PLEDGE AGREEMENT
This Pledge Agreement (the "Pledge Agreement") is made this ____ day of
________, 1997, by Cascadia Pacific Management, LLC, an Oregon limited
liability company, on behalf of the Oregon Research and Technology
Development Fund, Xxxxx X. Xxxxxxxxx, Ph.D, Xxxxxx X. Xxxxxx, Ph.D., Xxxxxx
X. Xxxxxx, Ph.D., Xxxx Xxxxxx, Xxxxxx X. Xxxxxxx, Ph.D., and Xxxxx X.
Xxxxxxxx, Ph.D. (the "Pledgors") to __________, as collateral agent (the
"Collateral Agent"), for the Note Holders identified in Schedule A hereto.
Recitals:
A. The Pledgors are holders of record of 3,842,708 shares of the Common
Stock of Antivirals, Inc., an Oregon corporation (the "Company"), which
shareholdings are more particularly set forth in Schedule B hereto.
B. The Company has filed a registration statement with the Securities
and Exchange Commission in connection with the proposed initial public
offering of 1,500,000 units, which initial public offering is being
underwritten by Xxxxxxx Investment Company, Inc. Under the terms of the
proposed underwriting agreement between the Company and Xxxxxxx Investment
Company, Inc., the obligation of Xxxxxxx Investment Company, Inc. to
undertake the proposed unit offering is conditioned on the Company's
undertaking a rescission offering to certain shareholders of the Company who
acquired Common Stock of the Company between October 1990 and March 1994.
C. The Company has filed a registration statement with the Securities
and Exchange Commission in connection with a proposed rescission offering to
certain shareholders of the Company. It is contemplated that the rescission
price will be paid in cash to all eligible offerees; provided, however, that
to the extent that securities with an aggregate cash rescission price in
excess of $1,500,000 are tendered to the Company in response to the
rescission offering and if the proposed unit offering has not closed, the
Company may issue to rescinding security holders in the states of Oregon and
Colorado a portion of the rescission price in the form of promissory notes
(the "Notes") of the
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Company bearing interest at the rate of 9% per annum and with maturities of
18 months to 36 months.
D. Certain state regulatory authorities have required the Notes to be
secured. The Pledgors desire to pledge certain of their shares of Common
Stock of the Company to secure the Company's payment of the Notes and to
facilitate the undertaking of the rescission offering and the unit offering.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. PLEDGE OF SHARES. The Pledgors grant to the Collateral Agent for the
benefit of the Note Holders by pledge a security in and to all right, title
and interest of the Pledgors in [insert number of shares which, when divided
by the market price of the Company's Common Stock or $6.00 in the absence of
a market quote, equal 120% of the outstanding principal amount of the Notes]
shares of the Common Stock of the Company, which shares initially pledged are
more particularly identified in Schedule C hereto (the "Pledged Shares").
Contemporaneous with the execution and delivery of this Pledge Agreement, the
Pledgors will deliver to the Collateral Agent all stock certificates
evidencing the Pledged Shares in their possession, together with stock powers
endorsed in blank, to hold subject of the terms of this Pledge Agreement.
2. SECURITY FOR OBLIGATIONS. This Pledge Agreement secures the payment
by the Company of all oblilgations of the Company under the Notes, whether
for principal, interest, fees, expenses, or otherwise (all such obligations
of the Company being the "Obligations"). Recourse to the Pledgors with
respect to the Obligations shall be limited solely to the Pledged Shares.
3. VOTING SHARES; CARE AND CUSTODY OF CERTIFICATES.
a. Provided that no Event of Default, as hereafter defined, has
occurred and is continuing and that the Pledged Shares, or any shares which
are a part thereof, are not subject to sale in accordance with Section 7
hereof, the Pledgors shall be entitled to vote the Pledged Shares or such
shares which are a part thereof which are not subject to sale.
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b. Provided that no Event of Default, as hereafter defined, has
occurred and is continuing and that the Pledged Shares, or any shares which
are a part thereof, are not subject to sale in accordance with Section 7
hereof, the Pledgors shall be entitled to receive and retain any dividend or
other distribution, whether in securities or other property (other than a
stock split, split-up or exchange of shares) made in respect of such shares
of the Pledged Shares which are not subject to sale. The Collateral Agent
shall be entitled to receive and retain and pledge any dividend or other
distribution, whether in securities or other property, made in respect of
such shares which are subject to sale in accordance with Section 7 hereof.
Securities issued in respect of the Pledged Shares, or any shares which are a
part thereof, by reason of a stock split, split-up or exchange, shall be
subject to the pledge arising under this Pledge Agreement. The Pledgors
shall immediately deliver all such securities, in pledge, to the Collateral
Agent.
c. The Collateral Agent shall take reasonable care in the
preservation of all stock certificates delivered to the Collateral Agent by
the Pledgors.
