LOAN, PLEDGE AND OPTION AGREEMENT
THIS LOAN, PLEDGE AND OPTION AGREEMENT (the "Agreement") is made as of
July 31, 1997 between PARAGON MANAGEMENT SYSTEMS, INC., a California
corporation ("Lender" or the "Company"), K. XXXXX XXXXXX ("Borrower") and
MANATT, XXXXXX & XXXXXXXX, LLP ("Pledgeholder"), and provides as follows:
RECITALS
A. Borrower desires to borrow Two Hundred Thousand Dollars ($200,000.00)
from Lender on the terms and subject to the conditions of this Agreement.
B. To induce Lender to make the loan, Borrower desires to pledge and
grant to Lender a security interest in certain assets of Borrower, as more
fully described herein.
C. Borrower also desires to provide Lender an option to purchase certain
capital stock owned by Borrower, upon the occurrence of certain events, as
more fully described below.
D. The parties desire Pledgeholder to secure the Collateral and perform
other functions, as more fully described below.
THE PARTIES AGREE AS FOLLOWS:
1. LOAN.
1.1 ADVANCE OF FUNDS. Subject to the terms and conditions of this
Agreement Lender hereby loans to Borrower and Borrower hereby borrows the
amount of Two Hundred Thousand Dollars ($200,000.00) (the "Loan") which Loan
shall be evidenced by a Promissory Note in the form attached hereto as
Exhibit A (the "Note").
1.2 LIMITATION ON RECOURSE. In the event of any breach or default by
Borrower of his obligations under this Agreement or the Note, and
notwithstanding any other provision of this Agreement or the Note to the
contrary, the sole recourse of Lender shall be the Collateral (as such term
is defined in Section 2.1 hereof), and neither Borrower nor any person liable
by, through or under Borrower shall be personally liable therefor, nor shall
any of the property or assets of Borrower or of any such person, other than
the Collateral, be subject to garnishment, attachment or other process for
the enforcement of judgments or the collection of debts, except that the
foregoing limitations shall not apply to any breach or default concerning any
representation or warranty of Borrower or of any covenant of Borrower
concerning the ownership of or transfer of any interest in the Collateral.
This paragraph shall take priority over and be deemed to modify and supersede
any inconsistent provision contained in this Agreement or the Note, and any
such provision shall be null and void to the extent of the inconsistency.
1.3 ACCELERATION. Lender may, at its option and in its sole discretion,
declare the then outstanding principal balance of the Loan, together with all
accrued and unpaid interest thereon, to be immediately due and payable if any
of the following (each of which is referred to herein as an "Event of
Default") shall occur:
1.
(a) the failure of Borrower to pay any amount under the Note when
due, and upon written notice thereof given to Borrower, if such failure shall
not have been cured or waived within ten (10) business days of such notice;
(b) the commencement of any proceeding against Borrower in
bankruptcy, or otherwise seeking any reorganization, arrangement or similar
relief, or the appointment of a receiver, trustee, or liquidator to take
possession of the assets of Borrower, or the commencement of any other
proceeding under any law for the relief of creditors;
(c) any assignment by Borrower for the benefit of Borrower's
creditors; or
(d) any other breach by Borrower of any of Borrower's
representations, warranties or obligations under this Agreement which is not
cured to the satisfaction of Lender within thirty (30) days after notice of
such breach is deemed given pursuant to Section 6.6.
2. PLEDGE AS SECURITY.
2.1 PLEDGE AND GRANT OF SECURITY INTEREST. As security for all of
Borrower's obligations and liabilities to Lender whether now existing or
hereafter arising under this Agreement (the "Obligations"), Borrower hereby
assigns as security and pledges to Lender One Million Six Hundred Ninety Four
Thousand Nine Hundred Twenty (1,694,920) shares (the "Shares") of the Common
Stock of Lender owned by Borrower, and grants Lender a security interest in
Borrower's right, title and interest in and to the Shares, the proceeds (from
disposition or otherwise) thereof and all proceeds (from disposition or
otherwise) of the proceeds (collectively the "Collateral"). Borrower agrees
to take such additional actions (including, without limitation, the filing of
a Form UCC-1) as may be necessary or advisable at the reasonable request of
Lender to perfect and continue Lender's security interest in the Collateral.
