EXHIBIT 10.1
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of March 17,
1997, is made between Xxxxxxx Xxxxxx ("Pledgor"), and Polycom, Inc. ("Secured
Party").
Pledgor and Secured Party hereby agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) As used in this Agreement, the following terms shall have the
following meanings:
"ADDITIONAL COLLATERAL" means any and all (i) securities, property,
interest, dividends and other payments and distributions issued as an addition
to, in redemption of, in renewal or exchange for, in substitution or upon
conversion of, or otherwise on account of, the Pledged Shares or such additional
capital stock or other equity securities, and (ii) cash and non-cash proceeds of
the Pledged Shares and any of the foregoing, in each case from time to time
received or receivable by, or otherwise paid or distributed to or acquired by,
Pledgor.
"EVENT OF DEFAULT" has the meaning set forth in Section 7.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
assignment, charge or encumbrance, lien, or other type of preferential
arrangement.
"NOTE" means that certain Promissory Note dated March 17, 1997 made by
Pledgor in favor of Secured Party, as amended, modified, renewed, extended or
replaced from time to time.
"OBLIGATIONS" means the indebtedness, liabilities and other
obligations of Pledgor to Secured Party under or in connection with this
Agreement and the Note.
"PERSON" means an individual, corporation, partnership, joint venture,
trust, unincorporated organization or authority, or any other entity of whatever
nature.
"PLEDGED COLLATERAL" has the meaning set forth in Section 2(a).
"PLEDGED SHARES" means the issued and outstanding shares of the
capital stock, whether certificated or uncertificated, of the Secured Party now
owned by Pledgor, as more specifically described in SCHEDULE 1.
1.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; PROVIDED, HOWEVER, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Pledged Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
(b) Where applicable and except as otherwise defined herein, terms
used in this Agreement shall have the meanings assigned to them in the UCC.
SECTION 2 SECURITY INTEREST.
(a) As security for the payment and performance of the Obligations,
Pledgor hereby pledges, assigns, transfers, hypothecates and sets over to
Secured Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in, to and under (i) the Pledged Shares and
the Additional Collateral and any certificates and instruments now or hereafter
representing the Pledged Shares and the Additional Collateral, (ii) all rights,
interests and claims with respect to the Pledged Shares and Additional
Collateral, including under any and all related agreements, instruments and
other documents, and (iii) all books, records and other documentation of Pledgor
related to the Pledged Shares and Additional Collateral, in each case whether
presently existing or owned or hereafter arising or acquired and wherever
located (collectively, the "Pledged Collateral").
(b) Pledgor hereby agrees to deliver to or for the account of Secured
Party, at the address and to the Person or Persons to be designated by Secured
Party, the certificates representing the Pledged Shares, which shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party.
(c) If Pledgor shall become entitled to receive or shall receive any
Additional Collateral, Pledgor shall accept any such Additional Collateral as
Secured Party's agent, shall hold it in trust for Secured Party, shall segregate
it from other property or funds of Pledgor, and shall deliver all Additional
Collateral and all certificates, instruments and other writings representing
such Additional Collateral forthwith to or for the account of Secured Party, at
the address and to the Person to be designated by Secured Party, which shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Secured Party, to be held by Secured Party subject to
the terms hereof, as part of the Pledged Collateral. Upon accepting any such
Additional Collateral hereunder, Secured Party shall promptly send a
notification to Pledgor describing the Additional Collateral accepted and held
as part of the Pledged Collateral hereunder, which notification shall be deemed
to be a Schedule to this Agreement and may be attached hereto.
2.
(d) Pledgor shall execute and deliver to Secured Party concurrently
with the execution of this Agreement, and at any time and from time to time
thereafter, all financing statements, assignments, continuation financing
statements, termination statements, and other documents and instruments, in form
reasonably satisfactory to Secured Party, and take all other action, as Secured
Party may reasonably request, to effect a transfer of a perfected first priority
security interest in and pledge of the Pledged Collateral to Secured Party
pursuant to the UCC and to continue perfected, maintain the priority of or
provide notice of the security interest of Secured Party in the Pledged
Collateral and to accomplish the purposes of this Agreement.
(e) Pledgor agrees that this Agreement shall create a continuing
security interest in and pledge of the Pledged Collateral which shall remain in
effect until terminated by Secured Party.
