Buyer. The Escrow
Agent shall determine the expiration date of any Reset Period, which
determination shall be binding on the Company and the Buyer.
(b) Within three Trading Days following receipt of a Release Notice or as
promptly as practicable thereafter, the Escrow Agent shall release to the Buyer
the number of Escrow Shares specified in such Release Notice in accordance with
the Buyer's instructions stated therein until such time as the Escrow Agent no
longer holds any Escrow Shares in the Buyer's account. A Release Notice given by
the Buyer shall be deemed for all purposes to be in proper form unless the
Escrow Agent notifies the Buyer in writing within five Trading Days after such
Release Notice has been given (which notice shall specify all defects in such
Release Notice) and any Release Notice containing any such defect shall
nonetheless be effective on the date given if the Buyer promptly undertakes to
correct all defects. The certificates for any Common Shares so released from
escrow prior to the SEC Effective Date may, if so requested by the Company, bear
the restrictive legend specified in Section 6(b) of the Subscription Agreement.
Any remaining Escrow Shares in the Buyer's account which are not Company Escrow
Shares following the last Reset Date to occur under the Subscription Agreement
shall be promptly delivered to or upon the order of the Buyer. Once properly
released from escrow in accordance with this Agreement, Escrow Shares may not be
re-deposited into escrow.
(c) When (1) no additional shares are required to be deposited into escrow
following the last Rest Date to occur under the Subscription Agreement and (2)
all Escrow Shares are properly released from escrow in accordance with this
Agreement, the escrow provisions of this Agreement shall terminate and no
further deposits of shares into escrow shall be permitted.
4. Release of Company Escrow Shares to the Company. On or after each Reset
Date, the Escrow Agent shall receive a Reset Notice, in the form attached hereto
as Exhibit B (each, a "Reset Notice"), from the Buyer or, when permitted by
Section 3(d) of the Subscription Agreement, from the Company. If a Reset Notice
states that Reset Shares are to be released to the Company, within ten Trading
Days after such Reset Notice
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is given to the Escrow Agent or as promptly as practicable thereafter, the
Escrow Agent shall release from the Buyer's account the applicable whole number
of Company Escrow Shares to the Company in accordance with the Company's written
instructions. In the event of any error or dispute concerning the number of
Reset Shares to be released to the Buyer or to the Company set forth in a Reset
Notice, the Company and the Buyer will comply with the provisions of Section
3(e) of the Subscription Agreement and the Escrow Agent shall receive the
notices provided therein. The Escrow Agent is authorized and directed to rely on
any determination of the Auditors made pursuant to such Section 3(e).
5. Method of Release. In the discretion of the Escrow Agent, the Escrow
Agent may release Escrow Shares to the Buyer or to the Company, as and when
required by this Agreement, by means of (i) delivering physical certificates
representing such Escrow Shares or (ii) electronic transfer of such Escrow
Shares by DWAC or a similar system to an account designated in writing to the
Escrow Agent by the Buyer or the Company, as the case may be.
6. Duties of Escrow Agent. The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely and
shall be protected in relying or refraining from acting on any instrument
reasonably believed by the Escrow Agent to be genuine and to have been signed or
presented by the proper party or parties. In no event shall the Escrow Agent
have any responsibility or liability for the accuracy of the information set
forth in any Release Notice or Reset Notice or for the determination of any
calculation to be made for purposes of Section 4 of the Subscription Agreement
or otherwise. The Escrow Agent shall not be personally liable for any act the
Escrow Agent may do or omit to do hereunder as Escrow Agent while acting in good
faith, and any act done or omitted by the Escrow Agent pursuant to the advice of
the Escrow Agent's attorneys-at-law shall be conclusive evidence of such good
faith. In no event shall the Escrow Agent incur any liability or be held
responsible, if any certificate for or electronic transmission of Escrow Shares,
once released from escrow hereunder, shall become lost, delayed, stolen,
destroyed, mutilated or misplaced while in transit to any person, provided the
Escrow Agent shall have dispatched the same by a means customarily used by the
Escrow Agent.
7. Disregard of Warnings; Judicial Orders. The Escrow Agent is hereby
expressly authorized to disregard any
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and all warnings given by any of the parties hereto or by any other person, firm
or corporation, excepting only orders or process of governmental authorities
(including courts of law) and is hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court. In case the Escrow Agent obeys
or complies with any such order, judgment or decree, the Escrow Agent shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without jurisdiction.
