Exhibit 10.9


 


TANOX, INC.


 


NON-QUALIFIED STOCK OPTION AGREEMENT


 


1.             Grant
of Option. 


 


TANOX, INC., a
Delaware corporation (the “Company”), hereby grants to                       (the
“Employee”), an option, pursuant to the Company’s 1997 Stock Plan (the “Plan”),
to purchase an aggregate of                    shares
of Common Stock, $.01 par value per share, of the Company (“Common Stock”) at a
price of                     per
share, purchasable as set forth in and subject to the terms and conditions of
this option and the
Plan.                          ,
the date of grant of this option, is hereinafter referred to as the “Grant
Date.”


 


2.             Exercise
of Option and Provisions for Termination.


 


(a)           Except
as otherwise provided herein, this option is exercisable for the first time
with respect to the following shares subject to the option:


 


25% on the
first anniversary of the Grant Date; and an additional


 


1/48th on the
13th through 48th monthly anniversary of the Grant Date


 


To the extent
not exercised, installments shall be cumulative and shall be exercisable in
whole or in part; provided that no partial exercise of the option shall be for
less than 10 whole shares.


 


This option
shall become fully exercisable, irrespective of the limitations set forth
above, provided that the Employee has been in continuous employment since the
Grant Date, upon a Change in Control. 
This option may not be exercised at any time after the tenth anniversary
of the Grant Date.


 


(b)           Subject
to the conditions hereof, this option shall be exercisable by the Employee
contacting the Company’s designated stock option administration representative
(the “Representative”), specifying the number of shares to be purchased and the
exercise price to be paid therefor and accompanied by payment in accordance
with Section 3 hereof.


 


(c)           If
the Employee ceases to be employed by the Company or one of its subsidiaries
for any reason, including retirement but other than death, this option shall
immediately terminate; provided, however, that any portion of this
option which was otherwise exercisable on the date of termination of the
Employee’s employment may be exercised within the three-month period


 





















 


following the date on which the
Employee ceased to be so employed unless termination was due to “cause” as
determined by the Board of Directors or the Employee is found by the Board of
Directors to have disclosed trade secrets of the Company.  In no event may this option be exercised
after the tenth anniversary of the Grant Date. 
Any such exercise may be made only to the extent of the number of shares
subject to this option which are purchasable upon the date of such termination
of employment.  If the Employee dies
during such three-month period, this option shall be exercisable by the
Employee’s personal representatives, heirs or legatees to the same extent and
during the same period that the Employee could have exercised this option on
the date of his or her death.


 


(d)           If
the Employee dies while an employee of the Company or any subsidiary of the
Company, this option shall be exercisable, by the Employee’s personal
representatives, heirs or legatees, to the same extent that the Employee could
have exercised this option on the date of death.  This option or any unexercised portion hereof
shall terminate unless so exercised prior to the earlier of the expiration of
one year from the date of such death or the tenth anniversary of the Grant
Date.


 


(e)           The
Employee agrees not to exercise this option, and that the Company will not be
obligated to issue any shares of Common Stock pursuant to this option
agreement, if the exercise of the option or the issuance of such shares would
constitute a violation by the Employee or by the Company of any provision of
any law or regulation of any governmental authority or any stock exchange or
transaction quotation system.  Whether or
not the issuance of shares covered by the Plan have been registered pursuant to
the Securities Act of 1933, as amended, the Company may, at its election, require
the Employee to give a representation in writing in form and substance
satisfactory to the Company to the effect that the Employee is acquiring such
shares for the Employee’s own account for investment and not with a view to, or
for sale in connection with, the distribution of such shares or any part
thereof.


 


If any law or
regulation requires the Company to take any action with respect to the shares
specified in such notice, the time for delivery thereof, which would otherwise
be as promptly as possible, shall be postponed for the period of time necessary
to take such action.


 


(f)            A
“Change in Control” shall be deemed to have occurred as on the date that one or
more of the following occurs:


 


(i)            Individuals
who, on the date hereof, constitute the entire Board of Directors of the
Company (“Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote


 





















 


of at least a majority of the
then Incumbent Directors shall be considered as though such individual was an
Incumbent Director, but excluding, for this purpose any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest, as such terms are used in Rule 14a-11 under the
Securities Exchange Act of 1934, as amended (“Exchange Act”) or other actual or
threatened solicitation of proxies or consents by or on behalf of any Person (as
defined below) other than the Board;


 


(ii)           The
stockholders of the Company shall approve (A) any merger, consolidation or
recapitalization of the Company (or, if the capital stock of the Company is
affected, any subsidiary of the Company), or any sale, lease, or other transfer
(in one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company (each of the foregoing being an “Acquisition Transaction”) where (1) the
stockholders of the Company immediately prior to such Acquisition Transaction
would not immediately after such Acquisition Transaction beneficially own,
directly or indirectly, shares or other ownership interests representing in the
aggregate fifty one percent (51%) or more of (a) the then outstanding common
stock or other equity interests of the corporation or other entity surviving or
resulting from such merger, consolidation or recapitalization or acquiring such
assets of the Company, as the case may be (the “Surviving Entity”) (or of its
ultimate parent corporation or other entity, if any), and (b) the Combined
Voting Power of the then outstanding Voting Securities of the Surviving Entity
(or of its ultimate parent corporation or other entity, if any) or (2) the
Incumbent Directors at the time of the initial approval of such Acquisition
Transaction would not immediately after such Acquisition Transaction constitute
a majority of the Board of Directors, or similar managing group, of the
Surviving Entity (or of its ultimate parent corporation or other entity, if
any), or (B) any plan or proposal for the liquidation or dissolution of the
Company; or


 


(iii)          Any
Person other than Nancy T. Chang or Tse Wen Chang shall be or become the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing in the
aggregate more than forty percent (40%) of either (A) the then outstanding
shares of common stock of the Company (“Common Stock”) or (B) the Combined
Voting Power of all then outstanding Voting Securities of the Company;
provided, however, that notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred for purposes of this Subsection (iii):


 


(1)           Solely
as a result of an acquisition of securities by the Company which, by reducing
the number of Common Stock or other Voting Securities outstanding, increases
(a) the proportionate number of Common Stock beneficially owned by any Person
to more than forty percent (40%) of the Common Stock then outstanding, or (b)
the proportionate voting power represented by


 





















 


the Voting
Securities beneficially owned by any Person to more than forty percent (40%) of
the Combined Voting Power of all then outstanding Voting Securities; or


 


(2)           Solely
as a result of an acquisition of securities directly from the Company except
for any conversion of a security that was not acquired directly from the
Company,


 


(3)           provided,
further, that if any Person referred to in paragraph (1) or (2) of this
Subsection (iii) shall thereafter become the beneficial owner of any additional
Common Stock or other Voting Securities of the Company (other than pursuant to
a stock split, stock dividend or similar transaction), then a Change in Control
shall be deemed to have occurred for purposes of this Subsection (iii).


 


(iv)          For
purposes of this Section (f):


 


(1)  “Affiliate” shall mean, as to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the specified Person, within the meaning of such terms as used in Rule 405
under the Securities Act of 1933, as amended (“Securities Act”), or any
successor rule.


 


(2)  “Combined Voting Power” shall mean the
aggregate votes entitled to be cast generally in the election of the Board of
Directors, or similar managing group, of a corporation or other entity by
holders of then outstanding Voting Securities of such corporation or other
entity.


 


(3)  “Person” shall mean any individual, entity
(including, without limitation, any corporation, partnership, trust, joint
venture, association or governmental body) or group (as defined in Sections
14(d)(3) or 15(d)(2) of the Exchange Act and the rules and regulations thereunder);
provided, however, that Person shall not include the Company, any of its
subsidiaries, any employee benefit plan of the Company or any of its
majority-owned subsidiaries or any entity organized, appointed or established
by the Company or such subsidiaries for or pursuant to the terms of any such
plan.


 


(4)  “Voting Securities” shall mean all securities
of a corporation or other entity having the right under ordinary circumstances
to vote in an election of the Board of Directors, or similar managing group, of
such corporation or other entity.


 


3.             Payment
of Exercise Price.


 


(a)           Payment
of the exercise price for shares purchased upon exercise of this option,
together with all applicable taxes and fees, shall be made by


 





















 


delivery to the Representative
of cash or other verifiable funds (wire transfer, cashier’s check, money order)
payable to the order of the Representative, or, if the Employee elects and the
Company permits, by delivery of shares of Common Stock held by the Employee for
at least six months and having a fair market value (as determined by the Board
of Directors of the Company in accordance with the terms of the Plan) equal to
or less than the aggregate exercise price of the shares to be purchased, and
any difference shall be paid by cash or check.


 


(b)           If
the Employee elects to exercise options by delivery of shares of Common Stock,
the certificate(s) representing the shares shall be registered in the name of
the Employee and duly executed in blank, or accompanied by a stock power duly
executed in blank, by the Employee suitable for purposes of transferring such
shares to the Company.  The shares so
tendered shall be free of all liens, claims and encumbrances.


 


4.             Delivery
of Shares.


 


The
Representative shall, upon receipt of the exercise price, together with all
applicable taxes and fees, and verification of funds for the number of shares
purchased and paid for, make prompt delivery of such shares to the Employee,
provided that if any law or regulation requires Representative or the Company
to take any action with respect to such shares before the issuance thereof,
then the date of delivery of such shares shall be extended for the period
necessary to complete such action.  No
shares shall be issued and delivered upon exercise of any option unless and
until, in the opinion of counsel for the Company, any applicable registration
requirements of the Securities Act, any applicable listing requirements of any
national securities exchange on which stock of the same class is then listed,
and any other requirements of law or of any regulatory bodies having
jurisdiction over such issuance and delivery, shall have been fully complied
with.


 


5.             Non-transferability
of Option.


 


Except as
expressly provided in the Plan or as provided in Section 2(c) and 2(d) hereof,
this option is personal and no rights granted hereunder shall be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) nor shall any such rights be subject to execution, attachment or
similar process.  Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon this option or such rights, this option and
such rights shall become null and void.


 


6.             No
Special Employment Rights.


 


Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any of


 





















 


its subsidiaries to continue the
employment of the Employee for the period within which this option may be
exercised.


 


7.             No
Rights as a Stockholder.


 


The Employee
shall have no rights as a stockholder with respect to any shares which may be
purchased by exercise of this option unless and until such shares are duly
issued and delivered to the Employee. 
Except as otherwise expressly provided in the Plan, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock is issued.


 


8.             Withholding
Taxes and Fees.


 


No shares of
Common Stock purchased shall be delivered to or in respect of the Employee
unless the amount of all applicable federal, state and local withholding tax
requirements imposed upon the Company with respect to the issuance of such
shares of Common Stock, together with all applicable fees, has been remitted to
the Representative.


 


9.             Certain
Limits.


 


(a)           Notwithstanding
anything in this Agreement to the contrary, but subject to the application of
clause (b) below, to the extent the Employee would be subject to the excise tax
under Section 4999 of the Code on the amounts payable pursuant to this
Agreement and such other amounts or benefits the Employee receives from the
Company, any person whose actions result in a change of ownership covered by
Section 280G(b)(2) of the Code or any person affiliated with the Company or
such person, required to be included in the calculation of parachute payments
for purposes of Sections 280G and 4999 of the Code, the amounts vested pursuant
to Section 2(a) of this Agreement shall be automatically reduced to an amount
one dollar less than that which, when combined with such other amounts, would
subject the Employee to such excise tax.


 


(b)           If
the Employee’s employment with the Company is terminated by the Company without
Cause (hereinafter defined) or by the Employee upon a Constructive Termination
for Good Reason (hereinafter defined), in each case within one year following a
Change in Control (a “Protected Termination”), then the provisions of this
clause (b) will apply and clause (a) shall not be applicable.  If a Protected Termination occurs, then
notwithstanding anything in this Agreement to the contrary, if (i) any amounts
due to the Employee under this Agreement and any other plan or program of the
Company constitute a “parachute payment,” as such term is defined in Code
Section 280G(b)(2), and (ii) the amount of the parachute payment, reduced by
all federal, state and local taxes applicable thereto, including the excise tax
imposed pursuant to Code Section 4999, is less than the amount the Employee
would receive if he were


 





















 


paid three times his “base
amount,” as defined in Code Section 280G(b)(3), less one dollar, reduced by all
federal, state and local taxes applicable thereto, then the aggregate of the
amounts constituting the parachute payment shall be reduced to an amount that
will equal three times his base amount less one dollar.


 


(c)           The
determinations to be made with respect to this Section shall be made by an
accounting firm jointly selected by the Company’s Board of Directors and the
Employee and paid by the Company, and which may be the Company’s independent
auditors.


