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STOCK PLEDGE AGREEMENT
AGREEMENT, made as of the 2nd day of November, 1995, between by and
between Xxxxxx X. Xxxxx, Xx. (the "Pledgor") and ArQule, Inc., a Delaware
corporation with a principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx 00000 (the "Pledgee").
WHEREAS, the Pledgor has requested that the Pledgee advance the Pledgor
the principal sum of $120,000 (the "Loan"), as evidenced by a promissory note of
even date herewith by the Pledgor in favor of the Pledgee (the "Secured Note");
and
WHEREAS, the Pledgee is unwilling to advance the Loan and accept the
Secured Note without the assurances herein provided.
NOW, THEREFORE, in order to induce the Pledgee to accept the Secured
Note and in consideration therefor and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
in consideration of the mutual covenants set forth herein, the parties hereto
agree as follows:
1. Certain Definitions.
(a) The term "Stock" as used herein means that number of
shares of Common Stock, $0.01 par value (the "Common Stock"), of the Pledgee
that will be distributed to the Pledgor upon the dissolution of ArQule Partners,
L.P. (the "Partnership"), whose "fair market value" is equal to the principal
sum of the Loan on the Distribution Date (as defined in Section 3). For purposes
of this definition, the "fair market value" shall equal the last reported
closing price of the Common Stock quoted on the Nasdaq National Market, or any
exchange on which the Common Stock is listed, as published in the Wall Street
Journal, or such lesser number as shall be subject to this Agreement following
any partial release as provided in Section 14 hereof.
(b) The term "Obligations" as used herein means all
indebtedness, obligations and liabilities of the Pledgor to the Pledgee, now
existing or hereafter arising, direct or indirect, absolute or contingent, due
or to become due, matured or unmatured, liquidated or unliquidated, arising
under Pledgor's Secured Note in the original principal amount of $120,000
payable to the order of Pledgee, as from time to time amended, revised or
assigned.
(c) The term "Collateral" as used herein means the Stock and
any other property at any time, whether now or hereafter, pledged with the
Pledgee hereunder (whether described herein or not) and all income therefrom,
increases therein and proceeds thereof.
(d) The term "Event of Default" shall mean Pledgor's failure
to pay any and all amounts due under the Secured Note, an event of default
pursuant to the terms of any of the documents or instruments evidencing any of
the Obligations or the breach of a covenant or agreement herein contained.
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(e) Terms used herein without definition which are defined in
the Uniform Commercial Code of The Commonwealth of Massachusetts have such
defined meanings herein, unless the context otherwise indicates or requires.
2. Security for Obligations. This Agreement and the pledge of the
Collateral hereunder is made with the Pledgee as security for the Obligations.
3. Pledge of Collateral. For valuable consideration, receipt of which
is hereby acknowledged by the Pledgor, the Pledgor hereby grants a security
interest in and pledges the Collateral to the Pledgee, to be held by the Pledgee
subject to the terms and conditions hereinafter set forth. The Pledgor hereby
acknowledges and agrees that upon distribution to the Pledgor of the Stock by
the Partnership (the "Distribution Date"), the Pledgor shall promptly deliver
certificates representing such Stock to the Pledgee and such Stock shall be
considered to be Collateral for purposes of this Agreement, subject to the
limitation specified in Section 1(a).
4. Representations, Warranties and Covenants of the Pledgor.
(a) Warranty of Title, Etc. The Pledgor represents and
warrants (other than as provided in that certain Co-Sale Agreement
dated as of the date hereof by and among the Pledgor, the Pledgee and
the stockholders of the Pledgee listed therein) that:
(i) upon the distribution and receipt of the Stock, he
will own and have good title to the Stock, free of
all encumbrances and liens;
(ii) upon delivery of the certificates representing the
Stock in accordance with Section 3, the Pledgee shall
have a valid, perfected and first priority security
interest in the Collateral in accordance with the
terms hereof;
(iii) he has the full right and power to enter into this
Agreement and to take any actions contemplated or
permitted by this Agreement to be taken by him;
(iv) neither this Agreement, nor the pledge of the
Collateral hereunder, will violate any agreement or
commitment to which the Pledgor is a party or by
which Pledgor or any of Pledgor's property is bound
or affected; and
(v) this Agreement is binding upon the Pledgor, his
successors and assigns.
(b) General Covenants. The Pledgor covenants that he will
defend the Pledgee's rights and security interest hereunder in the
Collateral against the claims and demands of all persons whomsoever,
and that the Pledgor will have the like title to and right to
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pledge the Collateral and will likewise defend the Pledgee's rights and
security interests therein.
5. Dividends, Liquidation, Recapitalization, Etc. In case any
distribution of capital or stock dividend shall be made on or in respect of any
of the Collateral or payment of any dividend in cash or other property shall be
made in respect of the Collateral, or any money or property shall otherwise be
distributed upon or with respect to any of the Collateral, including pursuant to
a recapitalization or reclassification of the capital of the Pledgee or pursuant
to a reorganization or liquidation or dissolution of the Pledgee, capital,
dividend, principal, interest or other money or property so distributed shall be
delivered to the Pledgee to be held by it as part of the Collateral and as
security for the Obligations. All capital, dividends, principal, interest and
other sums of money and property, if any, paid or distributed in respect of the
Collateral, which are received by the Pledgor shall, until paid or delivered to
the Pledgee, be held in trust for the Pledgee as part of the Collateral and as
security for the Obligations.