(f) Notwithstanding anything to the contrary herein, so long as no
Event of Default has occurred under this Agreement or the Note, Pledgor may
request that certain of the Pledged Shares be released by Secured Party from the
lien created by this Agreement at such time as (i) the price of the shares of
common stock of Secured Party ("Traded Shares") quoted by nationally recognized
broker-dealers on Nasdaq after the date hereof (the "Future Value") exceeds by
25% or more the price of such Traded Shares quoted by nationally recognized
broker-dealers on Nasdaq as of the date hereof (the "Current Value") for a
period of no less than three months, or (ii) Pledgor prepays outstanding
principal due under the Note in an amount in excess of $50,000. Upon the
occurrence of the events noted in clauses (i) and (ii) of the preceding
sentence, Secured Party will release Pledged Shares in an amount that would
cause the ratio of the Future Value of all Pledged Shares (the parties agree
that for purposes of determining compliance with this clause (f) the value of
Traded Shares and Pledged Shares is equal) to the then outstanding principal
under the Note to be no less than the ratio of the Current Value of all Pledged
Shares to the amount of principal which may be borrowed under the Note as of the
date hereof.
SECTION 3 REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants to Secured Party that:
(a) This Agreement constitutes the legal, valid and binding
obligation of Pledgor, enforceable against Pledgor in accordance with its terms.
(b) No approval or consent of any other Person, is required for the
due execution, delivery or performance by Pledgor of this Agreement.
(c) With respect to the Pledged Shares Pledgor is, and with respect
to any Additional Collateral Pledgor will be, the legal record and beneficial
owner thereof, and has and will have good and marketable title thereto, subject
to no Lien except for the pledge created by this Agreement.
3.
(d) Pledgor's residence and all books and records concerning the
Pledged Collateral, are located at his address set forth on the signature pages
hereof.
(e) No effective financing statement naming Pledgor as debtor,
assignor, grantor, mortgagor, pledgor or the like and covering all or any part
of the Pledged Collateral is on file in any filing or recording office in any
jurisdiction.
Pledgor agrees that the foregoing representations and warranties shall
be deemed to have been made by him on the date of each delivery of Pledged
Collateral hereunder.
SECTION 4 COVENANTS. So long as any of the Obligations remain
unsatisfied, Pledgor agrees that:
(a) Pledgor will, at his own expense, appear in and defend any
action, suit or proceeding which purports to affect his title to, or right or
interest in, the Pledged Collateral or the security interest of Secured Party
therein and the pledge to Secured Party thereof.
(b) Pledgor shall give prompt written notice to Secured Party (and in
any event not later than 30 days following any change described below in this
subsection) of: (i) any change in the location of Pledgor's residence, (ii) any
change in the location of books and records pertaining to Pledged Collateral;
and (iii) any change in his name in any manner which might make any financing
statement filed hereunder incorrect or misleading.
(c) Pledgor will not create, incur or permit to exist any Liens upon
or with respect to the Pledged Collateral, other than the pledge to Secured
Party created by this Agreement.
SECTION 5 ADMINISTRATION OF THE PLEDGED COLLATERAL.
(a) Unless an Event of Default shall have occurred: (i) Pledgor
shall be entitled to receive and retain for his own account any cash dividend in
amounts consistent with past practices in respect of the Pledged Collateral; and
(ii) Pledgor shall have the right to vote the Pledged Collateral and to retain
the power to control the direction, management and policies of the Secured Party
to the same extent as Pledgor would if the Pledged Collateral were not pledged
to Secured Party pursuant to this Agreement; PROVIDED, HOWEVER, that Secured
Party shall receive, and Pledgor shall not be entitled to receive, (A) cash
paid, payable or otherwise distributed in redemption of, or in exchange for or
in substitution of, any Pledged Collateral, or (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution of the Secured
Party or in connection with a reduction of capital, capital surplus or
paid-in-surplus or any other type of recapitalization involving the Secured
Party; and PROVIDED FURTHER, HOWEVER, that no vote shall be cast or consent,
waiver or ratification given or action taken or proxy given which would have the
effect of impairing the position or interest of Secured Party in respect of the
Pledged Collateral or which would
4.
alter the voting rights with respect to the stock of the Secured Party or be
inconsistent with or violate any provision of this Agreement. Secured Party
shall execute and deliver (or cause to be executed and delivered) to Pledgor
all such proxies and other instruments as Pledgor may reasonably request for
the purpose of enabling Pledgor to exercise the voting and other rights which
it is entitled to exercise, and to receive distributions which it is
authorized to receive and retain, pursuant to this subsection (a).