2.2 STOCK DISTRIBUTIONS AND ADJUSTMENTS OF COLLATERAL. If, during
the term of this Agreement, any stock or other non-cash distribution,
dividend, stock split, reclassification, readjustment, exchange, substitution
or other change is declared or made in the capital structure of Lender, or
there is any merger, consolidation, reorganization or sale of all or
substantially all of the assets of Lender pursuant to which holders of Common
Stock of Lender are entitled to receive cash, securities or other property (a
"Reorganization"), all new, substituted and additional shares of stock or
other securities or property issued by reason of any such change or
Reorganization shall be immediately delivered by Borrower to Pledgeholder (as
defined in Section 4.1), together with duly executed assignment(s) separate
from certificate or other appropriate transfer and title documents, to be
held by Pledgeholder in the same manner as the Shares originally pledged
hereunder, and hereafter the term "Shares" or "Collateral" shall include such
cash securities or property. Furthermore, after such event, all references to
prices, number of Shares or number of shares of Common Stock of Lender in
this Agreement shall be adjusted to give effect to such event.
2.3 RELEASE OF COLLATERAL. Lender and Borrower mutually acknowledge
that the number of Shares pledged to secure the Loan is based on a fair
market value equal to One Dollar
2.
and Eighteen Cents ($1.18) per Share, as determined by the parties.
Notwithstanding the fact that the Company's Board of Directors may determine
at any time that the fair market value of shares of Common Stock of the
Company is in excess of such amount, Pledgeholder (as such term is defined in
Section 4.1 hereof) shall retain all Shares as Collateral.
2.4 SUBSTITUTION OF COLLATERAL. Borrower may substitute at any
time, and from time to time, any Collateral, with the prior written consent
of Lender, such consent to be given or withheld in Lender's sole discretion.
2.5 SALE OF COLLATERAL. In the event of the nonpayment of any
Obligations when due, whether by acceleration or otherwise, or upon the
happening of any Event of Default, Lender may then, or at any time
thereafter, at its election, apply, set off, collect or sell in one or more
sales, or take such steps as may be necessary to liquidate and reduce to cash
in the hands of Lender in whole or in part, with or without any previous
demands or demand of performance or notice or advertisement, the whole or
any part of the Collateral in such order as Lender may elect and any such
sale may be made either at public or private sale at its place of business or
elsewhere, or at any broker's board or securities exchange, either for cash
or upon credit or for future delivery. Lender-may be the purchaser of any or
all Collateral so sold and hold the same thereafter in its own right free
from any claim of Borrower or right of redemption. Demands of performance,
notices of sale, advertisements and presence of property at sale are hereby
waived.
3. OPTION.
3.1 OPTION TO PURCHASE SHARES. At any time from and after the date
the Borrower terminates service as an employee of or director or consultant
to the Company until repayment of the Loan and all accrued interest, Lender
shall have the right and option (the "Option"), exercisable at its sole
discretion by giving written notice to Borrower (with a copy to
Pledgeholder), to purchase from Borrower the Shares (plus any additional
stock of the Company, cash, securities or other property receivable on
account thereof as a result of any distribution, dividend, stock split,
reclassification, readjustment, exchange, substitution. Reorganization or
similar transaction with respect to such Shares since the date hereof) for an
aggregate price of Two Hundred Thousand Dollars ($200,000.00) (the "Purchase
Price"). The Purchase Price may be paid by applying and setting off dollar
for dollar the unpaid balance of principal and interest under the Note
(whether or not then due and payable), with any remaining balance to be paid
in cash. Lender shall have full power and authority to take any and all steps
in the name of the Lender or of Borrower to complete the transfer of such
Shares to Lender free of any rights of Borrower or any person claiming by,
through or under Borrower, including, without limitation, delivery to the
Lender of stock certificates representing such Shares and Assignments
Separate from Certificate as delivered by Borrower pursuant to Section 4.1
below.