6. Voting, Etc., Prior to Maturity. Unless and until an Event of
Default shall have occurred and be continuing, and until notice of such Event of
Default has been given by the Pledgee, the Pledgor shall be entitled to vote the
Stock and to give consents, waivers and ratifications in respect of the Stock;
provided, however, that no vote shall be cast, or consent, waiver or
ratification given or action taken which would be inconsistent with or violate
any provisions of any of the documents or instruments evidencing any of the
Obligations or of this Agreement. Until the occurrence of an Event of Default,
the Pledgee shall execute and deliver to the Pledgor such proxies or other
documents in writing as may be necessary to enable the Pledgor to exercise the
foregoing rights. All such rights of the Pledgor to vote and give consents,
waivers and ratifications shall cease forthwith in case an Event of Default
shall have occurred and be continuing, without any notice (except as provided in
this section 6) or demand by the Pledgee to the Pledgor.
7. Remedies. If an Event of Default shall have occurred and be
continuing, the Pledgee shall thereafter have the following rights and remedies
(to the extent permitted by applicable law) in addition to the rights and
remedies of a secured party under the Uniform Commercial Code of The
Commonwealth of Massachusetts, all such rights and remedies being cumulative,
not exclusive, and enforceable alternatively, successively or concurrently, at
such time or times as the Pledgee deems expedient:
(i) The Pledgee may vote any or all shares of the Stock
(whether or not the same shall have been transferred into its name or
the name of its nominee or nominees) and give all consents, waivers and
ratifications in respect of the Stock and otherwise act with respect
thereto as though it were the outright owner thereof (the Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy
and attorney in-fact of the Pledgor, with full power of substitution,
to do so);
(ii) The Pledgee may demand, xxx for, collect or make any
compromise or settlement the Pledgee deems suitable in respect of any
Collateral held by it hereunder;
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(iii) The Pledgee may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Collateral, for cash and/or
credit and upon such terms, at such place or places and at such time or
times and to such persons, firms, companies or corporations as the
Pledgee deems expedient, all without demand for performance by the
Pledgor or any notice or advertisement whatsoever except such as may be
required by law; and
(iv) The Pledgee may cause all or any part of the Stock held
by it to be transferred into its name or the name of its nominee or
nominees.
If any of the Collateral is sold by the Pledgee upon credit or for
future delivery, the Pledgee shall not be liable for the failure of the
purchaser to pay for the same and in such event the Pledgee may resell such
Collateral.
The Pledgee may buy any part or all of the Collateral at any public
sale and if any part or all of the Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of widely-distributed
standard price quotations, the Pledgee may, in its sole discretion, buy at
private sale and may make payments therefor by any means including, without
limitation, cancellation of indebtedness secured thereby.
The Pledgee may, in its sole discretion, apply the cash proceeds
actually received from any sale or other disposition to the reasonable expenses
of retaking, holding, preparing for sale, selling and the like, to reasonable
attorneys' fees, and all legal expenses, travel and other expenses which may be
incurred by the Pledgee in attempting to collect the Obligations or to enforce
this Agreement or any instrument evidencing the Obligations or in the
prosecution or defense of any action or proceeding related to the subject matter
of this Agreement or any instrument evidencing the Obligations, and then to the
Obligations with respect to principal or interest, or both, or other fees and
expenses, in such proportions as the Pledgee, in its sole discretion, shall
determine, and any surplus shall be paid to the Pledgor.
The Pledgor recognizes that the Pledgee may be unable to effect a
public sale of the Stock by reason of certain prohibitions contained in the
United States Securities Act of 1933, as amended, or in other applicable laws,
regulations or agreements to which such Stock may be subject but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers. The Pledgor agrees that any such private sales may be at prices
and other terms less favorable to the seller than if sold at public sales and
that such private sales shall be deemed to have been made in a commercially
reasonable manner. The Pledgee shall be under no obligation to delay a sale of
any of the Stock for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the said Securities
Act or other applicable law, even if the issuer would agree to do so.
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8. Marshalling. The Pledgee shall not be required to marshal any
present or future security for (including but not limited to this Agreement and
the Collateral pledged hereunder), or guaranties of, the Obligations or any of
them, or to resort to such security or guaranties in any particular order; and
all of the rights hereunder and in respect of such securities and guaranties
shall be cumulative and in addition to all other rights, however existing or
arising. To the extent that it lawfully may, the Pledgor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Pledgee's rights under this
Agreement or under any other instrument evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or guaranteed, and to the extent that it lawfully may the
Pledgor hereby irrevocably waives the benefits of all such laws.