 


(d)           For
purposes of this Section 9:


 


(i)            “Cause”
shall mean: (A) the continued and willful refusal by Employee to substantially
perform his duties after demand for substantial performance is delivered by the
Board which demand specifically identifies the manner in which the Board has
determined that the Employee has not substantially performed his duties, and
the Employee’s performance is not cured to the Board’s reasonable satisfaction
within thirty (30) days from such demand; (B) the engagement by Employee in
willful misconduct or dishonesty that is materially injurious to the Company,
monetarily or otherwise;  (C) Employee’s
felony conviction, or (D) disclosure by the Employee of Company trade secrets
or confidential Company matters to unauthorized persons which is reasonably
likely to be materially injurious to the Company, monetarily or otherwise.


 


(ii)           “Constructive
Termination for Good Reason” means:


 


(1)           the
Employee’s duties or responsibilities are not comparable to the Employee’s
position, offices, duties, responsibilities or status with the Company at the
time of the Change in Control, or the Employee’s reporting responsibilities or
titles are changed and the change results in a material reduction of the
Employee’s responsibilities or position with the Company;


 


(2)           the
level of benefits or compensation (individual base compensation and short and
long-term incentive opportunity) provided to the Employee is reduced below the
comparable level payable to similarly situated officers of the Company; or


 


(3)           the
Employee is actually transferred, or offered a proposed transfer, as evidenced
in a written communication from the Company to the Employee, to another
location other than the location at which he was primarily employed immediately
preceding the Change in Control, unless that new location is a major operating
unit or facility of the Company that is located within 50 miles of the Employee’s
primary location as of the date immediately preceding a transfer; provided,
however, (A) the Employee, within thirty (30) days from the date that he is
given written notice by the Company of such actual or proposed transfer, shall


 





















 


provide the Committee or the
Board with written notice that the transfer shall constitute a Constructive
Termination for Good Reason, (B) the Company, within twenty (20) days of
receipt of the notice, fails to provide the Employee with written notice
rescinding the actual or proposed transfer and (C) if the Company does not
rescind the transfer, the Employee must terminate his employment due to
Constructive Termination for Good Reason within forty (40) days following
expiration of the twenty (20)-day period so that in any event the Employee
shall have terminated his employment with the Company within ninety (90) days
after the Employee first receives written notice from the Company of such
actual or proposed transfer.


 


10.           Miscellaneous.


 


(a)           Except
as provided herein, this Agreement may not be amended or otherwise modified
unless evidenced in writing and signed by the Company and the Employee.


 


(b)           All
notices under this Agreement shall be mailed or delivered by hand to the
parties at their respective addresses set forth beneath their names below or at
such other address as may be designated in writing by either of the parties to
one another.


 


(c)           This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.


 


 


	
  Grant Date:

  	
  TANOX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:Vice President of Finance

  
	
   

  	
  Address:10301 Stella Link

  
	
   

  	
  Houston,
  Texas 77025

  
					



 


EMPLOYEE’S
ACCEPTANCE


 


The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.


 


	
  EMPLOYEE

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  
	
  Address:

  	
   

  	
   

  
				



 





















 


TANOX, INC.


 


NON-QUALIFIED STOCK OPTION AGREEMENT


 


1.             Grant
of Option.


 


TANOX, INC., a
Delaware corporation (the ‘Company’), hereby grants to                           
(the “Employee”), an option, pursuant to the Company’s 1997 Stock Plan (the
Plan”), to purchase an aggregate of                     shares
of Common Stock, $01 par value per share, of the Company (“Common Stock”) at a
price of                     per
share, purchasable as set forth in and subject to the terms and conditions of
this option and the Plan.  The date of
grant of this option is hereinafter referred to as the “Grant Date.”


 


2.             Exercise
of Option and Provisions for Termination.


 


(a) Except as
otherwise provided herein, this option is exercisable for the first time with
respect to the following shares subject to the option:


 


               shares
on the first anniversary of the Grant Date; an additional


 


               shares
on the second anniversary of the Grant Date; an additional


 


               shares
on the third anniversary of the Grant Date; an additional


 


               shares
on the fourth anniversary of the Grant Date; and an additional


 


               shares
on the fifth anniversary of the Grant Date; so that, after the expiration of
the fifth anniversary of the Grant Date, the option shall be exercisable in
full.


 


To the extent
not exercised, installments shall be cumulative and shall be exercisable in
whole or in part; provided that no partial exercise of the option shall be for
less than 10 whole shares.


 


This option
shall become fully exercisable, irrespective of the limitations set forth
above, provided that the Employee has been in continuous employment since the
Grant Date, upon a Change in Control. This option may not be exercised after
the tenth anniversary of the Grant Date.


 


(b) Subject to
the conditions hereof, this option shall be exercisable by the Employee
contacting the Company’s designated stock option administration


 





















 


representative (the “Representative”),
specifying the number of shares to be purchased and the exercise price to be
paid therefor and accompanied by payment in accordance with Section 3 hereof.


 


(c) If the
Employee ceases to be employed by the Company or one of its subsidiaries for
any reason, including retirement but other than death, this option shall
immediately terminate; provided,  however, that any portion of
this option which was otherwise exercisable on the date of termination of the
Employee’s employment may be exercised within the three-month period following
the date on which the Employee ceased to be so employed unless termination was
due to “cause” as determined by the Board of Directors or the Employee is found
by the Board of Directors to have disclosed trade secrets of the Company.  In no event may this option be exercised
after the tenth anniversary of the Grant Date. 
Any such exercise may be made only to the extent of the number of shares
subject to this option which are purchasable upon the date of such termination
of employment.  If the Employee dies
during such three-month period, this option shall be exercisable by the
Employee’s personal representatives, heirs or legatees to the same extent and
during the same period that the Employee could have exercised this option on
the date of his or her death.


 


(d) If the
Employee dies while an employee of the Company or any subsidiary of the
Company, this option shall be exercisable, by the Employee’s personal
representatives, heirs or legatees, to the same extent that the Employee could
have exercised this option on the date of death.  This option or any unexercised portion hereof
shall terminate unless so exercised prior to the earlier of the expiration of
one year from the date of such death or the tenth anniversary of the Grant
Date.


 


(e) The Employee
agrees not to exercise this option, and that the Company will not be obligated
to issue any shares of Common Stock pursuant to this option agreement, if the
exercise of the option or the issuance of such shares would constitute a
violation by the Employee or by the Company of any provision of any law or
regulation of any governmental authority or any stock exchange or transaction
quotation system.  Whether or not the
issuance of shares covered by the Plan have been registered pursuant to the
Securities Act of 1933, as amended, the Company may, at its election, require
the Employee to give a representation in writing in form and substance
satisfactory to the Company to the effect that the Employee is acquiring such
shares for the Employee’s own account for investment and not with a view to, or
for sale in connection with, the distribution of such shares or any part
thereof.


 


If any law or
regulation requires the Company to take any action with respect to the shares
specified in such notice, the time for delivery thereof, which would otherwise
be as promptly as possible, shall be postponed for the period of time necessary
to take such action.


 





















 


(f)  A “Change in Control” shall
be deemed to have occurred on the date that one or more of the following
occurs:


 


(i)    Individuals
who, on the date hereof, constitute the entire Board of Directors of the
Company (“Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the then Incumbent Directors shall be considered as though such
individual was an Incumbent Director, but excluding, for this purpose any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest, as such terms are used in Rule 14a-11
under the Securities Exchange Act of 1934, as amended (“Exchange Act’) or other
actual or threatened solicitation of proxies or consents by or on behalf of any
Person (as defined below) other than the Board;


 


(ii)   The
stockholders of the Company shall approve (A) any merger, consolidation or
recapitalization of the Company (or, if the capital stock of the Company is
affected, any subsidiary of the Company), or any sale, lease, or other transfer
(in one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company (each of the foregoing being an Acquisition Transaction”) where (1) the
stockholders of the Company immediately prior to such Acquisition Transaction
would not immediately after such Acquisition Transaction beneficially own, directly
or indirectly, shares or other ownership interests representing in the
aggregate fifty one percent (51%) or more of (a) the then outstanding common
stock or other equity interests of the corporation or other entity surviving or
resulting from such merger, consolidation or recapitalization or acquiring such
assets of the Company, as the case may be (the “Surviving Entity”) (or of its
ultimate parent corporation or other entity, if any), and (b) the Combined
Voting Power of the then outstanding Voting Securities of the Surviving Entity
(or of its ultimate parent corporation or other entity, if any) or (2) the
Incumbent Directors at the time of the initial approval of such Acquisition
Transaction would not immediately after such Acquisition Transaction constitute
a majority of the Board of Directors, or similar managing group, of the
Surviving Entity (or of its ultimate parent corporation or other entity, if
any), or (B) any plan or proposal for the liquidation or dissolution of the
Company; or


 


(iii) Any
Person other than Nancy T. Chang or Tse Wen Chang shall be or become the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing in the
aggregate more than forty percent (40%) of either (A) the then outstanding
shares of common stock of the Company (Common Stock”) or (B) the Combined
Voting Power of all then outstanding Voting Securities of the Company;
provided, however, that notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred for purposes of this Subsection (iii):


 





















 


(1)        Solely as a result of an
acquisition of securities by the Company which, by reducing the number of
Common Stock or other Voting Securities outstanding, increases (a) the
proportionate number of Common Stock beneficially owned by any Person to more
than forty percent (40%) of the Common Stock then outstanding, or (b) the
proportionate voting power represented by the Voting Securities beneficially
owned by any Person to more than forty percent (40%) of the Combined Voting
Power of all then outstanding Voting Securities; or


 


(2)        Solely as a result of an
acquisition of securities directly from the Company except for any conversion
of a security that was not acquired directly from the Company,


 


(3)        provided, further, that if
any Person referred to in paragraph (1) or (2) of this Subsection (iii) shall
thereafter become the beneficial owner of any additional Common Stock or other
Voting Securities of the Company (other than pursuant to a stock split, stock
dividend or similar transaction), then a Change in Control shall be deemed to
have occurred for purposes of this Subsection (iii).


 


(iv) For
purposes of this Section (f):


 


(1)        “Affiliate” shall mean, as
to a specified Person, another Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common
control with, the specified Person, within the meaning of such terms as used in
Rule 405 under the Securities Act of 1933, as amended (“Securities Act”), or
any successor rule.


 


(2)        “Combined Voting Power”
shall mean the aggregate votes entitled to be cast generally in the election of
the Board of Directors, or similar managing group, of a corporation or other
entity by holders of then outstanding Voting Securities of such corporation or
other entity.


 


(3)        ‘Person” shall mean any
individual, entity (including, without limitation, any corporation,
partnership, trust, joint venture, association or governmental body) or group
(as defined in Sections 14(d)(3) or l5(d)(2) of the Exchange Act and the rules
and regulations thereunder); provided, however, that Person shall not include
the Company, any of its subsidiaries, any employee benefit plan of the Company
or any of its majority-owned subsidiaries or any entity organized, appointed or
established by the Company or such subsidiaries for or pursuant to the terms of
any such plan.


 





















 


(4)        “Voting Securities” shall
mean all securities of a corporation or other entity having the right under
ordinary circumstances to vote in an election of the Board of Directors, or
similar managing group, of such corporation or other entity.


 


3.             Payment
of Exercise Price.


 


(a) Payment of
the exercise price for shares purchased upon exercise of this option, together
with all applicable taxes and fees, shall be made by delivery to the
Representative of cash or other verifiable funds (wire transfer, cashier’s
check, money order) payable to the order of the Representative, or, if the
Employee elects and the Company permits, by delivery of shares of Common Stock
held by the Employee for at least six months and having a fair market value (as
determined by the Board of Directors of the Company in accordance with the
terms of the Plan) equal to or less than the aggregate exercise price of the
shares to be purchased, and any difference shall be paid by cash or check.


 


(b) If the
Employee elects to exercise options by delivery of shares of Common Stock, the
certificate(s) representing the shares shall be registered in the name of the
Employee and duly executed in blank, or accompanied by a stock power duly
executed in blank, by the Employee suitable for purposes of transferring such
shares to the Company. The shares so tendered shall be free of all liens,
claims and encumbrances.


 


4.             Delivery
of Shares.


 


The
Representative shall, upon receipt of the exercise price, together with all
applicable taxes and fees, and verification of funds for the number of shares
purchased and paid for, make prompt delivery of such shares to the Employee,
provided that if any law or regulation requires the Representative or the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act, any applicable listing requirements of any national securities
exchange on which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.


 


5.             Non-transferability
of Option.


 


Except as
expressly provided in the Plan or as provided in Section 2(c) and 2(d) hereof,
this option is personal and no rights granted hereunder shall be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) nor shall any such rights be subject to execution, attachment


 





















 


or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
option or of such rights contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon this option or such rights, this option
and such rights shall become null and void.


