Exhibit 3
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (this "Agreement") is made
and entered into as of April 15, 1997 by and between
XXXXX X. XXXXXXXXX, an individual ("Pledgor") and THE IMMUNE
RESPONSE CORPORATION, a Delaware corporation ("Pledgee")
with reference to the facts set forth in the Recitals below:
RECITALS
WHEREAS, Pledgor is a co-founder of Pledgee and has
been a director of Pledgee since 1986;
WHEREAS, Pledgor is an individual of substantial net
worth;
WHEREAS, Pledgor and Pledgee have entered into a Unit
Purchase Agreement, of even date herewith, pursuant to which
Pledgor has purchased from Pledgee 1,776,004 Units, each
Unit consisting of one share of Pledgee's Common Stock and a
warrant to purchase one share of Pledgee's Common Stock. As
partial consideration for Pledgee's Units, and for other
good and valuable consideration, Pledgor has delivered to
Pledgee that certain Promissory Note (the "Note"), dated as
of April 17, 1997, executed by Pledgor in favor of Pledgee
in the principal amount of TEN MILLION THREE HUNDRED EIGHTY-
NINE THOUSAND SIX HUNDRED TWENTY-THREE AND 40/100 DOLLARS
($10,389,623.40)(the "Loan");
WHEREAS, to induce Pledgee to make the Loan, Pledgor
has agreed to pledge to Pledgee as security for repayment of
the Loan certain shares of capital stock with a fair market
value approximately equal to double the principal amount of
the Loan; and
WHEREAS, Pledgor has agreed not to sell any shares of
Pledgee's Common Stock purchased pursuant to the Unit
Purchase Agreement prior to maturity of the Note and
repayment of the Loan:
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Pledgor hereby agrees with Pledgee as follows:
1. Pledge. In consideration of Pledgee's making of
the Loan to Pledgor, receipt of which is hereby
acknowledged, Pledgor hereby agrees and covenants to pledge,
grant a security interest in, assign, transfer and deliver
to Pledgee, as collateral security for the payment and
performance in full when due by Pledgor of the Obligations
(defined below), and on the earliest date permitted under
that certain lock-up agreement to which Pledgor is a party
(described in Exhibit A hereto, the "Lock-up Agreement"), a
number of shares of capital stock, more particularly
described on the attached Schedule 1, having an aggregate
fair market value at the time transferred to Pledgee equal
to double the principal amount of the Loan (collectively,
the "Pledged Shares"), together with the certificates
evidencing same, which certificates shall be duly endorsed
in blank or accompanied by stock powers duly executed in
blank.
From the date hereof until such time as the Pledged
Shares may be transferred to Pledgee in accordance with this
Section 1 and the Lock-up Agreement, Pledgor shall segregate
and hold separate for safekeeping the Pledged Shares and the
certificates evidencing the same.
2. Obligations Secured. Subject only to the time
restrictions contained in the Lock-up Agreement, this
Agreement is made, and the security interest pledged herein
will be given, to secure payment and performance in full by
Pledgor of all obligations (collectively the "Obligations")
of Pledgor owing to Pledgee under the Note and this
Agreement, together with all extensions, amendments,
restatements, modifications, supplements and renewals
thereof, when the same shall become due, whether at
maturity, at a time fixed for payment or by acceleration or
otherwise, in accordance with the terms of the Note,
together with Pledgor's performance and compliance with all
other terms and conditions of this Agreement and any other
agreement now or in the future entered into between Pledgor
and Pledgee with respect to the Loan or any modifications,
amendments, restatements, supplements or renewals thereof.
3. Attorney-in-Fact. Subject to the rights of
Pledgor provided for in this Agreement and the time
restrictions contained in the Lock-up Agreement, Pledgor
hereby irrevocably agrees and covenants to appoint Pledgee
as Pledgor's attorney-in-fact, coupled with an interest,
with full authority in the place and stead of Pledgor and in
the name of Pledgor, Pledgee or otherwise, from time to time
to take any action, execute any document, instrument or
other agreement which Pledgee reasonably may deem necessary
or advisable, in its sole discretion, to accomplish the
purposes of this Agreement, including without limitation, to
arrange for the transfer of the Pledged Shares on the books
of the issuer to the name of Pledgee.
