LOAN AND PLEDGE AGREEMENT
Exhibit 10.10
THIS LOAN AND PLEDGE AGREEMENT (this “Agreement”) dated as of October 17, 2005 is made by
Xxxxxxx X. Xxxxxx (the “Borrower”), residing at 000 Xxxxx Xxxx, Xxx Xxxxx, XX 00000 in favor of
Asthmatx, Inc. (“Asthmatx”), a California corporation with its principal place of business at 0000
Xxxxx Xxxx Xxx, Xxxxxxxx Xxxx, XX 00000.
RECITALS
A. The Borrower desires to borrow Two Hundred Thousand Dollars ($200,000.00)
from Asthmatx in order to finance the purchase of One Million (1,000,000) shares (the
“Shares”) of Asthmatx’s Common Stock, $0.001 par value per share, issued upon the exercise of certain
stock options (the “Options”) granted by Asthmatx to the Borrower pursuant to certain Stock
Option Exercise Agreements governing such exercises (the “Exercise Agreements”). As used
herein, “Shares” means and includes any securities or other property received in exchange for
Shares, whether pursuant to a merger, consolidation, reorganization, recapitalization or similar
event.
B. Asthmatx is willing to make the Loan (as defined below) upon the condition,
among others, that the Borrower enter into this Agreement and grant the security interest and
pledge hereinafter described to secure the Liabilities (as defined in Section 16 hereof).
NOW, THEREFORE, for and in consideration of the premises and the Loan made by Asthmatx and
other good and valuable consideration, the receipt of which is hereby acknowledged, and intending
to be legally bound hereby, the parties hereby agree as follows:
1. Loan. Subject to the terms hereof, Asthmatx will make, on or after the date
hereof, a loan (the “Loan”) to the Borrower in the aggregate principal amount of Two Hundred
Thousand Dollars ($200,000.00), which Loan shall be made solely for the purpose of allowing
Borrower to pay the applicable exercise price required in order to exercise Options. The Loan
shall be payable in full on the earlier of (i) July 1, 2015, (ii) ninety (90) days after the date of any
termination of the Borrower’s employment with Asthmatx for any reason, (iii) the date
immediately preceding the date that Asthmatx (or any successor entity whose securities are
exchanged for Shares) files a registration statement pursuant to the Securities Act of 1933, as
amended, if such filing would result in a violation of Section 402 of the Xxxxxxxx-Xxxxx Act of
2002 if the loan were to remain outstanding, or (iv) in the event Asthmatx is to be acquired (by
merger, sale or otherwise) by a company (or any parent entity) whose securities are registered
under Section 12 of the Securities Exchange Act of 1934, as amended and such acquisition
would result in a violation of Section 402 of the Xxxxxxxx-Xxxxx Act of 2002 if the loan were to
remain outstanding, then immediately prior to the consummation of such acquisition (any such
date in clauses (i) through (iv), the “Maturity Date”).
2. Note. The Loan shall be evidenced by a full recourse promissory note of the
Borrower in the original principal amount of Two Hundred Thousand Dollars ($200,000.00)
(the “Note”), payable to Asthmatx in accordance with its terms, such Note to be substantially in
the form of Exhibit A attached hereto. The Note shall be dated the date of the Loan and shall
have the blanks therein appropriately completed.
3. Interest Rate. The Loan shall bear interest on the outstanding principal amount
thereof at the annual rate of 4.19%, compounded annually.
4. Prepayment of the Loan. The Borrower may prepay any portion of the amounts
due under the Loan at any time. Any pre-payments shall be applied first to the payment of
interest and then to reduce the principal balance of the Loan. If at any time the Borrower shall
sell, transfer or otherwise dispose of the Shares for cash consideration (a “Sale”), the Borrower
shall be required to prepay the Loan and the Note with the net-after-tax proceeds (less applicable
brokerage commissions, underwriters discounts and other related expenses) of such sale. In
addition, to the extent that such net-after-tax proceeds are less than the aggregate exercise price
of the Shares being sold, then it shall be a condition of Borrower’s sale of such Shares that
Borrower pay to Asthmatx in cash, at the time of such sale, the difference between such
aggregate exercise price of the Shares being sold and the net-after-tax proceeds of such sale. The
net-after-tax proceeds of such Sale (and any additional amounts paid pursuant to the immediately
preceding sentence) shall be applied first to the payment of interest and any remainder shall be
applied to reduce the principal balance of the Loan. Notwithstanding anything to the contrary
herein, Borrower shall not sell, transfer or otherwise dispose of any Shares that are unvested and
still subject to a right of repurchase pursuant to any Exercise Agreement.