 


6.             No
Special Employment Rights.


 


Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any of its subsidiaries
to continue the employment of the Employee for the period within which this
option may be exercised.


 


7.             No
Rights as a Stockholder.


 


The Employee
shall have no rights as a stockholder with respect to any shares which may be
purchased by exercise of this option unless and until such shares are duly
issued and delivered to the Employee. Except as otherwise expressly provided in
the Plan, no adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock is issued.


 


8.             Withholding
Taxes and Fees.


 


No shares of
Common Stock purchased shall be delivered to or in respect of the Employee
unless the amount of all applicable federal, state and local withholding tax
requirements imposed upon the Company with respect to the issuance of such
shares of Common Stock, together with all applicable fees, has been remitted to
the Representative.


 


9.             Certain
Limits.


 


(a)
Notwithstanding anything in this Agreement to the contrary, but subject to the
application of clause (b) below, to the extent the Employee would be subject to
the excise tax under Section 4999 of the Code on the amounts payable pursuant
to this Agreement and such other amounts or benefits the Employee receives from
the Company, any person whose actions result in a change of ownership covered
by Section 280G(b)(2) of the Code or any person affiliated with the Company or
such person, required to be included in the calculation of parachute payments
for purposes of Sections 280G and 4999 of the Code, the amounts vested pursuant
to Section 2(a) of this Agreement shall be automatically reduced to an amount
one dollar less than that which, when combined with such other amounts, would
subject the Employee to such excise tax.


 


(b) If the
Employee’s employment with the Company is terminated by the Company without
Cause (hereinafter defined) or by the Employee upon a Constructive Termination
for Good Reason (hereinafter defined), in each case


 





















 


within one year following a
Change in Control (a “Protected Termination”), then the provisions of this
clause (b) will apply and clause (a) shall not be applicable. If a Protected
Termination occurs, then notwithstanding anything in this Agreement to the contrary,
if (i) any amounts due to the Employee under this Agreement and any other plan
or program of the Company constitute a “parachute payment,’ as such term is
defined in Code Section 280G(b)(2), and
(ii) the amount of the parachute payment, reduced by all federal, state and
local taxes applicable thereto, including the excise tax imposed pursuant to
Code Section 4999, is less than the amount the Employee would receive if he
were paid three times his “base amount,” as defined in Code Section 280G(b)(3),
less one dollar, reduced by all federal, state and local taxes applicable
thereto, then the aggregate of the amounts constituting the parachute payment
shall be reduced to an amount that will equal three times his base amount less
one dollar.


 


(c) The determinations
to be made with respect to this Section shall be made by an accounting firm
jointly selected by the Company’s Board of Directors and the Employee and paid
by the Company, and which may be the Company’s independent auditors.


 


(d)           For
purposes of this Section 9:


 


(i)    Termination
for “Cause’ shall have occurred if, on or after the date of the Change in
Control, the Company terminates Employee’s employment because (i) as a result
of an investigation, the Employee shall (A) be found to have engaged in, (B)
admit in writing facts amounting to, or (C) be held civilly liable for, fraud,
embezzlement or dishonesty, (ii) the Employee discloses Company trade secrets
or confidential Company matters to unauthorized persons and such disclosures
are reasonably likely to be materially injurious to the Company, monetarily or
otherwise, (iii) the Employee, after reasonable notice and opportunity to
correct his conduct, willfully refuses or continually neglects to substantially
perform his duties and assigned work, or (iv) the Employee materially breaches
any provision of any employment agreement with the Company.


 


(ii) “Constructive
Termination for Good Reason” means:


 


(1)        the Company has taken
action that results in a material diminution in the Employees position (other
than titles and reporting requirements), authority, duties or responsibilities
with the Company in effect immediately before the date of closing of the Change
in Control;


 


(2)        the level of benefits or
compensation (individual base compensation and short and long-term incentive
opportunity) provided to the Employee is reduced below the comparable level
payable to similarly situated employees of the Company; or


 





















 


(3)        the Employee is actually
transferred, or offered a proposed transfer, as evidenced in a written
communication from the Company to the Employee, to another location other than
the location at which he was primarily employed immediately preceding the
Change in Control, unless that new location is a major operating unit or
facility of the Company that is located within 50 miles of the Employee’s
primary location as of the date immediately preceding a transfer; provided,
however, (A) the Employee, within thirty (30) days from the date that he is
given written notice by the Company of such actual or proposed transfer, shall
provide the Committee or the Board with written notice that the transfer shall
constitute a Constructive Termination for Good Reason, (B) the Company, within
twenty (20) days of receipt of the notice, fails to provide the Employee with
written notice rescinding the actual or proposed transfer and (C) if the
Company does not rescind the transfer, the Employee must terminate his
employment due to Constructive Termination for Good Reason within forty (40)
days following expiration of the twenty (20)-day period so that in any event
the Employee shall have terminated his employment with the Company within
ninety (90) days after the Employee first receives written notice from the
Company of such actual or proposed transfer.


 


10.           Miscellaneous.


 


(a)           Except
as provided herein, this Agreement may not be amended or otherwise modified
unless evidenced in writing and signed by the Company and the Employee


 


(b)           All
notices under this Agreement shall be mailed or delivered by hand to the parties
at their respective addresses set forth beneath their names below or at such
other address as may be designated in writing by either of the parties to one
another.


 


(c)           This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas.


 


 


	
  Grant Date:

  	
  TANOX, INC.

  
	
   

  	
   

  	
  By:

  
	
   

  	
  Title:VP of Finance

  
	
   

  	
  Address:

  	
  10301 Stella Link

  
	
   

  	
   

  	
  Houston,
  Texas 77025

  
				



 


EMPLOYEE’S
ACCEPTANCE


 


The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.


 





















 


	
  EMPLOYEE

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
					



 





















 


TANOX, INC.


NON-QUALIFIED STOCK OPTION AGREEMENT


 


1.             Grant
of Option.


 


TANOX, INC., a
Delaware corporation (the ‘Company’), hereby grants to                       (the
“Employee”), an option, pursuant to the Company’s 1997 Stock Plan (the “Plan”),
to purchase an aggregate of                shares
of Common Stock, $01 par value per share, of the Company (‘Common Stock”) at a
price of                per
share, purchasable as set forth in and subject to the terms and conditions of
this option and the Plan. The date of grant of this option is hereinafter
referred to as the “Grant Date.”


 


2.             Exercise
of Option and Provisions for Termination.


 


(a)           Except
as otherwise provided herein, this option is exercisable for the first time
with respect to the following shares subject to the option:


 


shares on the
first anniversary of the Grant Date; an additional


 


shares on the
second anniversary of the Grant Date; an additional


 


shares on the
third anniversary of the Grant Date; an additional


 


shares on the
fourth anniversary of the Grant Date; and an additional


 


shares on the
fifth anniversary of the Grant Date; so that, after the expiration of the fifth
anniversary of the Grant Date, the option shall be exercisable in full.


 


To the extent
not exercised, installments shall be cumulative and shall be exercisable in
whole or in part; provided that no partial exercise of the option shall be for
less than 10 whole shares.


 


This option
shall become fully exercisable, irrespective of the limitations set forth
above, provided that the Employee has been in continuous employment since the
Grant Date, upon a Change in Control. This option may not be exercised after
the tenth anniversary of the Grant Date.


 


(b) Subject
to the conditions hereof, this option shall be exercisable by the Employee
contacting the Company’s designated stock option administration representative
(the “Representative”), specifying the number of shares to be purchased and the
exercise price to be paid therefor and accompanied by payment in accordance
with Section 3 hereof.


 





















 


(c) If
the Employee ceases to be employed by the Company or one of its subsidiaries
for any reason, including retirement but other than death, this option shall
immediately terminate; provided, however, that any portion of this option which
was otherwise exercisable on the date of termination of the Employees
employment may be exercised within the three-month period following the date on
which the Employee ceased to be so employed unless termination was due to cause’
as determined by the Board of Directors or the Employee is found by the Board
of Directors to have disclosed trade secrets of the Company. In no event may
this option be exercised after the tenth anniversary of the Grant Date. Any
such exercise may be made only to the extent of the number of shares subject to
this option which are purchasable upon the date of such termination of
employment. If the Employee dies during such three-month period, this option
shall be exercisable by the Employee’s personal representatives, heirs or
legatees to the same extent and during the same period that the Employee could
have exercised this option on the date of his or her death.


 


(d) If
the Employee dies while an employee of the Company or any subsidiary of the
Company, this option shall be exercisable, by the Employee’s personal
representatives, heirs or legatees, to the same extent that the Employee could
have exercised this option on the date of death. This option or any unexercised
portion hereof shall terminate unless so exercised prior to the earlier of the
expiration of one year from the date of such death or the tenth anniversary of
the Grant Date.


 


(e) The
Employee agrees not to exercise this option, and that the Company will not be
obligated to issue any shares of Common Stock pursuant to this option
agreement, if the exercise of the option or the issuance of such shares would
constitute a violation by the Employee or by the Company of any provision of
any law or regulation of any governmental authority or any stock exchange or
transaction quotation system. Whether or not the issuance of shares covered by
the Plan have been registered pursuant to the Securities Act of 1933, as
amended, the Company may, at its election, require the Employee to give a representation
in writing in form and substance satisfactory to the Company to the effect that
the Employee is acquiring such shares for the Employee’s own account for
investment and not with a view to, or for sale in connection with, the
distribution of such shares or any part thereof.


 


If any law or
regulation requires the Company to take any action with respect to the shares
specified in such notice, the time for delivery thereof, which would otherwise
be as promptly as possible, shall be postponed for the period of time necessary
to take such action.


 


(f) A “Change
in Control” shall be deemed to have occurred on the date that one or more of
the following occurs:


 





















 


(i)            Individuals
who, on the date hereof, constitute the entire Board of Directors of the Company
(“Incumbent Directors”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of the
then Incumbent Directors shall be considered as though such individual was an
Incumbent Director, but excluding, for this purpose any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest, as such terms are used in Rule 14a-1 1 under the
Securities Exchange Act of 1934, as amended (“Exchange Act”) or other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
(as defined below) other than the Board;


 


(ii)           The
stockholders of the Company shall approve (A) any merger, consolidation or
recapitalization of the Company (or, if the capital stock of the Company is
affected, any subsidiary of the Company), or any sale, lease, or other transfer
(in one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company (each of the foregoing being an “Acquisition Transaction”) where (I)
the stockholders of the Company immediately prior to such Acquisition
Transaction would not immediately after such Acquisition Transaction
beneficially own, directly or indirectly, shares or other ownership interests
representing in the aggregate fifty one percent (51%) or more of (a) the then
outstanding common stock or other equity interests of the corporation or other
entity surviving or resulting from such merger, consolidation or
recapitalization or acquiring such assets of the Company, as the case may be
(the Surviving Entity (or of its ultimate parent corporation or other entity,
if any), and (b) the Combined Voting Power of the then outstanding Voting
Securities of the Surviving Entity (or of its ultimate parent corporation or
other entity, if any) or (2) the Incumbent Directors at the time of the initial
approval of such Acquisition Transaction would not immediately after such
Acquisition Transaction constitute a majority of the Board of Directors, or
similar managing group, of the Surviving Entity (or of its ultimate parent
corporation or other entity, if any), or (B) any plan or proposal for the
liquidation or dissolution of the Company; or


 


(iii) Any
Person other than Nancy T. Chang or Tse Wen Chang shall be or become the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing in the
aggregate more than forty percent (40%) of either (A) the then outstanding
shares of common stock of the Company (“Common Stock”) or (B) the Combined
Voting Power of all then outstanding Voting Securities of the Company;
provided, however, that notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred for purposes of this Subsection (iii):


 


(1)           Solely
as a result of an acquisition of securities by the Company which, by reducing
the number of Common Stock or other Voting Securities outstanding,


 





















 


increases (a)
the proportionate number of Common Stock beneficially owned by any Person to
more than forty percent (40%) of the Common Stock then outstanding, or (b) the
proportionate voting power represented by the Voting Securities beneficially
owned by any Person to more than forty percent (40%) of the Combined Voting
Power of all then outstanding Voting Securities; or


 


(2)           Solely
as a result of an acquisition of securities directly from the Company except
for any conversion of a security that was not acquired directly from the
Company,


 


(3)           provided,
further, that if any Person referred to in paragraph (I) or (2) of this
Subsection (iii) shall thereafter become the beneficial owner of any additional
Common Stock or other Voting Securities of the Company (other than pursuant to
a stock split, stock dividend or similar transaction), then a Change in Control
shall be deemed to have occurred for purposes of this Subsection (iii).