(b) Upon and after the occurrence of any Event of Default:(i) Secured
Party shall be entitled to receive all distributions and payments of any nature
with respect to the Pledged Collateral, to be held by Secured Party as part of
the Pledged Collateral;(ii) Secured Party shall have the right following prior
written notice to Pledgor to vote or consent to take any action with respect to
the Pledged Collateral and exercise all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to the
Pledged Collateral as if Secured Party were the absolute owner thereof; and
(iii) Secured Party shall have the right, for and in the name, place and stead
of Pledgor, to execute endorsements, assignments or other instruments of
conveyance or transfer with respect to all or any of the Pledged Collateral, to
endorse any checks, drafts, money orders and other instruments relating thereto,
to xxx for, collect, receive and give acquittance for all moneys due or to
become due in connection with the Pledged Collateral and otherwise to file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Pledged Collateral, execute any and all
such other documents and instruments, and do any and all such acts and things,
as Secured Party may deem necessary or desirable to protect, collect, realize
upon and preserve the Pledged Collateral, to enforce Secured Party's rights with
respect to the Pledged Collateral and to accomplish the purposes of this
Agreement.
(c) Distributions and other payments which are received by Pledgor
but which it is not entitled to retain as a result of the operation of
subsection (a) or (b) shall be held in trust for the benefit of Secured Party,
be segregated from the other property or funds of Pledgor, and be forthwith paid
over or delivered to Secured Party in the same form as so received.
(d) At any time and from time to time, Secured Party may cause any of
the Pledged Collateral to be transferred into its name or into the name of its
nominee or nominees (subject to the revocable rights specified in
subsection (a)). Secured Party shall at all times have the right to exchange
uncertificated Pledged Collateral for certificated Pledged Collateral, and to
exchange certificated Pledged Collateral for certificates of larger or smaller
denominations, for any purpose consistent with this Agreement.
(e) For the purpose of enabling Secured Party to exercise its rights
under this Section 5 or otherwise in connection with this Agreement, Pledgor
hereby (i) constitutes and appoints Secured Party (and any of Secured Party's
officers, employees or agents designated by Secured Party) his true and lawful
attorney-in-fact, with full power and authority to execute any notice,
assignment, endorsement or other instrument or document, and to do any and all
acts and things for and on behalf of Pledgor, which Secured Party may deem
necessary or desirable to protect, collect, realize upon and preserve the
Pledged
5.
Collateral, to enforce Secured Party's rights with respect to the Pledged
Collateral and to accomplish the purposes hereof, and (ii) revokes all
previous proxies with regard to the Pledged Collateral and appoints Secured
Party as his proxyholder with respect to the Pledged Collateral to attend and
vote at any and all meetings of the shareholders of the Secured Party held on
or after the date of this proxy and prior to the termination hereof, with
full power of substitution to do so and agrees, if so requested, to execute
or cause to be executed appropriate proxies therefor. Each such appointment
is coupled with an interest and irrevocable so long as the Obligations have
not been paid and performed in full. Pledgor hereby ratifies, to the extent
permitted by law, all that Secured Party shall lawfully and in good faith do
or cause to be done by virtue of and in compliance with this Section 5.
SECTION 6 SECURED PARTY'S DUTIES. Notwithstanding any provision
contained in this Agreement, Secured Party shall have no duty to exercise any of
the rights, privileges or powers afforded to it and shall not be responsible to
Pledgor or any other Person for any failure to do so or delay in doing so.
Beyond the exercise of reasonable care to assure the safe custody of the Pledged
Collateral while held hereunder and the accounting for moneys actually received
by Secured Party hereunder, Secured Party shall have no duty or liability to
exercise or preserve any rights, privileges or powers pertaining to the Pledged
Collateral.
SECTION 7 EVENTS OF DEFAULT. Any of the following events which shall
occur and be continuing shall constitute an "Event of Default":
(a) Pledgor shall fail to pay when due any amount payable hereunder
or under the Note or in respect of the Obligations.
(b) Any representation or warranty by Pledgor under or in connection
with this Agreement or the Note shall prove to have been incorrect in any
material respect when made or deemed made.