5. Conditions Precedent to Loan. The obligation of Asthmatx to make the Loan is
subject to the condition precedent that Asthmatx shall have received, in form and substance
satisfactory to Asthmatx and its counsel, the following:
(a) this Agreement and the Note, duly executed by the Borrower;
(b) the pledged Collateral with stock powers for the pledged Collateral duly executed
by the Borrower; and
(c) such other documents, and completion of such other matters, as Asthmatx may
deem necessary or appropriate.
6. Security Interest and Pledge. To secure the prompt, punctual, and faithful
performance of all and each of the present and future Liabilities of the Borrower to Asthmatx,
the Borrower hereby grants to Asthmatx, a security interest in and to, and assigns, pledges, and
delivers to Asthmatx certificates representing all of the Shares (“Pledged Securities”), together
with appropriate undated stock powers duly executed in blank, and all products, proceeds,
substitutions, additions, interest, dividends, and other distributions in respect thereto, as
described in Section 7 below (all of which are referred to hereinafter as the “Collateral”).
7. Stock Dividends, Distributions, Etc. If, while this Agreement is in effect, the
Borrower shall become entitled to receive or shall receive any stock certificate (including,
without limitation, any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital, or issued in connection with any
reorganization), whether as an addition to, in substitution of or in exchange for any shares of any
Pledged Securities, or otherwise, the Borrower agrees to accept the same as agent for Asthmatx
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and to hold the same in trust on behalf of and for the benefit of Asthmatx and to deliver the same
forthwith to Asthmatx in the exact form received, with the endorsement of the Borrower when
necessary and/or with appropriate undated stock powers duly executed in blank, to be held by
Asthmatx as part of the Collateral. In case any distribution of capital shall be made on or in
respect of the Pledged Securities or any property shall be distributed upon or with respect to the
Pledged Securities pursuant to the recapitalization or reclassification of the capital of Asthmatx
or pursuant to the reorganization thereof, the property so distributed shall be delivered to
Asthmatx as Collateral. All sums of money and property so paid or distributed in respect of the
Pledged Securities which are received by the Borrower shall, until paid or delivered to Asthmatx,
be held by the Borrower in trust as Collateral.
8. Cash Dividends; Voting Rights. Unless a Default (as defined in Section 11) has
occurred and is continuing, the Borrower shall be entitled to receive all cash dividends paid in
respect of the Pledged Securities, to vote the Pledged Securities and to give consents, waivers
and ratifications, and to take other action in respect of the Pledged Securities. After the
occurrence and during the continuance of any Default, Asthmatx shall have the right, upon notice
to the Borrower, to receive all cash dividends paid in respect of the Pledged Securities and to
exercise voting rights as specified in Section 12 below.
9. Borrower’s Representations. The Borrower hereby represents, warrants and
covenants as follows:
(a) The Borrower has the full power, authority and legal right to enter into this
Agreement to be bound hereby and to perform and observe the terms and conditions hereof, and
is in compliance with all applicable material laws, rules and regulations.
(b) This Agreement has been duly executed and delivered by the Borrower
and constitutes the legal, valid and binding obligation of the Borrower enforceable against him in
accordance with its terms, subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency and similar laws affecting creditors’ rights generally and to
moratorium laws from time to time in effect and to general principles of equity.
(c) The execution, delivery and performance by the Borrower of this
Agreement does not and will not (i) violate or constitute a default under any provision of any
agreement, note or instrument which is binding upon the Borrower or by which his properties are
bound or materially affected, or any law, rule or regulation, order writ, injunction or decree of
any court or governmental instrumentality or any contractual restriction binding on the
Borrower, or (ii) require any filing with or consent or other act by or in respect of any
governmental authority or other person or entity (other than the filing of the appropriate number
of UCC-1 financing statements covering the Pledged Securities, if necessary, and any consent
obtained by the Borrower prior to the date hereof) or (iii) constitute a default thereunder or result
in the imposition or require the creation of any lien or charge (other than those created, continued
or otherwise contemplated hereby) upon the assets of the Borrower,
(d) The Pledged Securities consist of not fewer than one million (1,000,000) shares of
Common Stock of Asthmatx and are held and owned by the Borrower free and clear of
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all liens, encumbrances, attachments, security interests, pledges and charges, other than those
in favor of Asthmatx.