4. ADDITION TO PLEDGED SHARES; RELEASE OF SHARES FROM PLEDGE.
Not more than five (5) business days after the end of each month, the
Collateral Agent shall deliver to the Company for distribution to the
Pledgors a Coverage Certificate, setting forth the last reported closing
price for shares of the Common Stock of the Company on the last business day
of the preceeding month, or $6.00 in the absence of a closing price, and the
number of shares of Common Stock of the Company, based on such price, which
shall equal 120% of the outstanding principal balance of the Notes when
multiplied by such closing price (the "Monthly Pledge Requirement"). If the
Monthly Pledge Requirement is greater than the number of shares constituting
the Pledged Shares, not more than five (5) business days after delivery of
the Coverage Certificate, the Pledgors shall pledge and deliver to the
Collateral Agent that number of shares of Common Stock of the Company equal
to the difference between the Monthly Pledge Requirement and the Pledged
Shares; provided, however, that the number of shares subject to pledge under
this Pledge Agreement shall not exceed 3,842,708, subject to adjustment for
stock splits, split-ups and exchanges. Not more than two (2) days after the
sale of any shares constituting the Pledged Shares in accordance with Section
7 hereof, the Collateral Agent shall deliver to the Company for distribution
to the Pledgors a Post-sale Coverage Certificate, setting forth the last
reported closing price for shares of Common Stock of the Company on the day
of such sale, or the price per share obtained in such sale in the absense of
a closing price, and the number of shares of Common Stock of the Company
based on such price, which shall equal 120% of the outstanding principal
balance of the Notes when multiplied by such closing price (the "Post-Sale
Pledge Requirement"). If the Post-Sale Pledge Requirement is greater than the
number of shares constituting the Pledged Shares, not more than five (5)
business after delivery of the Post-Sale Coverage Certificate, the Pledgors
shall pledge and deliver to the Collateral Agent that number of shares of
Common Stock of the Company equal to the difference between the Post-Sale
Pledge Requirement and the Pledged Shares. If the Monthly Pledge Requirement is
less than the number of shares constituting the Pledged Shares, and no Event
of Default, as hereafter defined, has occurred and is continuing, and no
shares
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constituting the Pledged Shares are subject to sale in accordance with
Section 6 hereof, the Pledgors may request, in writing, the release from the
pledge created by this Pledged Agreement to the Pledgors, such number of the
Pledged Shares as shall cause the number of shares subject to such pledge to
equal the Monthly Pledge Requirement. The specific shares to be released to
the Pledgors shall be identified in such written request which shall be
executed by all of the Pledgors, their representatives or successors.
5. EVENTS OF DEFAULT. The occurrence and continuation of any of the
following events shall constitute an event of default ("Event of Default")
under this Pledge Agreement:
a. the Company shall fail to pay when due any installment of
principal of, or interest on, the Notes to any Note Holder, the Collateral
Agent shall have received written notice of such failure from such Note
Holder, and such failure shall remain unremedied for five (5) business days
after written notice thereof shall have been given to the Company by the
Collateral Agent; or
b. the Pledgors shall have failed to deliver to the Collateral Agent
additional shares of the Common Stock of the Company as required in
accordance with Section 4 hereof, and such failure shall have remained
unremedied for five (5) business days after written notice thereof shall have
been given to the Pledgors by the Collateral Agent.
6. REMEDIES OF COLLATERAL AGENT. Upon the occurrence of any Event of
Default, the Collateral Agent may in the Collateral Agent's sole discretion,
without further notice to the Pledgors:
a. register in the Company's name any of the Pledged Shares which
the Collateral Agent reasonably determines shall be in an amount of such
shares necessary to satisfy the then-matured obligations of the Company
arising under the Notes; and
b. sell or otherwise dispose of the Pledged Shares which the
Collateral Agent reasonably determines shall be in an amount of such shares
necessary to satisfy the Company's then-matured obligations arising under the
Notes in accordance with Section 7 hereof.
4 - PLEDGE AGREEMENT
7. SALE UPON OCCURRENCE OF EVENT OF DEFAULT. Pledgors and the
Collateral Agent agree that, although a public market may exist for the
Common Stock of the Company, certain or all of the Pledged Shares may be
subject to restrictions and accordingly may not be sold in the public market.
Accordingly, certain or all of the Pledged Shares may not be subject to sale
in a "recognized market" within the contemplation of Or. Rev. Stat. 79.5040.