(c) Pledgor shall fail to perform or observe in any material respect
any other covenant or agreement contained in this Agreement or the Note on his
part to be performed or observed and any such failure shall remain unremedied
for a period of 15 days from the occurrence thereof, or any "Event of Default"
as defined in the Note shall have occurred.
(d) Any impairment in the priority of Secured Party's Lien hereunder.
SECTION 8 REMEDIES.
(a) Upon the occurrence and during the continuance of any Event of
Default, Secured Party may declare any of the Obligations to be immediately due
and payable and shall have, in addition to all other rights and remedies granted
to it in this Agreement or the Note, all rights and remedies of a secured party
under the UCC and other applicable laws. Without limiting the generality of the
foregoing, Pledgor agrees that any item of the Pledged Collateral may be sold
for cash or on credit or for future delivery
6.
without assumption of any credit risk, in any number of lots at the same or
different times, at any exchange, brokers' board or elsewhere, by public or
private sale, and at such times and on such terms, as Secured Party shall
determine; PROVIDED, HOWEVER, that Pledgor shall be credited with the net
proceeds of sale only when such proceeds are finally collected by Secured
Party in cash. Pledgor hereby agrees that the sending of notice by ordinary
mail, postage prepaid, to the address of Pledgor set forth herein, of the
place and time of any public sale or of the time after which any private sale
or other intended disposition is to be made, shall be deemed reasonable
notice thereof if such notice is sent ten days prior to the date of such sale
or other disposition or the date on or after which such sale or other
disposition may occur, PROVIDED that Secured Party may provide Pledgor
shorter notice or no notice, to the extent permitted by the UCC or other
applicable law. Pledgor recognizes that Secured Party may be unable to make
a public sale of any or all of the Pledged Collateral, by reason of
prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of purchasers for
investment and not with a view to any distribution thereof shall be
considered a commercially reasonable sale. Secured Party shall have the
right upon any such public sale, and, to the extent permitted by law, upon
any such private sale, to purchase the whole or any part of the Pledged
Collateral so sold, free of any right or equity of redemption, which right or
equity of redemption Pledgor hereby releases to the extent permitted by law.
(b) The cash proceeds actually received from the sale or other
disposition or collection of Pledged Collateral, and any other amounts received
in respect of the Pledged Collateral the application of which is not otherwise
provided for herein, shall be applied FIRST, to the payment of the reasonable
costs and expenses of Secured Party in exercising or enforcing its rights
hereunder and in collecting or attempting to collect any of the Pledged
Collateral, and to the payment of all other amounts payable to Secured Party
pursuant to Section 12; and SECOND, to the payment of the Obligations. Any
surplus thereof which exists after payment and performance in full of the
Obligations shall be promptly paid over to Pledgor or otherwise disposed of in
accordance with the UCC or other applicable law. Pledgor shall remain liable to
Secured Party for any deficiency which exists after any sale or other
disposition or collection of Pledged Collateral.
SECTION 9 CERTAIN WAIVERS. Pledgor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Pledged
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling of the Pledged Collateral or other collateral or security for the
Obligations; (ii) any right to require Secured Party (A) to proceed against any
Person, (B) to exhaust any other collateral or security for any of the
Obligations, (C) to pursue any remedy in Secured Party's power, or (D) to make
or give any presentments, demands for performance, notices of nonperformance,
protests, notices of protests or notices of dishonor in connection with any of
the Pledged Collateral; and (iii) all claims, damages, and demands against
Secured Party arising out of the repossession, retention, sale or application of
the proceeds of any sale of the Pledged Collateral.
SECTION 10 NOTICES. All notices or other communications hereunder
shall be in writing (including by facsimile transmission) and mailed, sent or
delivered to the respective parties hereto at or to their respective addresses
or facsimile numbers set forth
7.
below their names on the signature pages hereof, or at or to such other
address or facsimile number as shall be designated by any party in a written
notice to the other parties hereto. All such notices and other
communications shall be effective (i) if delivered by hand, when delivered;
(ii) if sent by mail, upon the earlier of the date of receipt or five
business days after deposit in the mail, first class; and (iii) if sent by
facsimile transmission, when sent.
SECTION 11 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Secured Party to exercise, and no delay in exercising, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers and privileges that may
otherwise be available to Secured Party.
SECTION 12 COSTS AND EXPENSES.