10. Borrower’s Covenants. The Borrower shall
(a) if the Collateral is in the form of a certificated security, within the
meaning of the Uniform Commercial Code, as adopted in the State of California (the “Code”),
surrender possession of the Collateral to Asthmatx;
(b) if the Collateral is in the form of an uncertificated security, within the
meaning of the Code, cause Asthmatx to record this pledge in the records of Asthmatx relating to
the Pledged Securities;
(c) execute all such instruments, documents, and papers, and will do all such
acts as Asthmatx may reasonably request now and from time to time hereafter with respect to the
perfection of the security interest granted herein and the assignment effected hereby,;
(d) keep the Collateral free and clear of all liens, encumbrances, attachments,
security interests, pledges, and charges, except in favor of Asthmatx or created by Asthmatx;
(e) deliver to Asthmatx, if and when received by the Borrower, any item
representing or constituting any of the Collateral or, except as otherwise provided herein,
proceeds of Collateral;
(f) not cause or permit any of the Collateral presently evidenced by a written
certificate to be converted to uncertificated securities, except on request of Asthmatx;
(g) not exercise any right with respect to the Collateral which would dilute or
otherwise adversely affect Asthmatx’s rights to the Collateral.
11. Default. Upon the occurrence of a Default, any and all Liabilities of the Borrower
to Asthmatx shall become immediately due and payable at the option of Asthmatx and without
further notice or demand, in addition to which Asthmatx may exercise Asthmatx’s rights and
remedies upon Default, as set forth hereinafter. For purposes of this Agreement, a “Default”
under this Agreement shall mean any of the following events: (i) any representation or warranty
made by the Borrower in this Agreement being untrue in any material respect when made, (ii)
failure of the Borrower to observe or perform any other covenant, agreement or other term of this
Agreement or the Note and the continuation of such failure without it having been duly cured for
a period of thirty (30) days after written notice thereof given by Asthmatx to the Borrower, or
(iii) Borrower’s initiation of bankruptcy proceedings.
12. Effect of Default. Upon the occurrence of any Default, and at any time thereafter,
unless and until the Default may be cured, Asthmatx shall have the right to apply the Collateral
toward the satisfaction of the Liabilities, to sell or otherwise dispose of the Collateral and/or
enforce and collect the Collateral for application towards (but not necessarily in complete
satisfaction) of the Liabilities, in addition to all of the rights and remedies of a secured party
upon default under the Code. Subject to the limitations set forth in the Note, the Borrower shall
remain liable to Asthmatx for any deficiency remaining following such application to any
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Liabilities. Any and all shares of the Pledged Securities may be registered in the name of
Asthmatx or its nominee, and Asthmatx or its nominee may thereafter without further notice exercise
all voting and corporate rights at any meeting of any issuer and exercise any and all
rights of conversion, exchange, subscription or any other rights, privileges or options pertaining
to any shares of the Pledged Securities as if it were the absolute owner thereof, including without
limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or other readjustment of any issuer or upon
the exercise by any issuer or Asthmatx or such nominee of any right, privilege or option pertaining
to any shares of the Pledged Securities, and, in connection therewith, to deposit and deliver any
and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as it may determine, all without liability
except to account for property actually received by it, but Asthmatx shall have no duty to exercise
any of the aforesaid rights, privileges or options prior to proceeding against any other assets of
Borrower in satisfaction of any of the Liabilities and shall not be responsible for any failure to
do so or delay in so doing so long as it acts in good faith. The Borrower acknowledges that any
exercise by Asthmatx of Asthmatx’s rights upon default may be subject to compliance by Asthmatx
with state and/or federal law governing the sale of securities. Except as otherwise provided
herein, the net proceeds which Asthmatx shall receive from the sale of the Collateral, in
accordance with the provisions hereof, shall be applied in the following manner: First, to the
payment of all costs and expenses incurred by Asthmatx in connection with the administration and
enforcement of, or the preservation of any rights under, or otherwise in connection with this
Agreement (including, without limitation, the costs and expenses of retaking, holding, preparing
for sale or selling of any Collateral and the reasonable fees and disbursements of its counsel and
agents); Second, to the payment of all other Liabilities in such order of priority as Asthmatx may
determine in its sole discretion; and Third, as otherwise provided by applicable law.