3.
4. PLEDGE.
4.1 APPOINTMENT OF PLEDGEHOLDER. Lender hereby appoints Manatt,
Xxxxxx & Xxxxxxxx, LLP as "Pledgeholder" to accept and hold the deliveries
described below on its behalf. To assure Borrower's ability to perform
Borrower's Obligations under this Agreement, Borrower will, concurrently
with the delivery of this Agreement, deliver Stock Certificate No(s).
_________, together with duly executed blank Assignments Separate from
Certificate (in the form attached hereto as Exhibit B) for such
Certificate(s), to Pledgeholder, such Assignments to be held in pledge (the
"Pledge") pursuant to the terms of this Section 4.
4.2 DUTIES AFTER AN EVENT OF DEFAULT OR OPTION EXERCISE.
(a) Pledgeholder shall have no duty to determine the existence
of an Event of Default and shall, subject to Section 4.15, without any
liability whatsoever, rely upon the written notice of Lender that an Event of
Default has occurred. If, following an Event of Default, Lender shall elect
to exercise its right to realize on the Shares, Pledgeholder shall, upon the
receipt of written notice from Lender (with a copy to Borrower), subject to
Section 4.15, deliver possession of the Collateral to Lender, without
warranty. Following an Event of Default, Pledgeholder shall dispose of the
Collateral other than the Shares in accordance with written instructions of
Lender.
(b) If Lender exercises the Option pursuant to Section 3.1,
Pledgeholder shall, upon the receipt of written notice of the exercise of the
Option and delivery of payment in full of the Purchase Price, by any means
provided in Section 3.1, deliver possession of the Shares to Lender and, if
applicable, deliver the purchase funds to Borrower without warranty in either
case.
4.3 ATTORNEY-IN-FACT; ADDITIONAL STOCK ASSIGNMENTS. Borrower hereby
irrevocably constitutes and appoints Pledgeholder as Borrower's
attorney-in-fact and agent for the term of this Pledge to execute, with
respect to such securities or other Collateral as are deposited with
Pledgeholder hereunder, all documents necessary or appropriate to make such
securities or other Collateral negotiable and complete any transaction herein
contemplated. Borrower shall deliver to Pledgeholder from time to time such
number of stock assignments separate from certificate or other documents duly
executed by Borrower as may be reasonably requested by Lender or Pledgeholder.
4.4 RETURN OF PROPERTY. If at the time of termination of this
Agreement, Pledgeholder has in Pledgeholder's possession any documents,
securities, or other property belonging to Borrower, Pledgeholder shall
deliver all of same to Borrower and shall be discharged of all further
obligations hereunder.
4.5 DUTIES; MODIFICATION OF DUTIES. Pledgeholder shall carry out
Pledgeholder's duties hereunder to the best of Pledgeholder's ability and
shall be liable only for willful misconduct. Pledgeholder's duties hereunder
may be altered, amended, modified or revoked only by a written instrument
signed by Lender, Borrower and Pledgeholder.
4.
4.6 OBLIGATIONS. Pledgeholder shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed by Pledgeholder to be genuine and to have been signed or
presented by the proper party or parties. Pledgeholder shall not be
personally liable for any act Pledgeholder may do or omit to do hereunder as
Pledgeholder or as attorney-in-fact for Borrower while acting in good faith
and in the exercise of Pledgeholder's own good judgment, and any act done or
omitted by Pledgeholder pursuant to the advice of Pledgeholder's own
attorneys shall be conclusive evidence of such good faith.
4.7 AUTHORIZATION TO ACT. Pledgeholder is hereby expressly authorized
to disregard any and all warnings given by any of the parties hereto or by
any other person or corporation, excepting only orders or process of courts
of law, and is hereby expressly authorized to comply with and obey orders,
judgments or decrees of any court. In case Pledgeholder obeys or complies
with any such order, judgment or decree of any court, Pledgeholder shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
4.8 AUTHORITY TO INVEST. Any cash received by Pledgeholder pursuant to
this Agreement and designated by Lender as additional Collateral and which is
to be retained in pledge by Pledgeholder for more than fifteen (15) days
shall be invested in an interest bearing savings account specified by Lender
and the interest therein shall constitute a part of such additional
Collateral.