(a) Pledgor agrees to pay on demand all costs and expenses of Secured
Party, including the fees and disbursements of counsel to Secured Party, in
connection with the enforcement or attempted enforcement of, and preservation of
any rights or interests under, this Agreement and the Note, including in any
out-of-court workout or other refinancing or restructuring or in any bankruptcy
case, and the protection, sale or collection of, or other realization upon, any
of the Pledged Collateral.
(b) Any amounts payable to the Agent or any Secured Party under this
Section 12 or otherwise under this Agreement if not paid upon demand shall bear
interest from the date of such demand until paid in full, at the default rate of
interest set forth in the Note.
SECTION 13 BINDING EFFECT. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by Pledgor, Secured Party and their
respective successors, assigns, personal representatives, heirs and legatees
(including any trust pledgor now or hereafter may create).
SECTION 14 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of California, except as
required by mandatory provisions of law and to the extent the validity or
perfection of the security interests hereunder, or the remedies hereunder, in
respect of any Pledged Collateral are governed by the law of a jurisdiction
other than California.
SECTION 15 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the
entire agreement of the parties with respect to the subject matter hereof and
shall not be amended except by the written agreement of the parties.
SECTION 16 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be
8.
prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only
to the extent of such prohibition or invalidity without affecting the
remaining provisions of this Agreement, or the validity or effectiveness of
such provision in any other jurisdiction.
SECTION 17 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
Xxxxxxx Xxxxxx
/S/ XXXXXXX XXXXXX
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[* * * * *]
[* * * * *]
Fax:
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POLYCOM, INC.
By /s/ XXXXX X. XXXXXX
-----------------------------------
Title:
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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0000 XXXXXXXX XXX.
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XXX XXXX, XX 00000
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Attn:
---------------------------------
Fax:
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* Confidential treatment requested. Confidential portion has been filed
separately with the Securities and Exchange Commission.
9.
SCHEDULE 1
to the Stock Pledge Agreement
PLEDGED SHARES
Up to 62,500 shares of common stock of Polycom, Inc. (as determined in
accordance with the Stock Pledge Agreement between Pledgor and Secured Party
dated as of March 17, 1997) being represented by stock certificates as follows:
Certificate No. Certificate Date No. of Shares
--------------- ---------------- -------------
FBU07814 March 18, 1997 62,500
S-1
PROMISSORY NOTE
$250,000 Dated: March 17, 1997
FOR VALUE RECEIVED, the undersigned, Xxxxxxx Xxxxxx (the "Borrower"),
HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of Polycom, Inc. (the
"Lender"), the principal sum of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000),
on March 17, 2002.
The Borrower further promises to pay interest on the outstanding
principal amount of this Promissory Note from the date hereof until maturity, in
arrears, on March 17, 2002, at a rate per annum equal at all times to the
Applicable Federal Rate. The "Applicable Federal Rate" means the lowest
available interest rate which may be paid by the Borrower such that no
additional interest is imputed to be paid to Lender under the Internal Revenue
Code of 1986, including any rules or regulations promulgated thereunder. In the
event that any amount of principal or interest, or any other amount payable
hereunder, is not paid in full when due (whether at stated maturity, by
acceleration or otherwise), the Borrower agrees to pay interest on such unpaid
principal or other amount, from the date such amount becomes due until the date
such amount is paid in full, payable on demand, at a rate per annum equal at all
times to 9%. All computations of interest shall be made on the basis of a year
of 365 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest is payable.
Notwithstanding anything to the contrary herein, so long as no Event of Default
occurs under clauses (i) and (ii) of the paragraph below listing the Events of
Default, it is intended that the Borrower shall not be obligated to pay any
interest described in this Promissory Note to the Lender. Moreover, the
Borrower may, with the Lender's permission and subject to such further
conditions as the Lender may require, repay this Promissory Note by selling the
Collateral (as defined in the Stock Pledge Agreement referred to below) and
using the proceeds of such sale therefor without such sale being deemed to be an
Event of Default (as defined below) hereunder.
All payments hereunder shall be made in lawful money of the United
States of America, to the Lender, at such place or to such account as the Lender
from time to time shall designate to the Borrower.
Whenever any payment hereunder shall be stated to be due, or whenever
any interest payment date or any other date specified hereunder would otherwise
occur, on a day other than a Business Day (as defined below), then such payment
shall be made, and such interest payment date or other date shall occur, on the
next succeeding Business Day, and such extension of time shall in such case be
included in the
1.
computation of payment of interest hereunder. As used herein, "Business Day"
means a day (i) other than Saturday or Sunday, and (ii) on which commercial
banks are open for business in San Francisco, California.