13. Private Placements.
(a) The Borrower recognizes that Asthmatx may be unable to effect a public sale of
any or all of the Pledged Securities by reason of certain prohibitions contained in the federal
securities laws and applicable state or foreign securities law, but may resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such securities for their own account for investment and not with a view
to the distribution or resale thereof. The Borrower acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller than if such sale were
a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. Asthmatx shall be under no
obligation to delay a sale of any of the Pledged Securities for the period of time necessary to
permit the issuer of such securities to register such securities for public sale under the federal
securities law, or under applicable state securities law, even if the issuer would agree to do so.
(b) The Borrower further agrees to use commercially reasonable efforts to do or cause
to be done all such other acts and things (other than effect the registration of the Pledged
Securities under applicable federal, state or foreign laws) as may be necessary to make such sale
or sales of any portion or all of the Pledged Securities valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and
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all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Borrower’s expense. The Borrower further agrees that a
breach of any of the covenants contained in this Section 13 will cause irreparable injury to
Asthmatx, and that Asthmatx will have no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section 13 shall be specifically
enforceable against the Borrower.
14. Appointment of Asthmatx as Attorney-in-Fact. In furtherance of the remedies
provided in Sections 12 and 13, the Borrower hereby designates Asthmatx as and for the
attorney-in-fact of the Borrower after the occurrence and during the continuance of a Default to
endorse in favor of Asthmatx any of the Collateral, to cause the transfer of any of the Collateral
in such name as Asthmatx may from time to time determine, to cause the issuance of certificates
for book entry and/or uncertificated securities, and to make demand and to initiate actions to
accomplish the purposes of this Agreement. In connection with any action to enforce any of
Asthmatx’s rights with respect to the Collateral, Asthmatx may make such compromise or
settlement with respect to the Collateral as Asthmatx determines to be appropriate. After and
during the continuance of a Default, and in furtherance of the remedies provided in Sections 12
and 13, Asthmatx shall also have and may exercise at any time all rights, remedies, powers, and
discretions of the Borrower with respect to and under the Collateral. The within designation,
being coupled with an interest, is irrevocable until the within instrument is terminated by a
written instrument executed by a duly authorized officer of Asthmatx. Asthmatx shall not be
liable for any act or omission to act pursuant to this Paragraph except for any act or omission to
act which is in actual bad faith or which is grossly negligent.
15. Cumulative Remedies. The rights, remedies, powers, privileges, and discretions
of Asthmatx hereunder (hereinafter, “Asthmatx’s Rights and Remedies”) shall be cumulative and
not exclusive of any rights or remedies, which it otherwise may have. No delay or omission by
Asthmatx in exercising or enforcing any of Asthmatx’s Rights and Remedies shall operate as, or
constitute, a waiver thereof. No waiver by Asthmatx of any Default or of any default under any
other agreement shall operate as a waiver of any other default hereunder or under any other
agreement. No exercise of any of Asthmatx’s Rights and Remedies and no other agreement or
transaction of whatever nature entered into between Asthmatx and the Borrower at any time shall
preclude any other exercise of Asthmatx’s Rights and Remedies. No waiver by Asthmatx of any
of Asthmatx’s Rights and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of Asthmatx’s Rights and
Remedies and all of Asthmatx’s rights, remedies, powers, privileges, and discretions under any
other agreement or transaction are cumulative and not alternative or exclusive and may be
exercised by Asthmatx at such time or times and in such order of preference as Asthmatx in its
sole discretion may determine.
16. Definition of Liabilities. “Liabilities” shall mean principal and interest under the
Note plus all reasonable costs of collection incurred by Asthmatx in connection with the
enforcement of the Note.
17. Waivers by Borrower. The Borrower
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(a) waives presentment, demand, notice, and protest with respect to the
Liabilities and the Collateral; and
(b) waives any delay on the part of Asthmatx; and
(c) assents to any indulgence or waiver which Asthmatx may grant or give to
the Borrower or any other person liable or obliged to Asthmatx for or on the Liabilities; and
(d) agrees that no release of any property securing the Liabilities shall affect
the rights of Asthmatx with respect to the Collateral hereunder; and
(e) if entitled thereto, waives the right to notice and/or hearing prior to
Asthmatx’s exercising of Asthmatx’s rights and remedies hereunder upon default.
18. Partial Release Upon Pay-Down of the Note. Upon written notice from the
Borrower that he wishes to sell some or all of the Pledged Securities and apply the net-after-tax
proceeds of such sale to amounts due under the Note, Asthmatx agrees to deliver promptly to the
Borrower or a broker designated by the Borrower and reasonably satisfactory to Asthmatx
certificates representing such Pledged Securities, provided that such instructions include or are
accompanied by irrevocable instruction from the Borrower (with signature guarantee), if
applicable, to the broker requiring that the net after-tax proceeds (less applicable brokerage
commissions, underwriters discounts and other related expenses) from the sale of such Pledged
Securities be delivered by check payable to Asthmatx and that a certificate for any shares of the
Pledged Securities remaining unsold be returned to Asthmatx.
