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PLEDGE AGREEMENT
AGREEMENT entered into and effective this 25th day of
September, 1998, by Xxx X. Xxxxxxxxx (the "Pledgor") and in favor of WPAMS
Acquisition Corp., a Delaware corporation (the "Company").
RECITALS:
A. Pledgor has issued a promissory note of even date herewith (the
"Note") payable to the order of the Company in the original principal amount of
Two Hundred and Eight Thousand, Two Hundred Fifty Dollars ($208,250) to borrow
cash to repay a promissory note dated September 1, 1995 payable to the order of
Optical Sensors Incorporated, a Delaware corporation ("OSI"), in the original
principal amount of $245,000.
B. To secure the payment of the Note, the Company requires that the
Pledgor grant it a security interest in certain shares of common stock of OSI in
accordance with this Pledge Agreement, and the Pledgor agrees to grant the
Company such a security interest.
AGREEMENT
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Pledgor hereby agrees as
follows:
I. TERMS OF THE PLEDGE.
A. The Pledge.
Pledgor does hereby pledge and grant to the Company a security
interest in all of the following described property (the
"Collateral"):
1. 105,062 shares of common stock of 051 owned by the Pledgor on the
date hereof, subject to adjustment as provided in Section I.A.3.
(as so adjusted, the "Pledged Shares").
2. The proceeds of any dividend or other distribution attributable
to the Pledged Shares (payable other than in cash) or any shares
of stock or securities of 051 or of another corporation payable
with respect to the Pledged Shares in connection with any change
in the corporate structure or shares of OSI pursuant to any
merger or recapitalization or otherwise.
3. The number of Pledged Shares shall be adjusted on June 30 and
December 31 of each year (the "Determination Date") so that, on
each Determination Date during the term of this Agreement, the
Fair Market Value, as defined below, of Pledged Shares is not
more than 100% of the principal amount of the Note outstanding on
such Determination Date. For purposes of this Agreement, the term
Fair Market Value shall have the meaning set forth in the
Company's 1998 Equity Incentive Plan. If the Fair Market Value of
the Pledged Shares on a Determination Date is more than 100% of
the
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principal amount of the Note outstanding on such
Determination Date, a number of Pledged Shares shall be
released from this Pledge Agreement and delivered to the
Pledgor such that the Fair Market Value of the Pledged
Shares is equal to 100% of the principal amount of the Note
on such Determination Date. If the Fair Market Value of the
Pledged Shares on a Determination Date is less than 100% of
the principal amount of the Note outstanding on such
Determination Date, the Pledgor shall deliver to the Company
an additional number of the shares that were previously
released from this Pledge Agreement (to the extent such
shares are then owned by the Pledgor and which shall again
become Pledged Shares) such that the Fair Market Value of
the Pledged Shares is equal to 100% of the principal amount
of the Note outstanding on such Determination Date.
B. Delivery of Collateral.
The Company hereby acknowledges receipt of the certificate
evidencing the Collateral together with a stock assignment
therefor duly endorsed. Pledgor agrees to deliver promptly to the
Company, in the exact form received, all securities and other
property which come into the possession, custody or control of
Pledgor which would be included within the definition of
Collateral in Section I.A. above.
C. Actions Prior to an Event of Default.
Until the occurrence of an Event of Default (as defined in
Section III.A. below) the Pledgor shall have the sole right (a)
to vote the securities constituting the Collateral and to give
consents, waivers and ratifications in respect thereof, provided
that no vote shall be cast, or consent, waiver or ratification
given or action taken that would violate or not comply with any
of the terms and provisions of this Pledge Agreement; and (b) to
receive any and all cash dividends declared and paid on the
securities constituting the Collateral that are not otherwise in
violation of any of the terms and provisions of this Pledge
Agreement.
D. Termination of Security and Return of Collateral.
Upon such date as the entire principal sum and all accrued
interest on the Note shall have been paid in full, (i) all of the
Collateral shall automatically, and without any further action of
the parties hereto, be released from the security interest of the
Company created by this Pledge Agreement and (ii) the Company
shall deliver the certificate or certificates representing the
Collateral to the Pledgor.
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II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR.
A. Power and Authority to Pledge.
Pledgor has full power and authority to execute and deliver this
Pledge Agreement and to perform his obligations hereunder.