4.9 SUBSTITUTION OF COLLATERAL. If Pledgeholder receives securities or
other property as substitute for Collateral, an assignment(s) separate from
certificate if applicable and the consent of Lender in accordance with
Section 2.4 above, Pledgeholder shall deliver to Borrower the stock
certificates or other property for which Pledgeholder has received substitute
collateral.
4.10 BANKRUPTCY. Bankruptcy, insolvency, or dissolution of any party
hereto shall not affect Pledgeholder's performance hereunder.
4.11 STATUTE OF LIMITATIONS. Pledgeholder shall not be liable for the
lapse of any rights because of any statute of limitation applicable with
respect to this Agreement or any documents deposited with Pledgeholder.
4.12 LEGAL COUNSEL. Pledgeholder shall be entitled to employ such legal
counsel and other experts as Pledgeholder may deem necessary to properly
advise Pledgeholder in connection with Pledgeholder's obligations and may pay
such counsel reasonable compensation therefor for which Pledgeholder shall be
reimbursed by Lender.
4.13 TERMINATION OF DUTIES; SUCCESSOR. Pledgeholder's responsibilities
as Pledgeholder hereunder shall terminate if (i) Pledgeholder shall resign by
thirty (30) days' written notice to Borrower and Lender, (ii) Borrower and
Lender jointly agree as to Pledgeholder's termination and appoint
Pledgeholder's successor, or (iii) Pledgeholder ceases to exist or is
5.
otherwise unable to continue to discharge its duties hereunder. In the event
of Pledgeholder's termination as Pledgeholder by resignation, ceasing to
exist or by otherwise becoming unable to perform, Lender and Borrower shall
mutually appoint a successor. Upon Pledgeholder's receipt of notice of any
such appointment of Pledgeholder's successor, all documents, shares and other
property then in Pledgeholder's possession pursuant to this Agreement shall
be delivered to such successor.
4.14 FURTHER INSTRUMENTS. If Pledgeholder reasonably requires other or
further instruments in connection with this Agreement or obligations in
respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
4.15 CONFLICTING NOTICES; DISPUTES. It is understood and agreed that
should any dispute arise with respect to the delivery or ownership or right
of possession of the Collateral, secruities or any other property held by
Pledgeholder hereunder, Pledgeholder is authorized and directed to retain in
its possession without liability to anyone all or any part of said
Collateral, securities and such other property until such dispute shall have
been settled either by mutual written agreement of the parties concerned or
by a final order, decree, or judgment of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected, but
Pledgeholder shall be under no duty whatsoever to institute or defend any
such proceeding.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
5.1 OWNERSHIP OF COLLATERAL; NO CONFLICTS. Borrower represents and
warrants as of this date, and covenants for the period beginning on this date
and ending upon the termination of this Agreement, that (i) Borrower has and
will have the right to enter into this Agreement, to transfer to Pledgeholder
all or any part of the Collateral, free and clear of any lien, claim,
encumbrance or restriction of any type or nature whatsoever (other than
restrictions on resale that may arise under applicable federal and state
securities laws and the restrictions contained in the Company's Bylaws); (ii)
the Collateral is not and will not be subject to any right of first refusal,
right of repurchase or any similar right granted to, or retained by, the
Company, any shareholder of the Company or any other person which has not
been effectively waived or forfeited, other than the Option described in
Section 3 herein and the rights and restrictions contained in the Company's
Bylaws; and (iii) there is no provision of any existing agreement, and
Borrower will not enter into an agreement, by which Borrower is or would be
bound (or to which Borrower is or would become subject) that conflicts or
would conflict with this Agreement or the performance of Borrower's
obligations under this Agreement.