4. Dividends. After the Pledged Shares have been
transferred to Pledgee in accordance with Section 1 hereof
and for the remaining term of this Agreement, all dividends
and other amounts received in cash by Pledgee as a result of
Pledgee's record ownership of the Pledged Shares shall be
applied to the payment of the principal and interest on the
Loan.
5. Voting Rights. During the term of this Agreement,
and as long as Pledgor is not in default in the performance
of any of the terms of this Agreement, or in the payment of
the principal or interest of the Loan, or with respect to
any of the other Obligations, Pledgor shall have the right
to vote the Pledged Shares on all corporate questions.
Pledgee shall execute due and timely proxies in favor of
Pledgor to this end.
6. Representations and Warranties of Pledgor.
Pledgor represents and warrants: that Pledgor is the legal
and beneficial owner of the Pledged Shares; that Pledgor has
owned the Pledged Shares for two (2) or more years; that
there are no restrictions on the transfer of any of the
Pledged Shares, other than as may appear on the face of the
certificates thereof and those contained in the Lock-up
Agreement; that Pledgor has the right and power to transfer
the Pledged Shares free of any encumbrances or liens,
without obtaining the consents of any other party or
parties; that Pledgor is not now and has never been an
officer or director of the issuer of the Pledged Shares; and
that Pledgor is not now an affiliate (as such term is
defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended) of
the issuer of the Pledged Shares.
7. Adjustments. In the event that during the term of
this Agreement, any share dividend, reclassification,
readjustment or other change is declared or made in the
capital structure of the company that has issued the Pledged
Shares, all new, substituted and additional shares, or other
securities issued by reason of any such change with respect
to the Pledged Shares, shall be transferred to and held by
Pledgee in the same manner as the Pledged Shares originally
pledged to Pledgee under this Agreement.
8. Warrants and Rights. In the event that during the
term of this Agreement, subscription warrants or any other
rights or options shall be issued in connection with the
Pledged Shares, such warrants, rights and options shall be
immediately assigned by Pledgee to Pledgor, and if exercised
by Pledgor, all new shares or other securities so acquired
by Pledgor as a result thereof shall be immediately assigned
to Pledgee to be held in the same manner as the Pledged
Shares originally pledged under this Agreement and shall in
all respects be subject to the terms of this Agreement.
9. Payment of Loan. Upon payment in full, at
maturity, of all principal and interest due to Pledgee under
the Note, together with any other amounts due to Pledgee
under the terms of the Note or this Agreement, less amounts
received and applied by Pledgee in reduction of the Loan,
and upon full satisfaction of all of the other Obligations
provided for under this Agreement and the Note, Pledgee
shall transfer to Pledgor all of the Pledged Shares and all
rights received by Pledgee as a result of Pledgee's record
ownership of the Pledged Shares and this Agreement shall
terminate. Notwithstanding the above requirement that the
Obligations be satisfied in full prior to Pledgee's release
of its interest in the Pledged Shares under this Agreement,
Pledgee shall extend all reasonable cooperation to Pledgor
in connection with any proposed sale by Pledgor of the
Pledged Shares, provided the proceeds of such sale shall be
applied by Pledgor to repay the Loan in full, together with
all other amounts owed to Pledgee with respect to the
Obligations.