19. Duties of Asthmatx. Asthmatx shall have no duty as to the collection or
protection of the Collateral or any income or distribution thereon, beyond the safe custody of
such of the Collateral as may come into the possession of Asthmatx and shall have no duty as to
the preservation of rights against prior parties or any other rights pertaining thereto. Asthmatx’s
Rights and Remedies may be exercised without resort or regard to any other source of
satisfaction of the Liabilities.
20. Binding Agreement. This Agreement shall be binding upon the Borrower and
upon the Borrower’s representatives, successors, and assigns, and shall inure to the benefit of
Asthmatx and its successors and assigns.
21. Complete Agreement. This Agreement and all other instruments executed in
connection herewith incorporate all discussions and negotiations among Asthmatx and the
Borrower concerning the matters included herein and in such other instruments. No such
discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof. No
modification, amendment, or waiver of any provision of this Agreement shall be effective unless
executed in writing by the party to be charged with such modification, amendment and waiver,
and if such party be Asthmatx, then by a duly authorized officer thereof other than the Borrower.
22. Use of Originals. This Agreement and all other documents in Asthmatx’s
possession which relate to the Liabilities may be reproduced by Asthmatx by any photographic,
photostatic, microfilm, micro-card, miniature photographic, xerographic, or similar process, and,
with the exception of instruments constituting the Collateral, Asthmatx may destroy the original
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from which any document was so reproduced. Any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not the original is an
existence and whether or not such reproduction was made in the regular course of business) and any
enlargement, facsimile, or further reproduction shall likewise be admissible in evidence.
23. Notices. All notices, requests, demands and other communications to be given
pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if
delivered by hand or overnight courier or mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed to the party to receive notice at its or his respective address
set forth in the first paragraph of this Agreement or such other address as such party shall have
designated by notice in writing to the other party in accordance with this section.
24. Governing Law. This Agreement, and all rights and obligations hereunder,
including matters of construction, validity, and performance, shall be governed by the laws of the
State of California. The Borrower submits to the jurisdiction of the courts of said State for all
purposes with respect to this Agreement and the Borrower’s relationships with Asthmatx.
25. Sealed Instrument. It is intended that this Agreement take effect as a sealed
instrument.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned has executed the foregoing Loan and Pledge Agreement as of
the date first above written.
| /s/ Xxxxxxx X. Xxxxxx, individually | ||||
| Xxxxxxx X. Xxxxxx, individually |
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EXHIBIT A
FULL RECOURSE PROMISSORY NOTE
| $200,000.00 | San Mateo, CA | |
| October 17, 2005 |
For value received, the undersigned Xxxxxxx X. Xxxxxx of San Mateo, California (the
“Borrower”), promises to pay to Asthmatx, Inc. (“Asthmatx”), the principal sum of Two Hundred
Thousand Dollars ($200,000.00), with interest on the unpaid principal balance at the annual rate of
4.19%, compounded annually. Interest shall accrue from the date hereof on the unpaid principal
balance and shall be compounded annually. Except as otherwise agreed to by the Borrower and the
holder, payments of principal and interest shall be made in lawful money of the United States of
America at the principal office of Asthmatx in California, or by check mailed to such other place
as the holder hereof shall designate. Capitalized terms not otherwise defined herein shall have the
same meanings given to them in the Loan and Pledge Agreement (as defined below).
The principal amount of this Note and all accrued interest thereon shall become due and
payable in full on the earlier of (i) July 1, 2015, (ii) ninety (90) days after the date of any
termination of the Borrower’s employment with Asthmatx for any reason, (iii) the date immediately
preceding the date that Asthmatx (or any successor entity whose securities are exchanged for
Shares) files a registration statement pursuant to the Securities Act of 1933, as amended, if such
filing would result in a violation of Section 402 of the Xxxxxxxx-Xxxxx Act of 2002 if the loan
were to remain outstanding, or (iv) in the event Asthmatx is to be acquired (by merger, sale or
otherwise) by a company (or any parent entity) whose securities are registered under Section 12 of
the Securities Exchange Act of 1934, as amended and such acquisition would result in a violation of
Section 402 of the Xxxxxxxx-Xxxxx Act of 2002 if the loan were to remain outstanding, then
immediately prior to the consummation of such acquisition (any such date in clauses (i) through
(iv), the “Maturity Date”).
