EXHIBIT 10.27
EXHIBIT 3 to RESTRICTED STOCK AGREEMENT
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STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement is entered into as of November 6, 2001 (the
"Effective Date"), by and among DAOU Systems, Inc., a Delaware corporation (the
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"Company"), and Xxxxxx X. Xxxxxxx (the "Pledgor"), with reference to the
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following facts:
Background Statement
The Company has agreed to sell to Pledgor 150,000 shares of the Company's
common stock, par value $.001 per share (the "Shares"), pursuant to that certain
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Stock Purchase Agreement, by and between the Company and Pledgor, dated November
6, 2001 and effective retroactively to July 24, 2001 (the "Purchase Agreement").
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In addition the Company has agreed to loan to Pledgor $78,000 as evidenced
by that certain Secured Promissory Note (the "Note") dated November 6, 2001 and
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effectively retroactively to July 24, 2001.
As a material inducement for the Company to make the loan to Pledgor and to
enter into the Purchase Agreement, Pledgor has agreed to secure his obligations
under the Note by granting the Company a first priority security interest in the
Shares.
Agreement
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions contained herein, the parties hereby agree as follows:
1. Security. The term "Pledged Stock" shall mean the 150,000 Shares registered
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in the name of Pledgor, together with all certificates, options, rights or other
distributions issued as an addition to, in substitution or in exchange for, or
on account of, any such Shares, and all proceeds of the foregoing, as further
described in and subject to the provisions of Section 4 below, now or hereafter
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owned or acquired by Pledgor.
2. Grant of Security Interest. As security for full and timely payment,
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performance and satisfaction of the Obligations (as defined in Section 3),
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Pledgor hereby grant to the Company a first priority security interest in the
Pledged Stock. Upon the execution hereof, the Pledged Stock and any related
stock powers will be deposited in escrow with the Company pursuant to Section
1.9 of the Purchase Agreement. Upon execution of appropriate documentation, the
Company will accommodate Pledgor by appropriate arrangement with Pledgor's
broker so that Pledgor shall not be required to advance the payment prior to
receiving the proceeds of the sale.
3. Obligations of Pledgor. As used herein, the term "Obligations" shall mean
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all of Pledgor's obligations, covenants and agreements under the Note.
4. Pledged Stock. In the event Pledgor will become entitled to receive or will
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receive, in connection with any of the Pledged Stock, (a) any stock certificate,
including any certificate
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representing a stock dividend or any certificate in connection with any increase
or reduction of capital, reclassification, merger, consolidation, sale of
assets, combination of shares, stock split or spin-off, (b) any option, warrant
or right, whether as an addition to or in substitution of any of the Pledged
Stock, or otherwise, (c) any dividend or distribution payable in property,
including securities issued as a dividend on the Pledged Stock, or (d) any other
distributions of any kind whatsoever, Pledgor will accept the same as encumbered
by the security interest created hereby, and will deliver the same forthwith to
the Company as the escrow agent (the "Escrow Agent"), in the exact form
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received, including as appropriate, Pledgor's endorsement or appropriate stock
power duly executed in blank, as appropriate, to be held by the Escrow Agent, as
a part of the Pledged Stock, subject to the terms hereof; provided, however,
that as long as no Default (as defined in Section 7) is in existence, Pledgor
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will have sole voting rights with respect to the Pledged Stock.
5. Representations and Warranties of Pledgor. Pledgor warrants and represents to
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the Company that: (a) he has the power and authority to enter into this
Agreement and has the power and authority to pledge the Pledged Stock for the
purposes described herein, (b) Pledgor is the legal and beneficial owner of all
of the Pledged Stock, (c) all of the shares of the Pledged Stock are owned by
Pledgor free of any pledge, mortgage, lien or security interest of any kind,
except as created hereby, (d) the execution and delivery by Pledgor of this
Agreement, and the performance of its terms, will not result in any violation or
default under the terms of any agreement or instrument, or any law or
governmental rule or regulation applicable to Pledgor or the Pledged Stock, and
(e) upon execution and delivery by Pledgor of this Agreement and upon delivery
of the Pledged Stock to Escrow Agent, this Agreement will create a valid and
perfected first priority security interest in the Pledged Stock, and the
proceeds thereof, subject to no prior security interest.
6. Transfer of Interests. Pledgor hereby covenants that, until such time as the
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Oligations have been fully paid, performed and satisfied, except as set forth
in Section 1.2 of the Purchase Agreement, Pledgor will not sell, convey or
otherwise dispose of any of the Pledged Stock or any interest therein, or
create, incur or permit to exist any pledge, mortgage, lien, charge, encumbrance
or any security interest whatsoever in or with respect to any of the Pledged
Stock, or the proceeds thereof, other than the security interest created hereby.
No transfer shall be valid unless and until the transferee agrees that such
transfer is subject to the preexisting security interest created hereby and such
transferee executes a pledge agreement reasonably satisfactory to the Company.
7. Default. As used herein, the term "Default" will mean the failure of full and
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timely payment or performance and satisfaction of any of the Obligations.