Based on the foregoing, the parties desire to agree to reasonable standards
for conducting a commercially reasonable sale of the Pledged Shares upon the
Occurrence of Event of Default. Without limiting the rights of the Collateral
Agent, if certain or all of the Pledged Shares cannot be sold in the public
market for the Company's Common Stock, compliance with the following
procedures shall be deemed to satisfy the requirements of a commercially
reasonable sale:
a. The sale may be either a public or private sale, in the
Collateral Agent's sole discretion, for all or a part of the Pledged Shares;
b. The Collateral Agent shall establish a date for public sale of
the shares, or a date after which a private sale may occur, which date shall
be set not less than 30 days after the date notice of such a proposed sale is
given to the Pledgors and shall further provide the Pledgors advance written
notice specifying the time and place of any public sale;
c. Any public sale shall take place at a site in Oregon selected by
the Collateral Agent;
d. At any public or private sale of any of the Pledged Shares, the
Collateral Agent may restrict the prospective purchasers or bidders to
persons or entities who, in the reasonable opinion of the Collateral Agent,
would enjoy the right to purchase the Pledged Shares without the need for
further registration under applicable federal or state securities laws.
Notwithstanding the foregoing, the Pledgors shall enjoy the right to
purchase at such sale the Pledged Shares subject to such sale at a price
equal to highest bona fide offer received by the Collateral Agent.
5 - PLEDGE AGREEMENT
8. TERM OF PLEDGE. This Pledge Agreement shall terminate, the Pledged
Shares shall be released from the pledge created by this Pledge Agreement,
and the Collateral Agent will deliver all certificates representing the
Pledged Shares in its possession to the Pledgors upon receiving a certificate
from the Chief Financial Officer of the Company confirming to the Collateral
Agent that Obligations have been satisfied in full.
9. MISCELLANEOUS.
a. CUMULATIVE RIGHTS. The rights, powers, and remedies of the
Collateral Agent under this Pledge Agreement shall be in addition to all
rights, powers, and remedies given to the Collateral Agent by virtue of any
statute or rule of law, or any other agreement, all of which shall be
cumulative and may be exercised successively or concurrently without
impairing the Note Holder's security interest in the Pledged Shares.
b. WAIVER. Any waiver, forbearance, failure, or delay by the
Collateral Agent in exercising, or in the exercise or beginning of
exercise by the Collateral Agent of, any right, power, or remedy,
simultaneous, or later, shall not preclude the further, simultaneous or
later exercise, and every right, power, or remedy of the Collateral
Agent shall continue in full force and effect until it is specifically
waived in a writing executed by the Collateral Agent.
c. SEVERABILITY. If any provision in this Pledge Agreement is held
invalid or unenforceable, this Pledge Agreement and the rights and
obligations of the parties shall be construed without reference to such
provision and enforced accordingly.
d. BENEFIT AND ASSIGNMENT. This Pledge Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and assigns. Pledgors may not voluntarily or involuntarily
assign their interests under this Pledge Agreement.
e. ENTIRE AGREEMENT. This Pledge Agreement embodies the entire
agreement and understanding of the parties and supersede any and all
prior agreements, arrangements, and
6 - PLEDGE AGREEMENT
understandings relating to matters provided for in this Pledge
Agreement. No amendment or waiver of compliance with any provision or
condition of this Pledge Agreement or consent pursuant to this Pledge
Agreement will be effective unless evidenced by an instrument signed by
the parties.
(f) GOVERNING LAW. The construction and performance of this
Agreement will be governed by the laws of the state of Oregon.
(g) ATTORNEYS' FEES. If a party is required to bring a legal action
to enforce this Agreement, the prevailing party will be entitled to
recover their costs and expenses, including reasonable legal fees,
incurred in connection with such action.
(h) NOTICES. Any notice or other communication required to be
otherwise given under this Agreement shall be in writing and shall be
deemed to have been given (i) when delivered personally or (ii) two
business days after it has been deposited with the U.S. Postal Service,
postage prepaid, and addressed to the notified party as follows:
To the Collateral Agent:
With a copy to:
To the Pledgors:
Cascadia Pacific Management, LLC on behalf of the Oregon
Research and Technology Development Fund
Xxxxx X. Xxxxxxxxx, Ph.D
Xxxxxx X. Xxxxxx, Ph.D.
Xxxxxx X. Xxxxxx, Ph.D.
Xxxx Xxxxxx, Ph.D.
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Xxxxxx X. Xxxxxxx, Ph.D.
Xxxxx X. Xxxxxxxx, Ph.D.
With a copy to:
The address to which notice or other communications shall be mailed may be
changed from time to time by giving written notice to the other party.
IN WITNESS WHEREOF, the parties have executed this Pledge Agreement as of
the date first set forth above.
PLEDGORS:
Cascadia Pacific Management, LLC on behalf of the Oregon
Research and Technology Development Fund
By _______________________________
_______________________________
Its ___________________________
__________________________________
Xxxxx X. Xxxxxxxxx, Ph.D
__________________________________
Xxxxxx X. Xxxxxx, Ph.D.
__________________________________
Xxxxxx X. Xxxxxx, Ph.D.
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__________________________________
Xxxx Xxxxxx
__________________________________
Xxxxxx X. Xxxxxxx, Ph.D.
__________________________________
Xxxxx X. Xxxxxxxx, Ph.D.
COLLATERAL AGENT:
By _______________________________
_______________________________
Its ___________________________
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