10. Default. In the event that Pledgor defaults in
the performance of any of the material terms of this
Agreement, or on the payment at maturity of the principal or
interest of the Loan, or defaults with respect to any of the
Obligations, Pledgee shall have all of the rights and
remedies provided to it and be subject to the obligations
under the Delaware Uniform Commercial Code with respect to
such default or nonperformance. In this connection, after
the Pledged Shares have been transferred to Pledgee in
accordance with Section 1 hereof, Pledgee may, as permitted
by the Delaware Uniform Commercial Code, and without
liability for any diminution in price that may have
occurred, sell all of the Pledged Shares in the manner and
for the price that Pledgee may determine upon fifteen (15)
days written notice to Pledgor of the time and place of any
public sale or the time after which any private sale is to
be made. At any bona fide public sale, Pledgee shall be
free to purchase all or any part of the Pledged Shares. Out
of the proceeds of any sale of the Pledged Shares, Pledgee
may retain an amount equal to the principal and interest
then due with respect to the Loan under the Note, plus any
other amounts due with respect to the Obligations or
otherwise under the Note, plus the amount of the expenses of
the sale, and shall pay any balance of the proceeds of any
sale to Pledgor after satisfaction of all of the
Obligations. If Pledgor defaults in the performance of any
of the Obligations before the Pledged Shares have been
transferred to Pledgee in accordance with Section 1 hereof,
or if the proceeds of the sale of such Pledged Shares are
insufficient to cover the principal and interest of the Loan
and other amounts due with respect to the Obligations,
including expenses of the sale, Pledgor shall remain liable
to Pledgee for any deficiency in accordance with applicable
provisions of the Delaware Uniform Commercial Code.
11. Miscellaneous. This Agreement and the Note shall
be governed by and interpreted in accordance with the laws
of the State of Delaware, except as they may be preempted by
federal law. In any action brought or arising out of this
Agreement or the Note, Pledgor and Pledgee hereby consent to
the jurisdiction of any federal or state court having proper
venue within the State of California and also consent to the
service of process by any means authorized by California or
federal law. The headings used in this Agreement are for
convenience only and shall be disregarded in interpreting
the substantive provisions of this Agreement. Time is of
the essence in each term of this Agreement and the Note. If
any provision of this Agreement or the Note shall be
determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable, that portion shall be
deemed severed therefrom and the remaining parts shall
remain in full force as though the invalid, illegal or
unenforceable portion had never been a part thereof. This
Agreement may be executed in one or more counterparts, all
of which, taken together, shall constitute one and the same
Agreement. The Recitals and any Schedules attached to this
Agreement are hereby incorporated into this Agreement by
this reference.
12. Integration; Interpretation. The Agreement and
the Note contain or expressly incorporate by reference the
entire agreement of the parties with respect to the matters
contemplated herein and supersede all prior negotiations.
The Agreement and the Note shall not be modified except by
written instrument executed by all parties.
13. Further Assurances; Substitution of Collateral.
Pledgor shall execute, acknowledge and deliver, upon written
request of Pledgee, any and all further documents,
agreements or other instruments, and take such further
actions, as Pledgee may reasonably require for carrying out
the purpose and intent of the covenants set forth in this
Agreement. If at any time, the value of the Pledged Shares
declines to such an extent that in the reasonable opinion of
Pledgee such collateral is inadequate either to secure
satisfaction of Pledgor's Obligations or to satisfy the
requirements of Federal Reserve Board Regulation G, Pledgee
may require Pledgor to substitute reasonably equivalent
collateral for some or all of the Pledged Shares as security
for Pledgor's satisfaction of the Obligations, which
substituted collateral shall be acceptable to Pledgee in its
sole discretion and shall be subject, in all respects, to
the terms and conditions of this Agreement upon such
substitution. Pledgor shall execute, acknowledge and
deliver such additional documents, agreements and
instruments with respect to such substituted collateral as
Pledgee may require, including without limitation,
mortgages, deeds of trust or financing statements, in form
and content sufficient to perfect Pledgee's security
interest in such substituted collateral.
IN WITNESS WHEREOF, Pledgor and Pledgee have caused
this Agreement to be duly executed as of the date first
written above.
PLEDGOR PLEDGEE
THE IMMUNE RESPONSE CORPORATION
-----------------------------
Xxxxx X. Xxxxxxxxx
By: __________________________
Title:________________________
SCHEDULE 1
PLEDGED SHARES
[TO BE COMPLETED BY PLEDGOR]
No. of Class of Certificate
Issuer Shares Shares No. Date
------ ------ -------- ----------- ----
Ciena Corporation _______ Common ____________ ____