 


(iv) For
purposes of this Section (f):


 


(1)           “Affiliate”
shall mean, as to a specified Person, another Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the specified Person, within the meaning of such
terms as used in Rule 405 under the Securities Act of 1933, as amended (“Securities
Act”), or any successor rule.


 


(2)           “Combined
Voting Power” shall mean the aggregate votes entitled to be cast generally in
the election of the Board of Directors, or similar managing group, of a
corporation or other entity by holders of then outstanding Voting Securities of
such corporation or other entity.


 


(3)           “Person”
shall mean any individual, entity (including, without limitation, any
corporation, partnership, trust, joint venture, association or governmental
body) or group (as defined in Sections 14(d)(3) or 15(d)(2) of the Exchange Act
and the rules and regulations thereunder); provided, however, that Person shall
not include the Company, any of its subsidiaries, any employee benefit plan of
the Company or any of its majority-owned subsidiaries or any entity organized,
appointed or established by the Company or such subsidiaries for or pursuant to
the terms of any such plan.


 


(4)           “Voting
Securities” shall mean all securities of a corporation or other entity having
the right under ordinary circumstances to vote in an election of the Board of
Directors, or similar managing group, of such corporation or other entity.


 


3.             Payment
of Exercise Price.


 


(a) Payment
of the exercise price for shares purchased upon exercise of this option,
together with all applicable taxes and fees, shall be made by delivery to


 





















 


the Representative
of cash or other verifiable funds (wire transfer, cashiers check, money order)
payable to the order of the Representative, or, if the Employee elects and the
Company permits, by delivery of shares of Common Stock held by the Employee for
at least six months and having a fair market value (as determined by the Board
of Directors of the Company in accordance with the terms of the Plan) equal to
or less than the aggregate exercise price of the shares to be purchased, and
any difference shall be paid by cash or check.


 


(b) If
the Employee elects to exercise options by delivery of shares of Common Stock,
the certificate(s) representing the shares shall be registered in the name of
the Employee and duly executed in blank, or accompanied by a stock power duly
executed in blank, by the Employee suitable for purposes of transferring such
shares to the Company. The shares so tendered shall be free of all liens,
claims and encumbrances.


 


4.             Delivery
of Shares.


 


The
Representative shall, upon receipt of the exercise price, together with all
applicable taxes and fees, and verification of funds for the number of shares
purchased and paid for, make prompt delivery of such shares to the Employee,
provided that if any law or regulation requires the Representative or the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act, any applicable listing requirements of any national securities
exchange on which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.


 


5.             Non-transferability
of Option.


 


Except as
expressly provided in the Plan or as provided in Section 2(c) and 2(d) hereof,
this option is personal and no rights granted hereunder shall be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) nor shall any such rights be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option or of such rights contrary to the provisions
hereof, or upon the levy of any attachment or similar process upon this option
or such rights, this option and such rights shall become null and void.


 


6.             No
Special Employment Rights.


 


Nothing
contained in the Plan or this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any of its


 





















 


subsidiaries
to continue the employment of the Employee for the period within which this
option may be exercised.


 


7.             No
Rights as a Stockholder.


 


The Employee
shall have no rights as a stockholder with respect to any shares which may be
purchased by exercise of this option unless and until such shares are duly
issued and delivered to the Employee. Except as otherwise expressly provided in
the Plan, no adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock is issued.


 


8.             Withholding
Taxes and Fees.


 


No shares of
Common Stock purchased shall be delivered to or in respect of the Employee
unless the amount of all applicable federal, state and local withholding tax
requirements imposed upon the Company with respect to the issuance of such
shares of Common Stock, together with all applicable fees, has been remitted to
the Representative.


 


9.             Certain
Limits.


 


(a) Notwithstanding
anything in this Agreement to the contrary, but subject to the application of
clause (b) below, to the extent the Employee would be subject to the excise tax
under Section 4999 of the Code on the amounts payable pursuant to this
Agreement and such other amounts or benefits the Employee receives from the
Company, any person whose actions result in a change of ownership covered by
Section 280G(b)(2) of the Code or any person affiliated with the Company or
such person, required to be included in the calculation of parachute payments
for purposes of Sections 2800 and 4999 of the Code, the amounts vested pursuant
to Section 2(a) of this Agreement shall be automatically reduced to an amount
one dollar less than that which, when combined with such other amounts, would
subject the Employee to such excise tax.


 


(b) If
the Employee’s employment with the Company is terminated by the Company without
Cause (hereinafter defined) or by the Employee upon a Constructive Termination
for Good Reason (hereinafter defined), in each case within one year following a
Change in Control (a “Protected Termination”), then the provisions of this
clause (b) will apply and clause (a) shall not be applicable. If a Protected
Termination occurs, then notwithstanding anything in this Agreement to the
contrary, if (i) any amounts due to the Employee under this Agreement and any
other plan or program of the Company constitute a ‘parachute payment,’ as such
term is defined in Code Section 280G(b)(2), and (ii) the amount of the
parachute payment, reduced by all federal, state and local taxes applicable
thereto, including the excise tax imposed pursuant to Code Section 4999, is
less than the amount the Employee would receive if he were paid three times his
“base amount,” as defined in Code Section 280G(b)(3), less


 





















 


one dollar,
reduced by all federal, state and local taxes applicable thereto, then the
aggregate of the amounts constituting the parachute payment shall be reduced to
an amount that will equal three times his base amount less one dollar.


 


(c) For
purposes of this Section 9:


 


(i)            “Cause”
shall mean: (A) the continued and willful refusal by Employee to substantially
perform his duties after demand for substantial performance is delivered by the
Board which demand specifically identifies the manner in which the Board has
determined that the Employee has not substantially performed his duties, and
the Employee’s performance is not cured to the Board’s reasonable satisfaction
within thirty (30) days from such demand; (B) the engagement by Employee in
willful misconduct or dishonesty that is materially injurious to the Company,
monetarily or otherwise; (C) Employee’s felony conviction, or (D) disclosure by
the Employee of Company trade secrets or confidential Company matters to
unauthorized persons which is reasonably likely to be materially injurious to
the Company, monetarily or otherwise.


 


(ii)           “Constructive
Termination for Good Reason” means:


 


(1)           the
Employee’s duties or responsibilities are not comparable to the Employees
position, offices, duties, responsibilities or status with the Company at the
time of the Change in Control, or the Employees reporting responsibilities or
titles are changed and the change results in a material reduction of the
Employee’s responsibilities or position with the Company;


 


(2)           the
level of benefits or compensation (individual base compensation and short and
long-term incentive opportunity) provided to the Employee is reduced below the
comparable level payable to similarly situated employees of the Company; or


 


(3)           the
Employee is actually transferred, or offered a proposed transfer, as evidenced
in a written communication from the Company to the Employee, to another
location other than the location at which he was primarily employed immediately
preceding the Change in Control, unless that new location is a major operating
unit or facility of the Company that is located within 50 miles of the Employee’s
primary location as of the date immediately preceding a transfer; provided,
however, (A) the Employee, within thirty (30) days from the date that he is
given written notice by the Company of such actual or proposed transfer, shall
provide the Committee or the Board with written notice that the transfer shall
constitute a Constructive Termination for Good Reason, (B) the Company, within
twenty (20) days of receipt of the notice, fails to provide the Employee with
written notice rescinding the actual or proposed transfer and (C) if the
Company does not rescind the transfer, the Employee must terminate his
employment due to Constructive Termination for Good Reason within forty (40)
days following expiration of the twenty (20)-day period so that in any event
the Employee shall


 





















 


have
terminated his employment with the Company within ninety (90) days after the
Employee first receives written notice from the Company of such actual or
proposed transfer.


 


10.           Miscellaneous.


 


(a)           Except
as provided herein, this Agreement may not be amended or otherwise modified
unless evidenced in writing and signed by the Company and the Employee.


 


(b)           All
notices under this Agreement shall be mailed or delivered by hand to the
parties at their respective addresses set forth beneath their names below or at
such other address as may be designated in writing by either of the parties to
one another.


 


(d)           This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas.


 


	
  Grant Date:

  	
  TANOX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  .1

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
							



 


EMPLOYEE’S
ACCEPTANCE


 


The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.


 


	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
					



 





















 


TANOX, INC.


NON-QUALIFIED STOCK OPTION AGREEMENT


 


1.             Grant of Option.


 


TANOX, INC., a Delaware corporation (the “Company”), hereby grants to                 (the
“Employee), an option, pursuant to the Company’s 1997 Stock Plan (the ‘Plan”),
to purchase an aggregate of                 
shares of Common Stock, $01 par value per share, of the Company (“Common Stock”)
at a price of                 per
share, purchasable as set forth in and subject to the terms and conditions of
this option and the Plan. The date of grant of this option is hereinafter
referred to as the “date of grant.”


 


2.             Exercise of Option
and Provisions for Termination.


 


(a)           Except as otherwise
provided herein, this option is exercisable for the first time with respect to
the following shares subject to the option:


 


shares on the first anniversary of the date
of grant; an additional


 


shares on the second anniversary of the
date of grant; an additional


 


shares on the third anniversary of the date
of grant; an additional


 


shares on the fourth anniversary of the
date of grant; so that, after the expiration of the fourth anniversary of the
date of grant, the option shall be exercisable in full.


 


To the extent not exercised installments shall be cumulative and shall
be exercisable in whole or in part; provided that no partial exercise of the
option shall be for less than 10 whole shares.


 


This option shall become fully exercisable, irrespective of the
limitations set forth above, provided that the Employee has been in continuous
employment since the date of grant, upon a Change in Control. This option may
not be exercised at any time after the tenth anniversary of the date of grant.


 


(b)           Subject to the
conditions hereof this option shall be exercisable by the Employee giving
written notice of exercise to the Company, specifying the number of shares to
be purchased and the purchase price to be paid therefor and accompanied by
payment in accordance with Section 3 hereof. Such exercise shall be effective
upon receipt by the Treasurer of the Company of the written notice together
with the required payment.


 





















 


(c)           If the Employee ceases
to be employed by the Company or one of its subsidiaries for any reason,
including retirement but other than death, this option shall immediately
terminate; provided,  however, that any portion of this option
which was otherwise exercisable on the date of termination of the Employee’s
employment may be exercised within the three-month period following the date on
which the Employee ceased to be so employed unless termination was due to “cause”
as determined by the Board of Directors or the Employee is found by the Board
of Directors to have disclosed trade secrets of the Company. In no event may
this option be exercised after the tenth anniversary date. Any such exercise
may be made only to the extent of the number of shares subject to this option
which are purchasable upon the date of such termination of employment. If the
Employee dies during such three-month period, this option shall be exercisable
by the Employee’s personal representatives, heirs or legatees to the same
extent and during the same period that the Employee could have exercised this
option on the date of his or her death.


 


(d)           If the Employee dies
while an employee of the Company or any subsidiary of the Company, this option
shall be exercisable, by the Employees personal representatives, heirs or
legatees, to the same extent that the Employee could have exercised this option
on the date of his or her death. This option or any unexercised portion hereof
shall terminate unless so exercised prior to the earlier of the expiration of
one year from the date of such death or the tenth anniversary date.


 


(e)           The Employee agrees
that he will not exercise this option, and that the Company will not be
obligated to issue any shares of Common Stock pursuant to this option
agreement, if the exercise of the option or the issuance of such shares would
constitute a violation by the Employee or by the Company of any provision of
any law or regulation of any governmental authority or any stock exchange or
transaction quotation system. Whether or not the issuance of shares covered by
the Plan have been registered pursuant to the Securities Act of 1933, as
amended, the Company may, at its election, require the Employee to give a representation
in writing in form and substance satisfactory to the Company to the effect that
he is acquiring such shares for his own account for investment and not with a
view tot or for sale in connection with, the distribution of such shares or any
part thereof.


 


If any law or regulation requires the Company to take any action with
respect to the shares specified in such notice, the time for delivery thereof,
which would otherwise be as promptly as possible, shall be postponed for the
period of time necessary to take such action.