Anything herein to the contrary notwithstanding, if during any period
for which interest is computed hereunder, the amount of interest computed on the
basis provided for in this Promissory Note, together with all fees, charges and
other payments which are treated as interest under applicable law, as provided
for herein or in any other document executed in connection herewith, would
exceed the amount of such interest computed on the basis of the Highest Lawful
Rate, the Borrower shall not be obligated to pay, and the Lender shall not be
entitled to charge, collect, receive, reserve or take, interest in excess of the
Highest Lawful Rate, and during any such period the interest payable hereunder
shall be computed on the basis of the Highest Lawful Rate. As used herein,
"Highest Lawful Rate" means the maximum non-usurious rate of interest, as in
effect from time to time, which may be charged, contracted for, reserved,
received or collected by the Lender in connection with this Promissory Note
under applicable law.
The Borrower may prepay the outstanding amount hereof in whole or in
part at any time, without premium or penalty.
The Borrower represents and warrants to the Lender that this
Promissory Note is the legal, valid and binding obligation of the Borrower
enforceable against him in accordance with its terms.
The occurrence of any of the following shall constitute an "Event of
Default" under this Promissory Note:
i) the failure to make any payment of principal, interest or
any other amount payable hereunder when due under this Promissory Note or the
breach of any other condition or obligation under this Promissory Note or the
Pledge Agreement (as defined below);
ii) the filing of a petition by or against the Borrower under
any provision of United States bankruptcy laws or under any similar law relating
to bankruptcy, insolvency or other relief for debtors; or appointment of a
receiver, trustee, custodian or liquidator of or for all or any part of the
assets or property of the Borrower; or the insolvency of the Borrower; or the
making of a general assignment for the benefit of creditors by the Borrower;
iii) the Borrower's death or incapacity; or
iv) four months following the effective date of the voluntary
resignation of the Borrower from his current position with the Lender.
2.
Upon the occurrence of any Event of Default, the Lender, at its
option, may (i) by notice to the Borrower, declare the unpaid principal amount
of this Promissory Note, all interest accrued and unpaid hereon and all other
amounts payable hereunder to be immediately due and payable, whereupon the
unpaid principal amount of this Promissory Note, all such interest and all such
other amounts shall become immediately due and payable, without presentment,
demand, protest or further notice of any kind, provided that if an event
described in paragraph (ii) above shall occur, the result which would otherwise
occur only upon giving of notice by the Lender to the Borrower as specified
above shall occur automatically, without the giving of any such notice; and
(ii) whether or not the actions referred to in clause (i) have been taken,
exercise any or all of the Lender's rights and remedies and proceed to enforce
all other rights and remedies available to the Lender under applicable law.
The Borrower agrees to pay on demand all the losses, costs, and
expenses (including, without limitation, attorneys' fees and disbursements)
which the Lender incurs in connection with enforcement or attempted
enforcement of this Promissory Note, or the protection or preservation of the
Lender's rights under this Promissory Note, whether by judicial proceedings
or otherwise. Such costs and expenses include, without limitation, those
incurred in connection with any workout or refinancing, or any bankruptcy,
insolvency, liquidation or similar proceedings.
The Borrower hereby waives diligence, demand, presentment, protest
or further notice of any kind. The Borrower agrees to make all payments
under this Promissory Note without setoff or deduction and regardless of any
counterclaim or defense.
No single or partial exercise of any power under this Promissory
Note shall preclude any other or further exercise of such power or exercise
of any other power. No delay or omission on the part of the Lender in
exercising any right under this Promissory Note shall operate as a waiver of
such right or any other right hereunder.
This Promissory Note shall be binding on the Borrower and his
successors, assigns, personal representatives, heirs, and legatees, and shall
be binding upon and inure to the benefit of the Lender, any future holder of
this Promissory Note and their respective successors and assigns. The
Borrower may not assign or transfer this Promissory Note or any of his
obligations hereunder without the Lender's prior written consent.
3.
This Promissory Note is secured by that certain Stock Pledge
Agreement dated as of the date hereof by the Borrower in favor of the Lender
(the "Pledge Agreement").
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH CALIFORNIA LAW.
/s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx
Address:
[* * * * *]
[* * * * *]
* Confidential treatment requested. Confidential portion has been filed
separately with the Securities and Exchange Commission.
4.