5.2 FURTHER ASSURANCES. Upon the reasonable request of Pledgeholder or
Lender, Borrower will prepare, execute and deliver any further instruments
and do any further acts that may be necessary to carry out more effectively
the purpose of this Agreement.
6. MISCELLANEOUS.
6.
6.1 AMENDMENT. Except as provided in Section 4.5, this Agreement may
only be amended by a writing signed by Borrower and Lender. The signature of
Pledgeholder shall be required as well for any amendment affecting Article 4
or 6 hereof.
6.2 ASSIGNMENT. Borrower may not assign or otherwise transfer any of
his rights or obligations under this Agreement. Except for any assignment of
rights under this Agreement to affiliated partnerships of Lender, or to
partners of Lender or such partnerships, Lender may assign all or any portion
of its rights and obligations under this Agreement only with the prior
written consent of Borrower, which consent shall not be unreasonably withheld
or delayed. Subject to the foregoing, this Agreement shall be binding upon
the heirs, executors and personal representatives of Borrower and shall be
binding upon and inure to the benefit of the successors and assigns of Lender.
6.3 ENTIRE AGREEMENT; CONTROLLING DOCUMENT. This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any and all prior negotiations, correspondence and
understandings between the parties with respect to the subject matter hereof,
whether oral or in writing.
6.4 COSTS OF ENFORCEMENT. If either party to this Agreement seeks to
enforce its rights under this Agreement by legal proceedings or otherwise,
the non-prevailing party shall pay all costs and expenses incurred by the
prevailing party, including, without limitation, all reasonable attorneys'
fees.
6.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to
contracts entered into by California residents and to be performed wholly in
the State of California.
6.6 NOTICES. All notices and other communications under this Agreement
(other than payments hereunder, which shall be deemed made as of the date of
receipt by Lender) shall be in writing, and shall be deemed to have been duly
given on the date of delivery if delivered personally, or on the second day
after mailing if mailed to the party to whom notice is to be given by first
class mail, registered or certified, postage prepaid, and addressed as
follows (until any such address is changed by notice duly given):
To Borrower at: K. Xxxxx Xxxxxx
c/o Paragon Management Systems, Inc.
0000 X. Xxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
To Lender at: Paragon Management Systems, Inc.
0000 X. Xxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
To Pledgeholder at: Manatt, Xxxxxx & Xxxxxxxx, LLP
Attn: T. Xxxx Xxxxx
00000 Xxxx Xxxxxxx Xxxxxxxxx
0.
Xxx Xxxxxxx, XX 00000-0000
Copies of all notices to be given to either Borrower or Lender pursuant to
this Agreement also shall be delivered to Pledgeholder.
6.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.8 SEVERABILITY. If any provision of this Agreement shall be
determined to be invalid or unenforceable, the remainder shall be valid and
enforceable to the maximum extent possible.
6.9 HEADINGS. The section headings used in this Agreement are intended
principally for convenience and shall not by themselves determine the rights
and obligations of the parties to this Agreement.
6.10 DELAY AND WAIVER. No delay on the party of Lender in exercising
any right under this Agreement shall operate as a waiver of such right. The
waiver by Lender of any term or condition of this Agreement shall not be
construed as a waiver of a subsequent breach or failure of the same term or
condition or a waiver of any other term or condition contained in this
Agreement.
6.11 TERM. This Agreement shall terminate on the later of (i) delivery
by Lender, to Borrower and Pledgeholder, of notice that all Obligations of
Borrower under this Agreement have been fulfilled, or (ii) exercise by Lender
of the Option and the transfer to Lender of the Shares subject to the Option.
8.
IN WITNESS WHEREOF, the undersigned have executed this Agreement the
day and year first above written.
BORROWER:
/s/ K. Xxxxx Xxxxxx
---------------------------------------
K. Xxxxx Xxxxxx
LENDER:
PARAGON MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
----------------------------------
Title: VP Strategic Partnerships
---------------------------------
Upon reading and approving the foregoing, and in consideration of the
consummation of the transactions contemplated hereby, I, XXXXX XXXXXX, the
spouse of K. Xxxxx Xxxxxx, agree to be bound by the Agreement and further
agree that any community property or other such interest shall be similarly
bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact
with respect to any amendment or exercise of any rights under the Agreement.