 


(f)            A “Change in Control”
shall be deemed to have occurred as of the date that one or more of the
following occurs:


 


(i)            Individuals who, as of
the date hereof, constitute the entire Board of


 





















 


Directors of the Company (“Incumbent Directors”) cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the then Incumbent Directors shall be considered as
though such individual was an Incumbent Director, but excluding, for this
purpose any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest, as such terms are
used in Rule 14a-1 1 under the Securities Exchange Act of 1934, as amended (“Exchange
Act”) or other actual or threatened solicitation of proxies or consents by or
on behalf of any Person (as defined below) other than the Board;


 


(ii)           The stockholders of the
Company shall approve (A) any merger, consolidation or recapitalization of the
Company (or, if the capital stock of the Company is affected, any subsidiary of
the Company), or any sale, lease, or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single plan)
of all or substantially all of the assets of the Company (each of the foregoing
being an “Acquisition Transaction”) where (1) the stockholders of the Company
immediately prior to such Acquisition Transaction would not immediately after
such Acquisition Transaction beneficially own, directly or indirectly, shares
or other ownership interests representing in the aggregate fifty one percent
(51%) or more of (a) the then outstanding common stock or other equity
interests of the corporation or other entity surviving or resulting from such
merger, consolidation or recapitalization or acquiring such assets of the
Company, as the case may be (the “Surviving Entity”) (or of its ultimate parent
corporation or other entity, if any), and (b) the Combined Voting Power of the
then outstanding Voting Securities of the Surviving Entity (or of its ultimate
parent corporation or other entity, if any) or (2) the Incumbent Directors at
the time of the initial approval of such Acquisition Transaction would not
immediately after such Acquisition Transaction constitute a majority of the
Board of Directors, or similar managing group of the Surviving Entity (or of its
ultimate parent corporation or other entity, if any), or (B) any plan or
proposal for the liquidation or dissolution of the Company; or


 


(iii) Any Person other than Nancy T. Chang or Tse Wen Chang shall be or
become the beneficial owner (as defined in Rules 1 3d-3 and 1 3d-S under the
Exchange Act), directly or indirectly, of securities of the Company
representing in the aggregate more than forty percent (40%) of either (A) the
then outstanding shares of common stock of the Company (‘Common Stock”) or (B)
the Combined Voting Power of all then outstanding Voting Securities of the
Company; provided, however, that notwithstanding the foregoing, a Change in
Control shall not be deemed to have occurred for purposes of this Subsection
(iii):


 


(1)           Solely as a result of
an acquisition of securities by the Company which, by reducing the number of
Common Stock or other Voting Securities outstanding, increases (a) the
proportionate number of Common Stock beneficially owned by


 





















 


any Person to more than forty percent (40%) of the Common Stock then
outstanding, or (b) the proportionate voting power represented by the Voting
Securities beneficially owned by any Person to more than forty percent (40%) of
the Combined Voting Power of all then outstanding Voting Securities; or


 


(2)           Solely as a result of
an acquisition of securities directly from the Company except for any
conversion of a security that was not acquired directly from the Company,


 


(3)           provided, further, that
if any Person referred to in paragraph (1) or (2) of this Subsection (iii)
shall thereafter become the beneficial owner of any additional Common Stock or
other Voting Securities of the Company (other than pursuant to a stock split,
stock dividend or similar transaction), then a Change in Control shall be deemed
to have occurred for purposes of this Subsection (iii).


 


(iv) For purposes of this Section (f):


 


(1)           “Affiliate” shall mean,
as to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the specified Person, within the meaning of
such terms as used in Rule 405 under the Securities Act of 1933, as amended (“Securities
Act”), or any successor rule.


 


(2)           “Combined Voting Power”
shall mean the aggregate votes entitled to be cast generally in the election of
the Board of Directors, or similar managing group, of a corporation or other
entity by holders of then outstanding Voting Securities of such corporation or
other entity.


 


(3)           “Person” shall mean any
individual, entity (including, without limitation, any corporation,
partnership, trust, joint venture, association or governmental body) or group
(as defined in Sections 14(d)(3) or 1 5(d)(2) of the Exchange Act and the rules
and regulations thereunder); provided, however, that Person shall not include
the Company, any of its subsidiaries, any employee benefit plan of the Company
or any of its majority-owned subsidiaries or any entity organized, appointed or
established by the Company or such subsidiaries for or pursuant to the terms of
any such plan.


 


(4)           “Voting Securities”
shall mean all securities of a corporation or other entity having the right
under ordinary circumstances to vote in an election of the Board of Directors,
or similar managing group, of such corporation or other entity.


 


3.             Payment of
Purchase Price.


 


(a)           Payment of the purchase
price for shares purchased upon exercise of this option shall be made by
delivery to the Company of cash or other verifiable funds (wire transfer,
cashiers check, money order) payable to the order of the


 





















 


Company in an amount equal to the purchase price of such shares, or, if
the Employee elects and the Company permits, by delivery of shares of Common
Stock held by the Employee for at least six months and having a fair market
value (as determined by the Board of Directors of the Company in accordance
with the terms of the Plan) equal to or less than the aggregate purchase price
of the shares to be purchased, and any difference shall be paid by cash or
check.


 


(b)           If the Employee elects
to exercise options by delivery of shares of Common Stock, the certificate(s)
representing the shares shall be registered in the name of the Employee and
duly executed in blank, or accompanied by a stock power duly executed in blank,
by the Employee suitable for purposes of transferring such shares to the
Company. The shares so tendered shall be free of all liens, claims and
encumbrances.


 


4.             Delivery of Shares.


 


The Company shall, upon receipt of the purchase price, and verification
of funds for the number of shares purchased and paid for, make prompt delivery
of such shares to the Employee provided that if any law or regulation requires
the Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act, any applicable listing requirements of any national securities
exchange on which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having jurisdiction over such issuance
and delivery, shall have been fully complied with.


 


5.             Non-transferability
of Option.


 


Except as expressly provided in the Plan or as provided in Section 2(c)
and 2(d) hereof, this option is personal and no rights granted hereunder shall
be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) nor shall any such rights be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or of such rights
contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon this option or such rights, this option and such rights
shall become null and void.


 


6.             No Special
Employment Rights.


 


Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company or any of its
subsidiaries to continue the employment of the Employee for the period within
which this option may be exercised.


 





















 


7.             No Rights as a
Stockholder.


 


The Employee shall have no rights as a stockholder with respect to any
shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such shares are duly issued and delivered
to the Employee. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.


 


8.             Withholding Taxes.


 


No certificates representing shares of Common Stock purchased hereunder
shall be delivered to or in respect of the Employee unless the amount of all
federal, state and local withholding tax requirements imposed upon the Company
with respect to the issuance of such shares of Common Stock has been remitted
to the Company or unless provisions to pay such withholding requirements have
been made to the satisfaction of the Committee.


 


9.             Certain Limits.


 


(a)           Notwithstanding
anything in this Agreement to the contrary, but subject to the application of
clause (b) below, to the extent the Employee would be subject to the excise tax
under Section 4999 of the Code on the amounts payable pursuant to this
Agreement and such other amounts or benefits the Employee receives from the
Company, any person whose actions result in a change of ownership covered by
Section 280G(b)(2) of the Code or any person affiliated with the Company or
such person, required to be included in the calculation of parachute payments
for purposes of Sections 280G and 4999 of the Code, the amounts vested pursuant
to Section 2(a) of this Agreement shall be automatically reduced to an amount
one dollar less than that which, when combined with such other amounts, would
subject the Employee to such excise tax.


 


(b)           If the Employee’s
employment with the Company is terminated by the Company without Cause
(hereinafter defined) or by the Employee upon a Constructive Termination for
Good Reason (hereinafter defined), in each case within one year following a
Change in Control (a ‘Protected Termination’), then the provisions of this
clause (b) will apply and clause (a) shall not be applicable. If a Protected
Termination occurs, then notwithstanding anything in this Agreement to the
contrary, if (i) any amounts due to the Employee under this Agreement and any
other plan or program of the Company constitute a “parachute payment,” as such
term is defined in Code Section 280G(b)(2), and (ii) the amount of the
parachute payment, reduced by all federal, state and local taxes applicable thereto,
including the excise tax imposed pursuant to Code Section 4999, is less than
the amount the Employee would receive if he were paid three times his ‘base
amount,” as defined in Code Section 280G(b)(3), less


 





















 


one dollar, reduced by all federal, state
and local taxes applicable thereto, then the aggregate of the amounts
constituting the parachute payment shall be reduced to an amount that will
equal three times his base amount less one dollar.


 


(c)           For purposes of this
Section 9:


 


(i)            “Cause” shall mean:
(A) the continued and willful refusal by Employee to substantially perform his
duties after demand for substantial performance is delivered by the Board which
demand specifically identifies the manner in which the Board has determined
that the Employee has not substantially performed his duties, and the Employee’s
performance is not cured to the Board’s reasonable satisfaction within thirty
(30) days from such demand; (B.) the engagement by Employee in willful
misconduct or dishonesty that is materially injurious to the Company,
monetarily or otherwise; (C) Employee’s felony conviction, or (D) disclosure by
the Employee of Company trade secrets or confidential Company matters to
unauthorized persons which is reasonably likely to be materially injurious to
the Company, monetarily or otherwise.


 


(ii)           ‘Constructive
Termination for Good Reason” means:


 


(1)           the Employee’s duties
or responsibilities are not comparable to the Employee’s position, offices,
duties, responsibilities or status with the Company at the time of the Change
in Control, or the Employee’s reporting responsibilities or titles are changed
and the change results in a material reduction of the Employee’s
responsibilities or position with the Company;


 


(2)           the
level of benefits or compensation (individual base compensation and short and
long-term incentive opportunity) provided to the Employee is reduced below the
comparable level payable to similarly situated officers of the Company; or


 


(3)           the Employee is
actually transferred, or offered a proposed transfer, as evidenced in a written
communication from the Company to the Employee, to another location other than
the location at which he was primarily employed immediately preceding the
Change in Control, unless that new location is a major operating unit or
facility of the Company that is located within 50 miles of the Employee’s
primary location as of the date immediately preceding a transfer; provided,
however, (A) the Employee, within thirty (30) days from the date that he is
given written notice by the Company of such actual or proposed transfer, shall
provide the Committee or the Board with written notice that the transfer shall
constitute a Constructive Termination for Good Reason, (B) the Company, within
twenty (20) days of receipt of the notice, fails to provide the Employee with
written notice rescinding the actual or proposed transfer and (C) if the
Company does not rescind the transfer, the Employee must terminate his
employment due to Constructive Termination ,for Good Reason within forty (40)
days following expiration of the twenty (20)-day period so that in any event
the Employee shall 


 





















 


have terminated his employment with the
Company within ninety (90) days after the Employee first receives written
notice from the Company of such actual or proposed transfer.


 


10.           Miscellaneous.


 


(a)           Except as provided
herein, this Agreement may not be amended or otherwise modified unless
evidenced in writing and signed by the Company and the Employee.


 


(b)           All notices under this
Agreement shall be mailed or delivered by hand to the parties at their
respective addresses set forth beneath their names below or at such other
address as may be designated in writing by either of the parties to one
another.


 


(c)           This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.


 


	
  Date of Grant:

  	
  TANOX, INC.

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
							



 


EMPLOYEE’S
ACCEPTANCE


 


The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.


 


	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
					



 





















 


TANOX, INC.


INCENTIVE STOCK OPTION AGREEMENT


 


1.             Grant of Option.


 


TANOX, INC., a Delaware corporation (the “Company’), hereby grants                         (the
“Employee”), an option, pursuant to the Company’s 1997 Stock Plan (the ‘Plan”),
to purchase an aggregate of                  shares
of Common Stock, $01 par value per share, of the Company (“Common Stock”) at a
price
of                  per
share, purchasable as set forth in and subject to the terms and conditions of
this option and the Plan. This option is intended to qualify as an incentive
stock option (Incentive Stock Option”) within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the Code”). The date of grant of
this option is hereinafter referred to as the ‘date of grant.”


 


2.             Exercise of Option
and Provisions for Termination.


 


(a)           Except as otherwise
provided herein, this option is exercisable for the first time with respect to
the following shares subject to the option:


 


shares on the first anniversary of the date
of grant; an additional


 


shares on the second anniversary of the
date of grant; an additional


 


shares on the third anniversary of the date
of grant; an additional


 


shares on the fourth anniversary of the
date of grant; and an additional


 


shares on the fifth anniversary of the date of grant; so that, after the
expiration of the fifth anniversary of the date of grant, the option shall be
exercisable in full.


 


To the extent not exercised, installments shall be cumulative and shall
be exercisable in whole or in part; provided that no partial exercise of the
option shall be for less than 10 whole shares.


 


This option shall become fully exercisable, irrespective of the
limitations set forth above, provided that the Employee has been in continuous
employment since the date of grant, upon a Change in Control. This option may
not be exercised at any time after the tenth anniversary of the date of grant.


 


(b) Subject to the conditions hereof, this option shall be exercisable
by the Employee giving written notice of exercise to the Company, specifying
the number of shares to be purchased and the purchase price to be paid therefor


 





















 


and accompanied by payment in accordance
with Section 3 hereof. Such exercise shall be effective upon receipt by the
Treasurer of the Company of the written notice together with the required
payment.