B. Enforceability.
This Pledge Agreement is the valid and binding obligation of
Pledgor, enforceable against Pledgor according to its terms,
subject to applicable bankruptcy, insolvency, moratorium and
other laws affecting creditors rights and remedies and the
judicial limitations on the right to specific performance. Upon
delivery of the Pledged Shares to the Company, this Pledge
Agreement shall create a valid first lien upon, and perfected
security interest in, the Pledged Shares.
C. Title to Collateral.
Pledgor warrants and represents to the Company that it holds
title to the Collateral free and clear of any liens,
encumbrances, security interests and restrictions on transfer and
assignment thereof, except for the security interest created by
this Pledge Agreement, and as required by federal and state
securities laws.
D. Taxes.
Pledgor will promptly pay, when due, all taxes and other
governmental charges levied or assessed upon or against the
Collateral.
E. Preservation of Rights on Collateral.
Pledgor will take any action necessary to preserve redemption,
conversion, warrant, preemptive or other rights (and be aware of
the dates limiting the exercise of such rights) concerning the
Collateral.
F. Maintenance of Security Interest.
The Pledgor will pay all expenses and, upon request, do and enact
all things deemed necessary or appropriate by the Company from
time to time to establish, determine priority of, perfect,
continue perfection, terminate and enforce the Company's interest
in the Collateral and the Company's rights under this Pledge
Agreement.
G. Actions on Behalf of the Pledgor.
If the Pledgor fails at any time to comply with the requirements
of this Article II, or to do any other acts or things which the
Pledgor is required to do under this Pledge Agreement, the
Company shall have the right to do such acts and things, or any
of them, at the Company's option (and the Pledgor appoints the
Company
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as the Pledgor's attorney and agent with the right, but not the
duty, to do any such acts or things). If the Company does any
such acts or things, the Pledgor shall, on demand by the Company,
pay to the Company the amount of all costs and expenses incurred
or to be the rate specified in the Note from the date the same
were paid or incurred by the Company, and shall indemnify and
save harmless the Company from and against any other liability or
damage which it may incur in good faith and without gross
negligence, in the exercise and performance of any such acts or
things.
III. EVENTS OF DEFAULT AND REMEDIES.
A. Events of Default.
The occurrence of one or more of the following shall constitute
an "Event of Default" hereunder:
1. The Pledgor defaults in the performance or observance of any
of the terms or covenants in this Pledge Agreement;
2. Any representation or warranty made by the Pledgor in this
Pledge Agreement is untrue in any material respect;
3. The Pledgor defaults in the payment of any amounts due under
the Note; or
4. The Pledgor shall become a bankrupt or insolvent, or admit
in writing inability to pay debts as they mature, or make an
assignment for the benefit of creditors; the Pledgor shall
apply for or consent to the appointment of any receiver,
trustee or similar officer for him or for all or any
substantial part of his property; such receiver, trustee or
similar officer shall be appointed without the application
or consent of the Pledgor and such appointment shall
continue undischarged for a period of 30 days; the Pledgor
shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, insolvency, adjustment of debt
or similar proceeding under the laws of any jurisdiction;
any such proceeding shall be instituted (by petition,
application or otherwise) against the Pledgor and shall
remain undismissed for a period of 30 days; or any judgment,
writ, warrant of attachment or execution or similar process
shall be issued or levied against a substantial part of the
property of the Pledgor, and such judgment, writ or similar
process shall not be released, vacated or fully bonded
within 30 days after its issue or levy.
B. Company's Right to Sell Collateral.
Upon the occurrence of an Event of Default, the Collateral shall
be forfeited by the Pledgor to the Company unless the Company, in
its sole discretion, permits the Pledgor to continue to make
payments under the Note and to retain his rights and interest in
the Collateral under this Pledge Agreement. The Company shall be
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entitled to sell the Collateral upon 10 business days'
written notice to Pledgor, at public auction or private
sale. Thereafter, the Collateral shall be held by the
Company for its own account and the Company may cause the
Collateral to be registered in its name and may vote the
Collateral (whether or not transferred or registered in the
name of the Company) and give all consents, waivers and
ratifications in respect thereof, and may receive all
dividends, interest and other distributions thereon. The
Company may limit sales to purchasers who are acquiring for
investment and not with any view to distribution and may
condition any sale or sales upon restriction against future
transfers to the extent that the Company or counsel for the
Company shall deem necessary to protect the Company from any
liability under the Securities Act of 1933, the Securities
Exchange Act of 1934, state securities laws, and any like or
similar laws now or hereafter in effect.