8. No Liability for Genuineness. The Escrow Agent shall not be liable in
any respect on account of the identity, authorities or rights of the parties
executing or delivering or purporting to execute or deliver the Subscription
Agreement, a Release Notice, a Reset Notice or any other notice, document or
instrument deposited or called for hereunder or thereunder.
9. Statute of Limitations. The Escrow Agent shall not be liable for the
outlawing of any rights under the Statute of Limitations with respect to this
Agreement or any document or instrument deposited with or held by the Escrow
Agent pursuant to this Agreement.
10. Retention and Advice of Legal Counsel. The Escrow Agent shall be
entitled to employ such legal counsel and other experts as the Escrow Agent may
deem necessary properly to advise the Escrow Agent in connection with the Escrow
Agent's obligations hereunder, may rely upon the advice of such counsel, and may
pay such counsel reasonable compensation therefor, subject to reimbursement
thereof as and to the extent provided in Section 14. The Escrow Agent has acted
as legal counsel for [Buyer] and the Escrow Agent may continue to act as legal
counsel for [Buyer] notwithstanding its duties as Escrow Agent hereunder.
11. Resignation. The Escrow Agent's responsibilities as Escrow Agent
hereunder shall terminate if the Escrow Agent shall resign by written notice to
the Company and the Buyer. In the event of any such resignation, the Buyer shall
appoint a successor Escrow Agent. The Escrow Agent shall transfer any Escrow
Shares to any successor Escrow Agent promptly after receipt by the Escrow Agent
of notice from the Buyer of the appointment of such successor.
12. Further Assurances. If the Escrow Agent reasonably requires other or
further instruments in connection
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with this Agreement or obligations in respect hereto, the parties hereto shall
join in furnishing such instruments.
13. Disputes. It is understood and agreed that should any dispute arise
with respect to the release and/or right of possession of the Escrow Shares held
by the Escrow Agent hereunder, the Escrow Agent is authorized and directed, in
its sole discretion (a) to retain in the Escrow Agent's possession without
liability to anyone all or any part of the Escrow Shares until such disputes
shall have been settled either by mutual written agreement of the parties
concerned or by a final order, decree or judgment of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but the Escrow Agent shall be under no duty whatsoever to institute
or defend any such proceedings or (b) at any time, to deposit any or all of the
Escrow Shares with any court of competent jurisdiction in the State of New York,
in which event the Escrow Agent shall give notice thereof to the Company and the
Buyer and shall thereupon be relieved and discharged from all further
obligations hereunder.
14. Fees and Expenses; Indemnity. (a) The Buyer agrees to pay the
reasonable fees and expenses of the Escrow Agent as billed to the Buyer from
time to time for the performance of the Escrow Agent's services under this
Agreement.
(b) In addition to the amounts payable pursuant to Section 14(a), the
Company and the Buyer jointly and severally agree to pay or reimburse the Escrow
Agent for, and to indemnify and hold harmless the Escrow Agent from, any and all
claims, liabilities, costs or expenses in any way arising from or relating to
the duties or performance of the Escrow Agent hereunder other than any such
claim, liability, cost or expense to the extent the same shall have been
determined by final, unappealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the Escrow
Agent.
15. Notices. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery (which shall include telephone line facsimile
transmission or courier service), addressed to each person thereunto entitled at
the following addresses, or at such other address as such person may designate
by ten days advance written notice to each of the other parties hereto.
the Company: XOMA Ltd.
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2910 Seventh Street
Berkeley, California 94710
Attention: Legal Department
Facsimile No.: (510) 649-7571
the Buyer: [ ]
Facsimile No.:
with a copy to:
[ ]
the Escrow Agent: Law Offices of Brian W Pusch
Penthouse Suite
29 West 57th Street
New York, New York 10019
Facsimile No.: (212) 980-7055
16. Amendment, Modification, Etc. No amendment, modification, waiver,
discharge or termination of any provision of this Agreement nor consent to any
departure by the parties therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given. No course of dealing between the parties hereto shall operate
as an amendment of, or a waiver of any right under, this Agreement.
17. Subscription Agreement. By signing this Agreement, the Escrow Agent
does not become a party to and has no liability with respect to the Subscription
Agreement and the agreements and transactions contemplated thereby.