 


(c) If the Employee ceases to be employed by the Company or one of its
subsidiaries for any reason, including retirement but other than death, this
option shall immediately terminate; provided,  however, that any
portion of this option which was otherwise exercisable on the date of
termination of the Employee’s employment may be exercised within the
three-month period following the date on which the Employee ceased to be so
employed unless termination was due to cause” as determined by the Board of
Directors or the Employee is found by the Board of Directors to have disclosed
trade secrets of the Company. In no event may this option be exercised after
the tenth anniversary date. Any such exercise may be made only to the extent of
the number of shares subject to this option which are purchasable upon the date
of such termination of employment. If the Employee dies during such three-month
period, this option shall be exercisable by the Employees personal
representatives, heirs or legatees to the same extent and during the same
period that the Employee could have exercised this option on the date of his or
her death.


 


(d) If the Employee dies while an employee of the Company or any
subsidiary of the Company, this option shall be exercisable, by the Employee’s
personal representatives, heirs or legatees, to the same extent that the
Employee could have exercised this option on the date of his or her death. This
option or any unexercised portion hereof shall terminate unless so exercised
prior to the earlier of the expiration of one year from the date of such death
or the tenth anniversary date.


 


(e) The Employee agrees that he will not exercise this option, and that
the Company will not be obligated to issue any shares of Common Stock pursuant
to this option agreement, if the exercise of the option or the issuance of such
shares would constitute a violation by the Employee or by the Company of any
provision of any law or regulation of any governmental authority or any stock
exchange or transaction quotation system. Whether or not the issuance of shares
covered by the Plan have been registers pursuant to the Securities Act of 1933,
as amended, the Company may, at its election, require the Employee to give a
representation in writing in form and substance satisfactory to the Company to
the effect that he is acquiring such shares for his own account for investment
and not with a view to, or for sale in connection with, the distribution of
such shares or any part thereof.


 


If any law or regulation requires the Company to take any action with
respect to the shares specified in such notice, the time for delivery thereof,
which would otherwise be as promptly as possible, shall be postponed for the
period of time necessary to take such action.


 





















 


(f) A “Change in Control” shall be deemed to have occurred as of the
date that one or more of the following occurs:


 


(i)            Individuals who, as of
the date hereof, constitute the entire Board of Directors of the Company
(Incumbent Directors”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the then
Incumbent Directors shall be considered as though such individual was an
Incumbent Director, but excluding, for this purpose any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest, as such terms are used in Rule 14a-1l under the
Securities Exchange Act of 1934, as amended (Exchange Act”) or other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
(as defined below) other than the Board;


 


(ii) The stockholders of the Company shall approve (A) any merger,
consolidation or recapitalization of the Company (or, if the capital stock of
the Company is affected, any subsidiary of the Company), or any sale, lease, or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company (each of the foregoing being an Acquisition Transaction”)
where (1) the stockholders of the Company immediately prior to such Acquisition
Transaction would not immediately after such Acquisition Transaction
beneficially own, directly or indirectly, shares or other ownership interests
representing in the aggregate fifty one percent (51%) or more of (a) the then
outstanding common stock or other equity interests of the corporation or other
entity surviving or resulting from such merger, consolidation or
recapitalization or acquiring such assets of the Company, as the case may be
(the ‘Surviving Entity”) (or of its ultimate parent corporation or other
entity, if any), and (b) the Combined Voting Power of the then outstanding
Voting Securities of the Surviving Entity (or of its ultimate parent corporation
or other entity, if any) or (2) the Incumbent Directors at the time of the
initial approval of such Acquisition Transaction would not immediately after
such Acquisition Transaction constitute a majority of the Board of Directors,
or similar managing group of the Surviving Entity (or of its ultimate parent
corporation or other entity, if any), or (B) any plan or proposal for the
liquidation or dissolution of the Company; or


 


(iii) Any Person other than Nancy T. Chang or Tse Wen Chang shall be or
become the beneficial owner (as defined in Rules 1 3d-3 and 1 3d-5 under the
Exchange Act), directly or indirectly, of securities of the Company
representing in the aggregate more than forty percent (40%) of either (A) the
then outstanding shares of common stock of the Company (“Common Stock”) or (B)
the Combined Voting Power of all then outstanding Voting Securities of the
Company; provided, however, that notwithstanding the foregoing, a Change in
Control shall not be deemed to have occurred for purposes of this Subsection
(iii):


 





















 


(1)           Solely as a result of
an acquisition of securities by the Company which, by reducing the number of
Common Stock or other Voting Securities outstanding, increases (a) the
proportionate number of Common Stock beneficially owned by any Person to more
than forty percent (40%) of the Common Stock then outstanding, or (b) the
proportionate voting power represented by the Voting Securities beneficially
owned by any Person to more than forty percent (40%) of the Combined Voting
Power of all then outstanding Voting Securities; or


 


(2)           Solely as a result of
an acquisition of securities directly from the Company except for any
conversion of a security that was not acquired directly from the Company,


 


(3)           provided, further, that
if any Person referred to in paragraph (I) or (2) of this Subsection (iii)
shall thereafter become the beneficial owner of any additional Common Stock or
other Voting Securities of the Company (other than pursuant to a stock split,
stock dividend or similar transaction), then a Change in Control shall be
deemed to have occurred for purposes of this Subsection (iii).


 


(iv) For purposes of this Section (f):


 


(1)           “Affiliate” shall mean,
as to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the specified Person, within the meaning of
such terms as used in Rule 405 under the Securities Act of 1933, as amended (‘Securities
Act’), or any successor rule.


 


(2)           “Combined Voting Power”
shall mean the aggregate votes entitled to be cast generally in the election of
the Board of Directors, or similar managing group, of a corporation or other
entity by holders of then outstanding Voting Securities of such corporation or
other entity.


 


(3)           Person” shall mean any
individual, entity (including, without limitation, any corporation,
partnership, trust, joint venture, association or governmental body) or group
(as defined in Sections 14(d)(3) or 15(d)(2) of the Exchange Act and the rules
and regulations thereunder); provided, however, that Person shall not include
the Company, any of its subsidiaries, any employee benefit plan of the Company
or any of its majority-owned subsidiaries or any entity organized, appointed or
established by the Company or such subsidiaries for or pursuant to the terms of
any such plan.


 


(4)           “Voting Securities”
shall mean all securities of a corporation or other entity having the right
under ordinary circumstances to vote in an election of the Board of Directors,
or similar managing group, of such corporation or other entity.


 





















 


3.             Payment of
Purchase Price.


 


(a) Payment of the purchase price for shares purchased upon exercise of
this option shall be made by delivery to the Company of cash or other
verifiable funds (wire transfer, cashier’s check, money order) payable to the
order of the Company in an amount equal to the purchase price of such shares,
or, if the Employee elects and the Company permits, by delivery of shares of
Common Stock held by the Employee for at least six months and having a fair
market value (as determined by the Board of Directors of the Company in
accordance with the terms of the Plan) equal to or less than the aggregate
purchase price of the shares to be purchased, and any difference shall be paid
by cash or check.


 


(b) If the Employee elects to exercise options by delivery of shares of
Common Stock, the certificate(s) representing the shares shall be registered in
the name of the Employee and duly executed in blank, or accompanied by a stock
power duly executed in blank, by the Employee suitable for purposes of
transferring such shares to the Company. The shares so tendered shall be free
of all liens, claims and encumbrances.


 


4.             Delivery of Shares.


 


The Company shall, upon receipt of the purchase price, and verification
of funds for the number of shares purchased and paid for, make prompt delivery
of such shares to the Employee, provided that if any law or regulation requires
the Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act, any applicable listing requirements of any national securities
exchange on which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.


 


5.             Non-transferability
of Option.


 


Except as expressly provided in the Plan or as provided in Section 2(c)
and 2(d) hereof, this option is personal and no rights granted hereunder shall
be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) nor shall any such rights be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or of such rights
contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon this option or such rights, this option and such rights
shall become null and void.


 





















 


6.             No Special
Employment Rights.


 


Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company or any of its
subsidiaries to continue the employment of the Employee for the period within
which this option may be exercised.


 


7.             No Rights as a
Stockholder.


 


The Employee shall have no rights as a stockholder with respect to any
shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such shares are duly issued and
delivered to the Employee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.


 


8.             Withholding Taxes.


 


No certificates representing shares of Common Stock purchased hereunder
shall be delivered to or in respect of the Employee unless the amount of all
federal, state and local withholding tax requirements imposed upon the Company
with respect to the issuance of such shares of Common Stock has been remitted
to the Company or unless provisions to pay such withholding requirements have
been made to the satisfaction of the Committee.


 


9.             Qualification
under Section 422.


 


It is understood and intended that the option granted hereunder shall
qualify as an “incentive stock option” as defined in Section 422 of the Code.
Accordingly, the Employee understands that in order to obtain the benefits of
an incentive stock option under Section 421 of the Code, no sale or other
disposition may be made of any shares acquired upon exercise & the option
within the one-year period beginning on the day after the day of the transfer
of such shares to him or her, nor within the two-year period beginning on the
day after the grant of the option. If the Employee intends to dispose or does
dispose (whether by sale, exchange, gift, transfer or otherwise) of any such
shares within said periods, he or she will notify the Company within 30 days
after such disposition.


 


10.           Certain Limits.


 


(a) Notwithstanding anything in this Agreement to the contrary, but
subject to the application of clause (b) below, to the extent the Employee
would be subject to the excise tax under Section 4999 of the Code on the
amounts payable pursuant to this Agreement and such other amounts or benefits
the Employee receives from the Company, any person whose actions result in a
change of ownership covered by Section 280G(b)(2) of the Code or any person
affiliated with the Company or such person, required to be included in the
calculation of parachute payments for purposes of Sections 280G and 4999 of the
Code, the amounts


 





















 


vested pursuant to Section 2(a) of this
Agreement shall be automatically reduced to an amount one dollar less than that
which, when combined with such other amounts, would subject the Employee to
such excise tax.


 


(b) If the Employee’s employment with the Company is terminated by the
Company without Cause (hereinafter defined) or by the Employee upon a
Constructive Termination for Good Reason (hereinafter defined), in each case
within one year following a Change in Control (a “Protected Termination”), then
the provisions of this clause (b) will apply and clause (a) shall not be
applicable. If a Protected Termination occurs, then notwithstanding anything in
this Agreement to the contrary, if (I) any amounts due to the Employee under
this Agreement and any other plan or program of the Company constitute a “parachute
payment,” as such term is defined in Code Section 280G(b)(2), and (ii) the amount
of the parachute payment, reduced by all federal, state and local taxes
applicable thereto, including the excise tax imposed pursuant to Code Section
4999, is less than the amount the Employee would receive if he were paid three
times his “base amount,” as defined in Code Section 280G(b)(3), less one
dollar, reduced by all federal, state and local taxes applicable thereto, then
the aggregate of the amounts constituting the parachute payment shall be
reduced to an amount that will equal three times his base amount less one
dollar.


 


(c) The determinations to be made with respect to this Section shall be
made by an accounting firm jointly selected by the Company’s Board of Directors
and the Employee and paid by the Company, and which may be the Company’s
independent auditors.


 


(d) For purposes of this Section 10:


 


(i)            Termination for ‘Cause”
shall have occurred if, on or after the date of the Change in Control, the
Company terminates Employee’s employment because (i) as a result of an
investigation, the Employee shall (A) be found to have engaged in, (B) admit in
writing facts amounting to, or (C) be held civilly liable for, fraud,
embezzlement or dishonesty, (ii) the Employee discloses Company trade secrets
or confidential Company matters to unauthorized persons and such disclosures
are reasonably likely to be materially injurious to the Company, monetarily or
otherwise, (Hi) the Employee, after reasonable notice and opportunity to
correct his conduct, willfully refuses or continually neglects to substantially
perform his duties and assigned work, or (iv) the Employee materially breaches
any provision of any employment agreement with the Company.


 


(ii)           “Constructive
Termination for Good Reason” means:


 


(1)           the Company has taken
action that results in a material diminution in the Employee’s position (other
than titles and reporting requirements), authority, duties or responsibilities
with the Company in effect immediately before the date of the closing of the
Change in Control;


 





















 


(2)           the
level of benefits or compensation (individual base compensation and short and
long-term incentive opportunity) provided to the Employee is reduced below the
comparable level payable to similarly situated employees of the Company; or


 


(3)           the Employee is
actually transferred, or offered a proposed transfer, as evidenced in a written
communication from the Company to the Employee, to another location other than
the location at which he was primarily employed immediately preceding the
Change in Control, unless that new location is a major operating unit or
facility Of the Company that is located within 50 miles of the Employee’s
primary location as of the date immediately preceding a transfer; provided,
however, (A) the Employee, within thirty (30) days from the date that he is given
written notice by the Company of such actual or proposed transfer, shall
provide the Committee or the Board with written notice that the transfer shall
constitute a Constructive Termination for Good Reason, (B) the Company, within
twenty (20) days of receipt of the notice, fails to provide the Employee with
written notice rescinding the actual or proposed transfer and (C) if the
Company does not rescind the transfer, the Employee must terminate his
employment due to Constructive Termination for Good Reason within forty (40)
days following expiration of the twenty (20)-day period so that in any event
the Employee shall have terminated his employment with the Company within
ninety (90) days after the Employee first receives written notice from the
Company of such actual or proposed transfer.