SPOUSE
/s/ Xxxxx Xxxxxx
---------------------------------------
The undersigned agrees to act as Pledgeholder under this Agreement
pursuant to Section 4 and agrees to be bound only by Section 4 and Section 6.
PLEDGEHOLDER
MANATT, XXXXXX & XXXXXXXX, LLP
By:
------------------------------------
9.
IN WITNESS WHEREOF, the undersigned have executed this Agreement the
day and year first above written.
BORROWER:
---------------------------------------
K. Xxxxx Xxxxxx
LENDER:
PARAGON MANAGEMENT SYSTEMS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Upon reading and approving the foregoing, and in consideration of the
consummation of the transactions contemplated hereby, I, __________________,
the spouse of K. Xxxxx Xxxxxx, agree to be bound by the Agreement and further
agree that any community property or other such interest shall be similarly
bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with
respect to any amendment or exercise of any rights under the Agreement.
SPOUSE
---------------------------------------
The undersigned agrees to act as Pledgeholder under this Agreement
pursuant to Section 4 and agrees to be bound only be Section 4 and Section 6.
PLEDGEHOLDER
MANATT, XXXXXX & XXXXXXXX, LLP
By: /s/ [ILLEGIBLE]
------------------------------------
9.
EXHIBIT A
SECURED PROMISSORY NOTE
Los Angeles, CA
July __, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
PARAGON MANAGEMENT SYSTEMS, INC., a California corporation at 0000 X. Xxxxxxx
Xxxx., Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other place as
the holder hereof may from time to time designate, the sum of Two Hundred
Thousand Dollars ($200,000.00) in lawful money of the United States, together
with interest on all unpaid principal at the rate of five percent (5%) per
annum, commencing on the date of this Note and continuing until paid in full.
Interest shall be payable semi-annually in arrears, not later than December
31st and June 30th. All outstanding principal and accrued interest shall be
due and payable in full on or before July 31, 2002. In addition, upon an
"Event of Default" as defined in that certain Loan. Pledge and Option
Agreement of even date herewith (the "Loan Agreement"), the holder of this
Note shall have the right to declare the entire sum of principal and accrued
interest immediately due and payable. This Note may be prepaid in whole or in
part at the option of the undersigned without premium or penalty at any time.
In case suit or any legal proceeding is instituted to collect this
Note or any portion thereof, the undersigned promises to pay, in addition to
the costs and disbursements allowed by law, reasonable attorneys' fees as
determined by the court.
The makers, endorsers and all persons now or hereafter liable on
this Note severally waive demand notice, presentment for payment and protest
and notice of any default whereby this Note may be declared immediately due
and payable.
This Note is secured by the Loan Agreement, pursuant to which the
undersigned has pledged certain shares of the Common Stock of Paragon
Management Systems, Inc. In the event of any breach of or default under the
Loan Agreement, the entire unpaid principal balance hereof, together with
accrued interest, shall at the option of the holder, without notice, become
immediately due and payable. This Note shall be governed by the laws of the
State of California.
---------------------------------------
K. Xxxxx Xxxxxx
EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I, K. Xxxxx Xxxxxx, hereby sell, assign and
transfer unto ____________________, __________ shares of the Common Stock of
Paragon Management Systems, Inc. (the "Company") standing in my name on the
books of the Company represented by Certificate No(s). ___________________
herewith and do hereby irrevocably constitute and appoint the Secretary or
Assistant Secretary of the Company to transfer said stock on the books of the
Company with full power of substitution in the premises.
Dated:
--------------------------
-----------------------------------
K. Xxxxx Xxxxxx
This Assignment Separate from Certificate was executed in
conjunction with the terms of a Loan. Pledge and Option Agreement dated
July __, 1997, and shall not be used in any manner except as provided in
such Agreement.