18. Assignment. In connection with any permitted assignment by the Buyer of
any of its rights under the Subscription Agreement or the Registration Rights
Agreement in accordance with the respective terms thereof, the Buyer shall have
the right to assign all or a portion of its rights and obligations under this
Agreement to any such assignee by giving notice thereof to the Escrow Agent and
the Company. Each such notice shall be executed by the assignee. Such notice may
be contained in a notice of assignment given under the Subscription Agreement or
the Registration Rights Agreement. From and after the giving of such notice by
the Buyer, such assignee shall be deemed a party to this Agreement, and all
applicable references herein to the "Buyer" shall include such assignee.
19. Governing Law. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and
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their respective successors and permitted assigns and shall be governed by the
laws of the State of New York, without giving effect to principles of conflicts
of law.
IN WITNESS WHEREOF, the Company and the Buyer have caused this Agreement to
be duly executed and delivered by their respective officers or other
representatives thereunto duly authorized and the Escrow Agent has duly executed
this Agreement, in each case as of the date first set forth above.
XOMA LTD.
By:
-----------------------------------
Name:
Title:
[Buyer]
By:
-----------------------------------
Name:
Title:
Brian W. Pusch, as
Escrow Agent
Exhibit A
RELEASE NOTICE
TO: Brian W. Pusch,
as Escrow Agent
Law Offices of Brian W Pusch
29 West 57th Street
Penthouse Suite
New York, New York 10019
Facsimile No.: (212) 980-7055
(1) Pursuant to the terms of the Escrow Agreement, dated as of January 28,
1999 (the "Escrow Agreement"), by and between XOMA Ltd., a Bermuda company (the
"Company"), the Buyer named therein, and Brian W. Pusch, as Escrow Agent (the
"Escrow Agent"), the undersigned Buyer hereby elects to release
____________________ Escrow Shares (the "Released Shares"). Capitalized terms
used herein and not otherwise defined herein have the respective meanings
provided in the Escrow Agreement.
(2) Please send the Released Shares to the person and address or to the
account specified below or, if additional space is necessary, on an attachment
hereto:
Delivery Instructions
for Released Shares: ____________________________
____________________________
____________________________
____________________________
NAME OF BUYER:
____________________________
Date _________________________ By: _______________________
Name:
Title:
A-1
Exhibit B
RESET NOTICE
TO: XOMA Ltd. Brian W. Pusch, as Escrow Agent
2910 Seventh Street Law Offices of Brian W Pusch
Berkeley, California 94710 29 West 57th Street
Penthouse Suite
Attention: Legal Department New York, New York 10019
Facsimile No.: (510) 649-7571 Facsimile No.: (212) 980-7055
This Reset Notice is given pursuant to the terms of (i) the Subscription
Agreement, dated as of January 28, 1999 (the "Subscription Agreement"), by and
between XOMA Ltd., a Bermuda company (the "Company"), and the undersigned (the
"Buyer"), and (ii) the Escrow Agreement, dated as of January 28, 1999 (the
"Escrow Agreement"), by and between the Company, the Buyer and Brian W. Pusch,
as Escrow Agent (the "Escrow Agent"). Capitalized terms used herein and not
otherwise defined herein have the respective meanings provided in the
Subscription Agreement. The undersigned Buyer hereby notifies the Company and
the Escrow Agent as follows:
(1) Reset Date No.
(2) Reset Date:
(3) Basis of computation of number of Reset Shares pursuant to Section 3(b)
or 3(c) of the Subscription Agreement:
(a) Number of Designated Escrow Shares:
(b) The Adjustment Price on this Reset Date No. ______ is based on (check
one):
/ / the Average Market Price, or
/ / the Purchase Price.
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(c) To determine the Average Market Price, the Market Price on each of the
five Trading Days during the Measurement Period was as follows:
Date Market Price ($)
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
The Average Market Price, equal to 89% of the arithmetic average of such
five Market Prices, is $ . The Buyer hereby represents and warrants to the
Company that it did not sell any Common Shares (including short sales) on any of
the five Trading Days listed above.
(d) The Purchase Price is $_______________.
(e) The Adjustment Price determined on the immediately preceding Reset Date
is $_____________.
(4) Number of Reset Shares to be released to the Buyer: _________________
(5) Number of Reset Shares to be released to the Company: _____________.
The Buyer hereby instructs the Escrow Agent to release such Reset Shares to the
Company.
NAME OF BUYER:
Date _________________________ By: _______________________
Name:
Title:
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