 


11.           Miscellaneous.


 


(a) Except as provided herein, this Agreement may not be amended or
otherwise modified unless evidenced in writing and signed by the Company and
the Employee.


 


(b) All notices under this Agreement shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their names
below or at such other address as may be designated in writing by either of the
parties to one another.


 


(c)  This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.


 


 


	
  Date of Grant:

  	
   

  	
  TANOX, INC.

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
									



 


EMPLOYEE’S
ACCEPTANCE


 





















 


The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.


 


	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
					



 





















 


TANOX, INC.


INCENTIVE STOCK OPTION AGREEMENT


 


1.             Grant of Option.


 


TANOX, INC., a Delaware corporation (the Company”), hereby grants to             (the
“Employee”), an option, pursuant to the Company’s 1997 Stock Plan (the ‘Plan’),
to purchase an aggregate of         shares
of Common Stock, $01 par value per share, of the Company (“Common Stock”) at a
price of        per share, purchasable
as set forth in and subject to the terms and conditions of this option and the
Plan. This option is intended to qualify as an incentive stock option (‘Incentive
Stock Option”) within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”). The date of grant of this option is
hereinafter referred to as the “date of grant.”


 


2.             Exercise of Option
and Provisions for Termination.


 


(a)           Except as otherwise
provided herein, this option is exercisable for the first time with respect to
the following shares subject to the option:


 


shares on the first anniversary of the date
of grant; an additional


 


shares on the second anniversary of the
date of grant; an additional


 


shares on the third anniversary of the date
of grant; an additional


 


shares on the fourth anniversary of the
date of grant; and an additional


 


shares on the fifth anniversary of the date
of grant; so that, after the expiration of the fifth
anniversary of the date of grant, the option shall be exercisable in
full.


 


To the extent not exercised, installments shall be cumulative and shall
be exercisable in whole or in part; provided that no partial exercise of the
option shall be for less than 10 whole shares.


 


This option shall become fully exercisable, irrespective of the
limitations set forth above, provided that the Employee has been in continuous
employment since the date of grant, upon a Change in Control. This option may
not be exercised at any time after the tenth anniversary of the date of grant.


 


(b) Subject to the conditions hereof, this option shall be exercisable
by the Employee giving written notice of exercise to the Company, specifying
the number of shares to be purchased and the purchase price to be paid therefor
and accompanied by payment in accordance with Section 3 hereof. Such


 





















 


exercise shall be effective upon receipt by
the Treasurer of the Company of the written notice together with the required
payment.


 


(c) If the Employee ceases to be employed by the Company or one of its
subsidiaries for any reason, including retirement but other than death, this
option shall immediately terminate; provided,  however, that any
portion of this option which was otherwise exercisable on the date of
termination of the Employee’s employment may be exercised within the
three-month period following the date on which the Employee ceased to be so
employed unless termination was due to “cause” as determined by the Board of
Directors or the Employee is found by the Board of Directors to have disclosed
trade secrets of the Company. In no event may this option be exercised after
the tenth anniversary date. Any such exercise may be made only to the extent of
the number of shares subject to this option which are purchasable upon the date
of such termination of employment. If the Employee dies during such three-month
period, this option shall be exercisable by the Employee’s personal
representatives, heirs or legatees to the same extent and during the same
period that the Employee could have exercised this option on the date of his or
her death.


 


(d) If the Employee dies while an employee of the Company or any
subsidiary of the Company, this option shall be exercisable, by the Employee’s
personal representatives, heirs or legatees, to the same extent that the
Employee could have exercised this option on the date of his or her death. This
option or any unexercised portion hereof shall terminate unless so exercised
prior to the earlier of the expiration of one year from the date of such death
or the tenth anniversary date.


 


(e) The Employee agrees that he will not exercise this option, and that
the Company will not be obligated to issue any shares of Common Stock pursuant
to this option agreement, if the exercise of the option or the issuance of such
shares would constitute a violation by the Employee or by the Company of any
provision of any law or regulation of any governmental authority or any stock
exchange or transaction quotation system. Whether or not the issuance of shares
covered by the Plan have been registered pursuant to the Securities Act of
1933, as amended, the Company may, at its election, require the Employee to
give a representation in writing in form and substance satisfactory to the
Company to the effect that he is acquiring such shares for his own account for
investment and not with a view to, or for sale in connection with, the
distribution of such shares or any part thereof.


 


If any law or regulation requires the Company to take any action with
respect to the shares specified in such notice, the time for delivery thereof,
which would otherwise be as promptly as possible, shall be postponed for the
period of time necessary to take such action.


 





















 


(f) A “Change in Control’ shall be deemed to have occurred as of the
date that one or more of the following occurs:


 


(i) Individuals who, as of the date hereof, constitute the entire Board
of Directors of the Company (‘Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the then Incumbent Directors shall be considered as
though such individual was an Incumbent Director, but excluding, for this
purpose any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest, as such terms are
used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended (“Exchange
Act”) or other actual or threatened solicitation of proxies or consents by or
on behalf of any Person (as defined below) other than the Board;


 


(ii) The stockholders of the Company shall approve (A) any merger,
consolidation or recapitalization of the Company (or, if the capital stock of
the Company is affected, any subsidiary of the Company), or any sale, lease, or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company (each of the foregoing being an “Acquisition Transaction”)
where (1) the stockholders of the Company immediately prior to such Acquisition
Transaction would not immediately after such Acquisition Transaction
beneficially own, directly or indirectly, shares or other ownership interests
representing in the aggregate fifty one percent (51%) or more of (a) the then
outstanding common stock or other equity interests of the corporation or other
entity surviving or resulting from such merger, consolidation or
recapitalization or acquiring such assets of the Company, as the case may be
(the ‘Surviving Entity”) (or of its ultimate parent corporation or other
entity, if any), and (b) the Combined Voting Power of the then outstanding
Voting Securities of the Surviving Entity (or of its ultimate parent
corporation or other entity, if any) or (2) the Incumbent Directors at the time
of the initial approval of such Acquisition Transaction would not immediately
after such Acquisition Transaction constitute a majority of the Board of
Directors, or similar managing group, of the Surviving Entity (or of its
ultimate parent corporation or other entity, if any), or (B) any plan or
proposal for the liquidation or dissolution of the Company; or


 


(iii.) Any Person other than Nancy T. Chang or Tse Wen Chang shall be
or become the beneficial owner (as defined in Rules 1 3d-3 and 1 3d-5 under the
Exchange Act), directly or indirectly, of securities of the Company
representing in the aggregate more than forty percent (40%) of either (A) the
then outstanding shares of common stock of the Company (“Common Stock”) or (B)
the Combined Voting Power of all then outstanding Voting Securities of the
Company; provided, however, that notwithstanding the foregoing, a Change in
Control shall not be deemed to have occurred for purposes of this Subsection (iii):


 





















 


(1)           Solely as a result of
an acquisition of securities by the Company which, by reducing the number of
Common Stock or other Voting Securities outstanding, increases (a) the
proportionate number of Common Stock beneficially owned by any Person to more
than forty percent (40%) of the Common Stock then outstanding, or (b) the
proportionate voting power represented by the Voting Securities beneficially
owned by any Person to more than forty percent (40%) of the Combined Voting
Power of all then outstanding Voting Securities; or


 


(2)           Solely as a result of
an acquisition of securities directly from the Company except for any
conversion of a security that was not acquired directly from the Company,


 


(3)           provided, further, that
if any Person referred to in paragraph (1) or (2) of this Subsection (iii)
shall thereafter become the beneficial owner of any additional Common Stock or
other Voting Securities of the Company (other than pursuant to a stock split,
stock dividend or similar transaction), then a Change in Control shall be
deemed to have occurred for purposes of this Subsection (iii).


 


(iv) For purposes of this Section (f):


 


(1)           “Affiliate” shall mean,
as to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the specified Person, within the meaning of
such terms as used in Rule 405 under the Securities Act of 1933, as amended (“Securities
Act”), or any successor rule.


 


(2)           “Combined Voting Power”
shall mean the aggregate votes entitled to be cast generally in the election of
the Board of Directors, or similar managing group, of a corporation or other
entity by holders of then outstanding Voting Securities of such corporation or
other entity.


 


(3)           “Person” shall mean any
individual, entity (including, without limitation, any corporation,
partnership, trust, joint venture, association or governmental body) or group
(as defined in Sections 14(d)(3) or 15(d)(2) of the Exchange Act and the rules
and regulations thereunder); provided, however, that Person shall not include
the Company, any of its subsidiaries, any employee benefit plan of the Company
or any of its majority-owned subsidiaries or any entity organized, appointed or
established by the Company or such subsidiaries for or pursuant to the terms of
any such plan.


 


(4)           “Voting Securities”
shall mean all securities of a corporation or other entity having the right
under ordinary circumstances to vote in an election of the Board of Directors,
or similar managing group, of such corporation or other entity.


 





















 


3.             Payment of
Purchase Price.


 


(a) Payment of the purchase price for shares purchased upon exercise of
this option shall be made by delivery to the Company of cash or other
verifiable funds (wire transfer, cashier’s check, money order) payable to the
order of the Company in an amount equal to the purchase price of such shares,
or, if the Employee elects and the Company permits, by delivery of shares of
Common Stock held by the Employee for at least six months and having a fair
market value (as determined by the Board of Directors of the Company in
accordance with the terms of the Plan) equal to or less than the aggregate
purchase price of the shares to be purchased, and any difference shall be paid
by cash or check.


 


(b) If the Employee elects to exercise options by delivery of shares of
Common Stock, the certificate(s) representing the shares shall be registered in
the name of the Employee and duly executed in blank, or accompanied by a stock
power duly executed in blank, by the Employee suitable for purposes of
transferring such shares to the Company. The shares so tendered shall be free
of all liens, claims and encumbrances.


 


4.             Delivery of Shares.


 


The Company shall, upon receipt of the purchase price, and verification
of funds for the number of shares purchased and paid for, make prompt delivery
of such shares to the Employee, provided that if any law or regulation requires
the Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act, any applicable listing requirements of any national securities
exchange on which stock of the same class is then listed, and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.


 


5.             Non-transferability
of Option.


 


Except as expressly provided in the Plan or as provided in Section 2(c)
and 2(d) hereof, this option is personal and no rights granted hereunder shall
be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) nor shall any such rights be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or of such rights
contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon this option or such rights, this option and such rights
shall become null and void.


 





















 


6.             No Special
Employment Rights.


 


Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company or any of its
subsidiaries to continue the employment of the Employee for the period within
which this option may be exercised.


 


7.             No Rights as a
Stockholder.


 


The Employee shall have no rights as a stockholder with respect to any
shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such shares are duly issued and
delivered to the Employee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.


 


8.             Withholding Taxes.


 


No certificates representing shares of Common Stock purchased hereunder
shall be delivered to or in respect of the Employee unless the amount of all
federal, state and local withholding tax requirements imposed upon the Company
with respect to the issuance of such shares of Common Stock has been remitted
to the Company or unless provisions to pay such withholding requirements have
been made to the satisfaction of the Committee.


 


9.             Qualification
under Section 422.


 


It is understood and intended that the option granted hereunder shall
qualify as an “incentive stock option” as defined in Section 422 of the Code.
Accordingly, the Employee understands that in order to obtain the benefits of
an incentive stock option under Section 421 of the Code, no sale or other
disposition may be made of any shares acquired upon exercise of the option
within the one-year period beginning on the day after the day of the transfer
of such shares to him or her, nor within the two-year period beginning on the
day after the grant of the option. If the Employee intends to dispose or does
dispose (whether by sale, exchange, gift, transfer or otherwise) of any such
shares within said periods, he’ or she will notify the Company within 30 days
after such disposition.