If there occurs a Default, or any other default in the performance of any of the terms,
agreements, covenants or conditions contained in this Note or the Loan and Pledge Agreement (as
hereinafter defined) or any other documents now or hereafter executed as security for this Note
(collectively, the “Loan Documents”) continuing beyond, in each case, any applicable grace period
as may be provided therein for the payment of such amount or the performance of such term,
agreement, covenant or condition, then at the option of the holder of this note the entire
indebtedness evidenced hereby, with interest accrued thereon, if any, shall become due and payable,
and no omission on the part of the holder hereof to exercise such option when entitled to do so
shall be construed as a waiver of such right so long as such default shall remain uncured.
Notwithstanding anything contained herein or in the Loan Documents to the contrary, Asthmatx shall
have (i) full recourse against the Collateral (as defined in the Loan and Pledge Agreement)
in connection with the repayment of the principal and accrued interest thereon, and (ii) full
recourse up to the Recourse Amount (as hereinafter defined) against any other assets of the
Borrower, The “Recourse Amount” as of any time shall mean (i) the principal amount hereof
reduced by each payment of principal made by or on behalf of the Borrower from any source and (ii)
the full amount of accrued interest under this Note (it being understood that the Borrower shall be
personally obligated for the payments of interest and principal hereunder). All sums paid by the
Borrower or otherwise received by Asthmatx on account of sums owing hereunder shall be applied
first to payment of interest and any remainder shall be applied to reduce the principal balance of
the Loan.
The Borrower may prepay any portion of the amounts due under the Loan at any tune. If at any
time the Borrower shall sell, transfer or otherwise dispose of the Collateral as defined in the
Loan and Pledge Agreement for cash consideration, the Borrower shall be required to prepay this
Note with the net-after-tax proceeds of such sale (less applicable brokerage commissions,
underwriters discounts and other related expenses). In addition, to the extent that such
net-aftertax proceeds are less than the aggregate exercise price of the Shares being sold, then it
shall be a condition of Borrower’s sale of such Shares that Borrower pay to Asthmatx in cash, at
the time of such sale, the difference between such aggregate exercise price of the Shares being
sold and the net-after-tax proceeds of such sale. All prepayments, including the net-after-tax
proceeds of such Sale (and any additional amounts paid pursuant to the immediately preceding
sentence) shall be applied first to the payment of interest and any remainder shall be applied to
reduce the principal balance of the Loan. Notwithstanding anything to the contrary herein, Borrower
shall not sell, transfer or otherwise dispose of any Shares that are unvested and still subject to
a right of repurchase pursuant to any Exercise Agreement.
This note is secured by a certain loan and pledge agreement (the “Loan and Pledge
Agreement”) of even date herewith granted by the Borrower in favor of Asthmatx. Asthmatx by its
acceptance hereof, shall be entitled to the benefits, and subject to the terms of, the Loan and
Pledge Agreement. In the event of any conflict between the terms of the Loan and Pledge Agreement
and the terms of this Note, the terms of the Loan and Pledge Agreement shall control.
If the Borrower conveys, transfers, assigns, encumbers, pledges or otherwise disposes of any
legal or beneficial interest in the Collateral or any part thereof without Asthmatx’s prior written
consent, Asthmatx may, at its option, require immediate payment of the entire indebtedness
evidenced hereby, with accrued interest thereon, if any, as provided herein.
The undersigned agrees to pay, upon maturity (by acceleration or otherwise), costs of
collection, including reasonable attorneys’ fees.
No delay or omission on the part of the holder in exercising any right hereunder shall operate
as a waiver of such right or of any other right of such holder; nor shall any delay, omission or
waiver on any occasion be deemed a bar to or waiver of the same or any other right on any future
occasion. The undersigned and every endorser or guarantor of this note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of every kind and assents
to any one or more extensions or postponements of the time of payment or any other indulgences, to
any substitutions, exchanges or releases of collateral if at any time there be available to the
holder collateral for this note, and to the additions or releases of any other parties
or persons primarily or secondarily liable.
All rights and obligations hereunder shall be governed by and construed in accordance with the
law of the State of California and this note shall be deemed to be under seal.
| /s/ Xxxxxxx X. Xxxxxx | ||||
| Xxxxxxx X. Xxxxxx, individually |