C. Power of Attorney.
For the purposes of this Article III, the Pledgor
constitutes and appoints the Company as the Pledgor's true
and lawful attorney and agent, on behalf of and in the name,
place and stead of the Pledgor, with the right, but not the
duty, to endorse the Pledgor's name on all applications,
documents, papers and instruments necessary for the Company
to sell, assign, transfer, pledge, encumber or otherwise
transfer title in the Collateral or dispose of the
Collateral to any third party. The Pledgor hereby grants to
the Company, as such attorney and agent, full power and
authority to do, take and perform all and every act and
thing whatsoever required, proper or necessary to be done,
in the exercise of the rights and powers granted above, as
fully to all intents and purposes as the Pledgor might or
could do if personally present, ratifying all that such
attorney and agent shall lawfully do or cause to be done by
virtue hereof. This power of attorney shall be irrevocable
for the life of this Pledge Agreement, and until the Note is
fully paid or satisfied or the collateral is forfeited to
the Company.
D. Waiver of Redemption; No Liability for Value Decline.
Any and all sale(s) of Collateral held by the Company
pursuant to Section III.B. above shall be free from any
right of redemption, which is hereby expressly waived by
Pledgor. In addition, the Company shall have no liability
for any increase or decrease in the value of any of the
Collateral at any time.
E. Rights Cumulative.
All rights and remedies of the Company hereunder are in
addition to rights and remedies afforded the Company under
the Note, any other document or under law. All remedies are
cumulative any may be exercised by the Company concurrently
or consecutively. No failure or omission of the Company to
exercise any such right or remedy shall constitute a waiver
thereof.
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IV. MISCELLANEOUS.
A. Agreement Binding.
This Pledge Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Pledgor and the
Company.
B. Severability.
In the event that one or more provisions of this Pledge
Agreement should be declared to be invalid, illegal or
unenforceable in any respect by a court of competent
jurisdiction, the validity, legality and enforceability of
the remaining provisions herein shall not in any way be
affected or impaired thereby.
C. Survival of Representations.
All representations and warranties made herein are, and
shall continue to be, true and correct in all material
respects until the Note is paid in full.
D. Notices.
All notices and other communications required or permitted
to be given hereunder shall be given and become effective
when deposited in the U. S. Mail, postage prepaid, return
receipt requested, addressed to the parties at the Company's
offices in Minnetonka, Minnesota, or such other address as
the parties may designate from time to time.
E. Governing Law.
This Pledge Agreement shall be construed, interpreted and
governed according to the laws of the State of Minnesota.
F. Nature of Obligations.
The obligations of the Pledgor under this Pledge Agreement
shall be absolute and unconditional and shall remain in full
force and effect without regard to, and shall not be
released, suspended, discharged, terminated, lessened or
otherwise affected by, any circumstance or occurrence
whatsoever, whether or not the Pledgor shall have notice or
knowledge, including, without limitation, (a) any renewal,
extension, substitution, amendment or modification of or
addition or supplement to or deletion from the Note, this
Pledge Agreement or an assignment or transfer of any
thereof; (b) any waiver, consent, extension, indulgence or
other action or inaction under or in respect of the Note,
this Pledge Agreement, or any exercise or nonexercise of any
right, remedy, power or privilege under or in respect of the
Note or this Pledge Agreement, (c) any furnishing of any
additional collateral or security to the Company or its
assignee or any acceptance thereof or any release of any
collateral or security in whole or in part by the Company or
its assignee under this Pledge Agreement or otherwise, (d)
any limitation on any party's
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liability or obligations under the Note or under this Pledge
Agreement or any invalidity or unenforceability, in whole or
in part, or any such instrument or any term thereof, or (e)
any bankruptcy insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor, or any action taken with
respect to this Pledge Agreement or the Note by any trustee
or receiver, or by any court, in any such proceeding.
IN WITNESS WHEREOF, Pledgor has executed this Pledge
Agreement as of the day and year first above written.
Pledgor:
/s/ Xxx X. Xxxxxxxxx
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Xxx X. Xxxxxxxxx
Accepted:
WPAMS ACQUISITION CORP.
By: /s/ Xxxxxxxxx Xxxxxxxxxx
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Name: Xxxxxxxxx Xxxxxxxxxx
Title: Director and Benefits Committee
Member
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