 


10.           Certain Limits.


 


(a) Notwithstanding anything in this Agreement to the contrary, but
subject to the application of clause (b) below, to the extent the Employee
would be subject to the excise tax under Section 4999 of the Code on the
amounts payable pursuant to this Agreement and such other amounts or benefits
the Employee receives from the Company, any person whose actions result in a
change of ownership covered by Section 280G(b)(2) of the Code or any person
affiliated with the Company or such person, required to be included in the
calculation of parachute payments for purposes of Sections 280G and 4999 of the
Code, the amounts


 





















 


vested pursuant to Section 2(a) of this
Agreement shall be automatically reduced to an amount one dollar less than that
which, when combined with such other amounts, would subject the Employee to
such excise tax.


 


(b) If the Employee’s employment with the Company is terminated by the
Company without Cause (hereinafter defined) or by the Employee upon a
Constructive Termination for Good Reason (hereinafter defined), in each case
within one year following a Change in Control (a “Protected Termination”), then
the provisions of this clause (b) will apply and clause (a) shall not be
applicable. If a Protected Termination occurs, then notwithstanding anything in
this Agreement to the contrary, if (i) any amounts due to the Employee under
this Agreement and any other plan or program of the Company constitute a “parachute
payment,” as such term is defined in Code Section 280G(b)(2), and (ii) the
amount of the parachute payment, reduced by all federal, state and local taxes
applicable thereto, including the excise tax imposed pursuant to Code Section
4999, is less than the amount the Employee would receive if he were paid three
times his “base amount,” as defined in Code Section 280G(b)(3), less one
dollar, reduced by all federal, state and local taxes applicable thereto, then
the aggregate of the amounts constituting the parachute payment shall be
reduced to an amount that will equal three times his base amount less one
dollar.


 


(c) For purposes of this Section 10:


 


(i)            ‘Cause” shall mean:
(A) the continued and willful refusal by Employee to substantially perform his
duties after demand for substantial performance is delivered by the Board which
demand specifically identifies the manner in which the Board has determined
that the Employee has not substantially performed his duties, and the Employee’s
performance is not cured to the Board’s reasonable satisfaction within thirty
(30) days from such demand; (B) the engagement by Employee in willful
misconduct or dishonesty that is materially injurious to the Company,
monetarily or otherwise; (C) Employee’s felony conviction, or (D) disclosure by
the Employee of Company trade secrets or confidential Company matters to
unauthorized persons which is reasonably likely to be materially injurious to
the Company, monetarily or otherwise.


 


(ii)           ‘Constructive
Termination for Good Reason” means:


 


(1)           the Employee’s duties
or responsibilities are not comparable to the Employee’s position, offices,
duties, responsibilities or status with the Company at the time of the Change
in Control, or the Employee’s reporting responsibilities or titles are changed
and the change results in a material reduction of the Employee’s responsibilities
or position with the Company;


 


(2)           the
level of benefits or compensation (individual base compensation and short and
long-term incentive opportunity) provided to the Employee is reduced


 





















 


below the comparable level payable to
similarly situated officers of the Company; or


 


(3)           the Employee is
actually transferred, or offered a proposed transfer, as evidenced in a written
communication from the Company to the Employee, to another location other than
the location at which he was primarily employed immediately preceding the
Change in Control, unless that new location is a major operating unit or
facility of the Company that is located within 50 miles of the Employee’s
primary location as of the date immediately preceding a transfer; provided, however,
(A) the Employee, within thirty (30) days from the date that he is given
written notice by the Company of such actual or proposed transfer, shall
provide the Committee or the Board with written notice that the transfer shall
constitute a Constructive Termination for Good Reason, (B) the Company, within
twenty (20) days of receipt of the notice, fails to provide the Employee with
written notice rescinding the actual or proposed transfer and (C) if the
Company does not rescind the transfer, the Employee must terminate his
employment due to Constructive Termination for Good Reason within forty (40)
days following expiration of the twenty (20)-day period so that in any event
the Employee shall have terminated his employment with the Company within ninety
(90) days after the Employee first receives written notice from the Company of
such actual or proposed transfer.


 


11.           Miscellaneous.


 


(a)           Except as provided
herein, this Agreement may not be amended or otherwise modified unless
evidenced in writing and signed by the Company and the Employee.


 


(b)           All notices under this
Agreement shall be mailed or delivered by hand to the parties at their
respective addresses set forth beneath their names below or at such other
address as may be designated in writing by either of the parties to one
another.


 


(c)           This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.


 


 


	
  Date of Grant:

  	
   

  	
  TANOX, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
								



 





















 


EMPLOYEE’S
ACCEPTANCE


 


The
undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof.


 


	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
					



 





















 


STOCK OPTION AGREEMENT


 


Agreement made effective as of the       day
of           , between TANOX
BIOSYSTEMS, INC., a Texas corporation (the Company), and                        
(Employee).


 


To carry out the purposes of the Tanox Biosystems, Inc. 1987 Stock
Option Plan (the Plan), a copy of which is attached hereto as Exhibit A, by
affording Employee the opportunity to purchase shares of the $01 par value
common stock of the Company (the Stock”), and in consideration of the mutual
agreements and other matters set forth herein and in the Plan, the Company and
Employee hereby agree as follows:


 


1.             Grant of Option.
The Company hereby irrevocably grants to Employee the right and option (Option)
to purchase all or any part of an aggregate of                shares
of Stock, on the terms and conditions set forth herein and in the Plan, which
is incorporated herein by reference as a part of this Option. This Option is
not intended to constitute an incentive stock option, within the meaning of
section 422A (b) of the Internal Revenue Code of 1986, as amended (the “Code”).


 


2.             Purchase Price.
The purchase price of Stock purchased pursuant to the exercise of this Option
shall be       per share.


 


3.             Exercise
of Option. Subject to the earlier expiration or termination of this Option
as herein provided, this Option shall be cumulative and may be exercised, by
written notice to the Company, only at such time or times and for such
percentage of the aggregate number of shares offered by this Option, determined
by the number of full years from the date of grant hereof to the date of such
exercise, in accordance with the following schedule:


 




	
  Number

  of Full

  Years

  	
   

  	
  Percentage

  of Shares

  Purchasable

  	
   

  	
  Cumulative

  Percentage

  Purchasable

  	
   

  
	
  2 years

  	
   

  	
  40

  	
  %

  	
  40

  	
  %

  
	
  3 years

  	
   

  	
  20

  	
  %

  	
  60

  	
  %

  
	
  4 years

  	
   

  	
  20

  	
  %

  	
  80

  	
  %

  
	
  5 years

  	
   

  	
  20

  	
  %

  	
  100

  	
  %

  






 


Notwithstanding the provisions of vesting above, this option may be
exercised in full if, prior to full vesting, the Company is acquired, whether
by merger, sale of substantially all of its assets or sale of stock, if
following such transaction (including a series of related transactions) at
least 50% of the outstanding voting securities of the Company or its successor
shall not be owned directly or indirectly by stockholders that beneficially
owned voting securities of the


 





















 


Company immediately prior to such transaction in substantially the same
proportion as their ownership immediately prior to such transaction.


 


At or prior to the time this Option becomes exercisable, the Company
shall provide to Employee, if applicable, the buy-sell and other agreements
referred to below, together with certain information regarding the Company and
the Stock useful to Employee in making an investment decision, if such
information is not otherwise available to Employee.


 


This Option is not transferable by Employee (otherwise than by will or
the laws of descent and distribution as provided below), and may be exercised
only by Employee during Employee’s lifetime and while Employee remains an
employee of the Company, subject to any rights or restrictions contained in any
buy-sell or other agreement to which Employee is subject, except that:


 


(a)           If Employee’s employment
with the Company terminates for cause or voluntarily by Employee without the
written consent of the Company, this Option shall immediately terminate and
shall no longer be exercisable;


 


(b)           If Employee’s
employment with the Company terminates for any reason other than death or as
provided in (a) above, this Option may be exercised by Employee at any time
during the period of sixty (60) days following such termination or, upon death
of Employee within such period, by Employee’s estate (or the person who
acquires this Option by bequest or inheritance or by reason of the death of
Employee) during a period of one hundred eighty (180) days following Employee’s
death, but in each case only as to the number of shares Employee was entitled
to purchase hereunder as of the date Employee’s employment so terminates;
provided, however, that this Option and any Stock acquired pursuant hereto
shall be subject to any restrictions on transfer or any rights and options of
the Company and its shareholders contained in any buy-sell or other agreement
to which Employee is subject; or


 


(c)           If Employee dies while
in the employ of the Company, Employee’s estate, or the person who acquires
this Option by bequest or inheritance or by reason of the death of Employee,
may exercise this Option in full at any time during the period of one hundred
eighty (180) days following the date of employee’s death (subject to the
limitation set forth in Paragraph IV of the Plan as to the maximum amount of
Stock as to which this Option may first become exercisable in any calendar
year).


 


This Option shall not be exercisable in any event after the expiration
of One Hundred Twenty-One (121) months from the date of grant hereof. The
purchase price of shares as to which this Option is exercised shall be paid in
full at the time of exercise (a) in cash (including check, bank draft or money
order payable to the order of the Company), (b) by delivering to the Company
shares of Stock having a fair market value equal to the purchase price, or (c)
a combination of cash and


 





















 


Stock. For purposes of this Agreement, fair
market value of the Stock shall be determined in accordance with the provisions
of the Plan and any Stock delivered to the Company hereunder shall be required
to meet the holding period requirements set forth in the Plan. No fraction of a
share of Stock shall be issued by the Company upon exercise of a option or accepted by the Company in payment of the
exercise price thereof; rather, Employee shall provide a cash payment for such
cash amount as is necessary to effect the issuance and acceptance of only whole
shares of Stock.


 


Unless and until a certificate or certificates representing such shares
shall have been issued by the Company to Employee, Employee (or the person
permitted to exercise this Option in the event of Employee’s death) shall not
be or have any of the rights or privileges of a shareholder of the Company with
respect to shares acquirable upon an exercise of this Option.


 


4. Withholding of Tax. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income to Employee for federal or state income
tax purposes, Employee shall pay to the Company at the time of such exercise or
disposition such amount of money as the Company may require to meet its
obligation under applicable tax laws or regulations and, if Employee fails to
do so, the Company is authorized to withhold from any cash remuneration then or
thereafter payable to Employee any tax required to be withheld by reason of
such resulting compensation income.


 


5. Status of Stock. The Company may register for issue under the
Securities Act of 1933, as amended (the “Act”) the shares of Stock acquirable
upon exercise of this Option, and may keep such registration effective
throughout the period this Option is exercisable. In the absence of such
effective registration or an available exemption from registration, under the
Act, exercise of this Option and delivery of shares of Stock acquirable upon such
exercise will be delayed until registration of such shares is effective or an
exemption from registration under the Act is available. The Company intends to
use its reasonable efforts to ensure that no such delay will occur. If the
stock is not registered and an exemption from registration under the Act is
available upon an exercise of this Option, Employee (or the person permitted to
exercise this Option in the event of Employee’s death or incapacity), if
requested by the Company to do so, will be required to execute and deliver to
the Company in writing an agreement containing such representations and other
provisions as the Company may require to evidence Employee’s qualification to
acquire the Stock and otherwise assure compliance with applicable securities
laws.


 


No sales or disposition of shares of Stock acquired upon exercise of
this Option shall be made in the absence of a registration statement being on
file with respect to such shares under the Act unless an opinion of counsel
satisfactory to


 





















 


the Company that such sale or disposition
will not constitute a violation of the Act or any other applicable securities
laws is first obtained.


 


If the shares of Stock acquirable upon exercise of this Option are not
registered for issue under the Act, the Company, in its sole discretion, may
require that Employee execute a buy-sell or other agreement, in form and
substance satisfactory to the Company, which provides certain restrictions on
Employee’s right to transfer the shares of Stock and provides the Company and
certain of the other shareholders with rights to purchase the Employee’s Option
or shares of Stock acquired by Employee upon the happening of certain events,
including, without limitation, death, divorce, death of spouse, termination of
employment, or voluntary or involuntary transfer of Stock. Such agreement may
have such other provisions as the Company determines to be necessary to
reasonably restrict transfer of the shares of Stock or rights thereto to other
persons.


 


The certificates representing shares of Stock acquired under this
Option may bear such legend as the Committee deems appropriate, referring to
the provisions of this Paragraph 5.


 


6. Employment Relationship. Employee shall be considered to be
in the employment of the Company as long as Employee remains an employee of
either the Company, a parent or subsidiary corporation (as defined in section
425 of the Code) of the Company, if any, or a corporation or a parent or
subsidiary of such corporation assuming or substituting a new option for this
Option. Any question as to whether and when there has been a termination of
such employment, and the cause of such termination, shall be determined by the
Board of Directors of the employing corporation, and its determination shall be
final.


 


7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.


 


IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by one of its duly authorized officers, and Employee has executed this
Agreement, all as of the day and year first above written.


 


	
   

  	
  TANOX
  BIOSYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Title:President

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Employee