9. Pledgor's Obligations Not Affected. The obligations of the Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any bankruptcy, insolvency, arrangement, readjustment,
composition or the like of the Pledgor; (b) any exercise or non-exercise, or any
waiver, by the Pledgee of any right, remedy, power or privilege under or in
respect of any of the Obligations or any security therefor (including this
Agreement); (c) any amendment to or modification of any of the Obligations; (d)
any amendment to or modification of any instrument (other than this Agreement)
evidencing or securing or guaranteeing any of the Obligations; or (e) the taking
of additional security for, or any guaranty of, any of the Obligations or the
release or discharge or termination of any security or guaranty for any of the
Obligations, whether or not the Pledgor shall have notice or knowledge of any of
the foregoing.
10. Further Assurances. The Pledgor will do all such acts, and will
furnish to the Pledgee all such financing statements, certificates, legal
opinions and other documents and will obtain all such governmental consents and
approvals and will do or cause to be done all such other things, including
without limitation the execution and delivery of further agreements and
instruments, as the Pledgee may reasonably request from time to time in order to
give full effect to this Agreement and to secure the rights of the Pledgee
hereunder.
11. Pledgee's Exoneration. Under no circumstances shall the Pledgee be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Collateral of any nature or kind, or any matter or
proceedings arising out of or relating thereto, but the same shall be at the
Pledgor's sole risk at all times. The Pledgee shall not be required to take any
action of any kind to collect, preserve or protect its or the Pledgor's rights
in the Collateral or against other parties thereto. The Pledgee's prior recourse
to any part or all of the Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Obligations.
12. No Waiver, Etc. No act, failure or delay by the Pledgee shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by the Pledgee of any default or right or remedy which it may
have shall operate a waiver of any other default,
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right or remedy or of the same default, right or remedy on a future occasion.
The Pledgor hereby waives presentment, notice of dishonor and protest of all
instruments, included in or evidencing any of the Obligations or the Collateral,
and any and all other notices and demands whatsoever (except as expressly
provided herein).
13. Notices, Etc. All notices, requests and other communications
hereunder shall be in writing and shall be delivered in hand or by telex or
telecopy or where telex or telecopy communication is not possible, by mail,
return receipt requested, or by a nationally known overnight courier service
addressed as follows:
If to the Pledgor:
To the address set forth at
the foot of this
agreement.
with a copy to:
Such person or persons
as Pledgor may designate
from time to time.
If to the Pledgee:
ArQule, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
with a copy to:
Xxxxxx & Dodge
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
or to such other address as the party to receive any such communication or
notice may have designated by written notice to the other party from time to
time.
14. Termination; Partial Release. Upon payment and performance in full
of the Obligations in accordance with their terms and the performance by the
Pledgor of all of his covenants and agreements hereunder, this Agreement shall
terminate and the Pledgor shall be entitled to the return, at the Pledgor's
expense, of such of the Collateral in the possession or control of the Pledgee
as has not theretofore been disposed of pursuant to the provisions hereof,
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together with any moneys and other property at the time held by the Pledgee
hereunder. Notwithstanding the foregoing, if at any time during the term of this
Agreement, the fair market value of the Stock exceeds the remaining aggregate
principal amount of the Pledgor's Secured Note on any Stock Valuation Date (as
defined below), the Pledgee shall release from this Pledge Agreement and deliver
to the Pledgor that number of shares of Stock (rounded down to the nearest whole
number) as shall equal the amount of such excess value divided by the fair
market value of the Stock on such Stock Valuation Date. As used herein, the term
"Stock Valuation Date" shall mean November 30 of each year during the term of
this Pledge Agreement and the term "fair market value" shall mean the average of
the last reported closing price of the Common Stock quoted on the Nasdaq
National Market or on any exchange on which the Stock is listed, whichever is
applicable, as published in The Wall Street Journal for the five (5) trading
days prior to the Stock Valuation Date.
15. Miscellaneous Provisions.
(a) Waivers; Amendments. Neither this Agreement nor any term hereof may
be amended, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the party to be charged therewith.
(b) Successors and Assigns. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon the successors and assigns of the
Pledgor, and shall, together with the rights and remedies of the Pledgee
hereunder, inure to the benefit of the Pledgee and the Pledgee's successors and
assigns.
(c) Governing Law. This Agreement and the obligations of the Pledgor
hereunder shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts.
(d) Section Headings. The descriptive section headings herein have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
(e) Severability. If any terms of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
be in no way affected thereby, and this Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein.
(f) Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, binding upon all the
parties hereto, notwithstanding that all the parties are not signatories to the
original or the same counterpart. In pleading or proving any provision of this
Agreement, it shall not be necessary to produce more than one of such
counterparts.
16. Receipt. The Pledgor acknowledges receipt of a copy of this
Agreement.
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IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be duly executed, as an instrument under seal, as of the date first
above written.
Pledgor:
/s/
-------------------------
Xxxxxx X. Xxxxx, Xx.
Address:
00 Xxx Xxxxxx
Xxxxxxx, XX 00000
Pledgee:
ARQULE, INC.
By:/s/
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Name: Xxxx X. Xxxxxx
Title: President
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