8. Rights of the Company. Upon the occurrence of a Default, the Company may, at
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its option, do any one or more of the following: (a) declare all indebtedness of
Pledgor to Company to be immediately due and payable, whereupon all unpaid
principal and interest under the Note will become and be immediately due and
payable; (b) exercise any and all of the rights and remedies of a secured party
as provided for by law; (c) proceed by an action or actions at law or in equity
to recover the obligations secured hereby or to foreclose under the terms of
this Agreement and the Note and sell the collateral, or any portion thereof,
pursuant to a judgment or decree of a court or courts of competent jurisdiction;
(d) proceed immediately to have any or all
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of the Pledged Stock registered in the Company's name or in the name of a
nominee; (e) enforce one or more remedies hereunder, successively or
concurrently; and (f) proceed immediately to dispose of and realize upon the
Pledged Stock, or any part thereof, and in connection therewith, sell or
otherwise dispose of and deliver the Pledged Stock, or any part thereof, in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or at any of the Company's offices or elsewhere, at such prices and on
such terms as the Company may deem best, for cash or on credit, or for future
delivery without assumption of any credit risk, with the right of the Company or
any purchaser to purchase at any such sale either the whole or any part of the
Pledged Stock (in connection with any such sale or disposition, the Company need
not give more than thirty (30) calendar days notice of the time and place of any
public sale or of the time after which a private sale may take place, which
notice to Pledgor hereby acknowledges to be reasonable).
9. Proceeds. The proceeds of any disposition of all or any part of the Pledged
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Stock, as provided in Section 8, will be applied as follows: (a) first, to the
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costs and expenses incurred in connection therewith or incidental thereto,
including the Company's attorneys' fees and legal expenses; (b) second, to the
satisfaction of the Obligations; (c) third, to the payment of any other amounts
required by applicable law; and (d) fourth, to Pledgor to the extent of any
surplus remaining. In the event that there is any deficiency due to the fact
that the proceeds from the aforesaid disposition of the Pledged Stock were
inadequate to satisfy the Obligations, Pledgor will not be liable to the Company
for such deficiency.
10. Private Sale. Pledgor recognize and acknowledge that the company may be
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unable to effect a public sale of all or a part of the Pledged Stock and may
elect to resort to one or more private sales to purchasers who will be obligated
to agree, among other things, to acquire the Pledged Stock for their own
account, for investment, and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices and
on terms less favorable than those of public sales, and agrees that such private
sales will be deemed to have been made in a commercially reasonable manner and
that the Company has no obligation to delay sale of any Pledged Stock to permit
Pledgor to register it for public sale under the Securities Act of 1933, as
amended.
11. Release of Pledged Stock. Upon the execution hereof, Pledgor will deliver to
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Escrow Agent the stock certificates representing the Pledged Stock, including
Pledgor's endorsement thereon or appropriate stock powers duly executed in
blank, as appropriate, to be held by the Escrow Agent in accordance with the
terms of this Agreement and Section 1.9 of the Purchase Agreement.
12. Performance by Pledgor. Upon full payment and performance of all of the
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Obligations by Pledgor and upon payment of all additional costs and expenses
provided herein, this Agreement will terminate, and the Company will deliver or
caused to be delivered to Pledgor, such of the Pledged Stock that has not been
sold or otherwise disposed of pursuant to this Agreement.
13. Remedies. The rights and remedies provided herein are cumulative and are in
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addition to, and not exclusive of, any rights or remedies provided in other
instruments and agreements between the Company and Pledgor, or as provided by
law.
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14. Legend. As long as the shares are subject to this Agreement, such shares
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shall bear the following legend:
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THAT CERTAIN
STOCK PLEDGE AGREEMENT, DATED NOVEMBER 6, 2001 BY AND
BETWEEN DAOU SYSTEMS, INC. AND XXXXXX X. XXXXXXX AND MAY
NOT BE ASSIGNED, SOLD OR TRANSFERRED EXCEPT AS PROVIDED
THEREIN.
15. Successors and Assigns. This Agreement is binding upon and will inure to
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the benefit of the parties hereto, and their successors and assigns.
16. Governing Law. This Agreement will be governed by and construed in
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accordance with California law, without regards to the principles of the
conflict of laws.
17. Notices. All notices, consents, waivers, and other communications under
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this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to Company: DAOU Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxxx & XxXxxxxx
000 X. Xxxxxxxx, 00/xx/ Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 0000-0000
Attention: Xxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
If to Pledgor: Xxxxxx X. Xxxxxxx
Facsimile No.: ( )
18. Entire Agreement. This Agreement and any other agreement expressly referred
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to herein supersedes any and all other agreements, either oral or in writing,
among the parties hereto, with respect to the subject matter hereof and contains
all of the covenants and agreements among the parties with respect to the
subject matter hereof.
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19. Waiver; Modification. No term or condition of this Agreement will be deemed
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to have been waived nor will there by any estoppel to enforce any provision of
this Agreement except by written instrument of the party charged with such
waiver or estoppel. No amendment or modification of this Agreement will be
deemed effective unless and until executed in writing by all of the parties
hereto.
20. Severability. All agreements and covenants contained herein are severable
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and in the event that any of them will be held to be invalid by any court of
competent jurisdiction, this Agreement will be interpreted as if such invalid
agreements or covenants were not contained herein.
21. Delay; Time of Essence. No failure or delay by a party in exercising any
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right, power, or privilege hereunder will operate as a waiver thereof, and no
single or partial exercise thereof will preclude any other or further exercise
or the exercise of any other right, power, or privilege. Time is of the essence
of each and every provision of this Agreement of which time is an element.
22. Attorneys' Fees. In any action or proceeding brought to enforce or
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interpret any provision of this Agreement, the prevailing party will be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
IN WITNESS WHEREOF, the parties have executed this Stock Pledge Agreement
effective as of the date first written above.
Pledgor:
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxxx
XXXX Systems, Inc.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Its: Chief Executive Officer
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