EXHIBIT 10.1
PURCHASE AND SALE,
PLEDGE AND SECURITY AGREEMENT; RELEASE
THIS PURCHASE AND SALE PLEDGE AND SECURITY AGREEMENT (this "Agreement") is
made as of July 23, 1997, by Xxxxxx Xxxxx, an individual ("Pledgor"), in favor
of SciClone Pharmaceuticals, Inc., a California corporation ("Pledgee").
RECITALS
WHEREAS, Pledgor has borrowed from Pledgee, and Pledgee has loaned to
Pledgor, the principal sum of Two Million Eight Hundred Thousand Dollars
($2,800,000) pursuant to that certain $2,800,000 Promissory Note dated as of
July 10, 1997, made by Pledgor in favor of Pledgee (the "Unsecured Note");
WHEREAS, various disputes have arisen between the parties which the parties
wish to resolve and to terminate any prior agreements relating to the subject
matter hereof;
WHEREAS, Pledgor has agreed to borrow from Pledgee, and Pledgee has agreed
to loan to Pledgor, up to an additional Three Million One Hundred Forty-Four
Thousand Dollars ($3,144,000) (the "Additional Loan Amount"), to be aggregated
with the existing indebtedness (including accrued and unpaid interest) under the
Unsecured Note (which shall be superseded and canceled upon the execution
hereof) and evidenced by that certain $5,944,000 Secured Promissory Note dated
of even date herewith and made by Pledgor in favor of Pledgee (the "Secured
Note");
WHEREAS, Pledgee, as a condition to issuing the Secured Note, is requiring
Pledgor to pledge, as security for Pledgor's obligations under the Secured Note,
One Million Eight Hundred Eighty-Two Thousand Five Hundred (1,882,500) shares of
common stock of Pledgee (the "Pledged Shares");
WHEREAS, Pledgor is willing to so pledge the Pledged Shares, and Pledgee is
willing to issue the Secured Note, all according to the terms and subject to the
conditions of this Agreement and the Secured Note.
WHEREAS, the parties intend by execution hereof to resolve a variety of
issues and claims including, in addition to securing the Secured Note, providing
for the purchase and sale of stock on reasonable terms, and the consideration
provided herein has been highly negotiated by the parties to ensure that
appropriate benefit is accorded for the stock purchase and mutual release
covenants.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Pledgor and
Pledgee hereby agree as follows:
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1. Pledge of Collateral; Payment of Loan Amounts.
(a) Pledgor hereby pledges, assigns and delivers to Pledgee and grants
to Pledgee a security interest in the Pledged Shares, together with any stock
rights, rights to subscribe, dividends paid in cash or other property in
connection with the complete or partial liquidation of Pledgee, stock dividends,
dividends paid in stock, new securities or other property except cash dividends
other than liquidating dividends to which the Pledgor is or may hereafter become
entitled to receive on account of Pledgor's ownership of such shares (the
"Pledged Collateral") as security for the prompt performance of all Pledgor's
obligations under the Secured Note.
(b) Pledgee hereby agrees as follows:
i. Upon the execution and delivery of this Agreement by Pledgee
and Pledgor, the execution and delivery by Pledgor of the Secured Note and the
execution and delivery by the Pledgor and, where applicable, the Pledgee, of the
letters of instruction attached hereto as Annex A, it will cancel and deliver to
the Pledgor the Unsecured Promissory Note;
ii. Upon receipt of letters of confirmation from Xxxxx Xxxxxx and
Xxxxxxx Xxxxx of receipt of letters of instruction sent to them by the Pledgor
instructing them to deliver certain of the Shares held by them for the account
of Pledgor to Pledgee upon receipt of funds from Pledgee, Pledgee will pay up to
Five Hundred Sixty-Five Thousand Dollars ($565,000) of the Additional Loan
Amount to Xxxxx Xxxxxx and will pay up to Two Hundred Ninety Thousand Dollars
($290,000) of the Additional Loan Amount shall be paid to Xxxxxxx Xxxxx, as
necessary to pay the total outstanding loan balance in margin accounts
maintained at Xxxxx Xxxxxx and Xxxxxxx Xxxxx on behalf of the Pledgor;
iii. Upon receipt from Pledgor or his agents of stock
certificates evidencing the Pledged Shares (other than those Pledged Shares held
by Xxxxx Xxxxxx and Xxxxxxx Xxxxx), and five (5) executed but undated stock
assignments separate from certificate substantially in the form attached hereto
as Exhibit 1, the Pledgee will pay the remainder of the Additional Loan Payment
as follows:
a) One Hundred Sixty Thousand Dollars ($160,000)
representing satisfaction of outstanding indebtedness owed to the Pledgor by the
Pledgee shall be retained by the Pledgee;]
b) The remainder of the Additional Loan Payment shall be
paid to the Pledgor
(c) In the event that Pledgor receives any of the property described in
paragraph (a) of this Section 1 on account of Pledgor's ownership of the Pledged
Collateral after the date hereof, Pledgor will immediately deliver such property
to Pledgee in the manner set forth in paragraph (b) of this Section 1.
2. Representations, Warranties and Covenants. Pledgor represents and
warrants to, and covenants with, Pledgee during the term hereof that:
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(a) The Pledged Collateral is owned by Pledgor free and clear of any
security interests, liens, encumbrances, options or other restrictions other
than those set forth in this Agreement and the Secured Note;
(b) Pledgor has full power and authority to create a lien on the
Pledged Collateral in favor of Pledgee and no disability or contractual
obligation exists that would prohibit Pledgor from pledging the Pledged
Collateral pursuant to this Agreement, and Pledgor will not assign, create or
permit to exist any other claim to, lien or encumbrance upon, or security
interest in any of the Pledged Collateral;
(c) Pledgor shall, immediately upon Pledgee's request, execute and
deliver such further instruments and documents, and take all such other actions,
as Pledgee deems reasonably necessary or desirable to further evidence and
perfect this pledge and grant of security; and
(d) The Pledged Collateral is not the subject of any present or
threatened suit, action, arbitration, administrative or other proceeding, and
Pledgor knows of no reasonable grounds for the institution of any such
proceedings.
All the above representations and warranties shall survive the date of this
Agreement.
3. Conditions to Obligations of Pledgee. The obligation of the Pledgee to
consummate the transactions contemplated herein is subject to the fulfillment of
the following condition: the Board of Directors of the Pledgee shall have
approved the consummation of the Transactions.
4. Covenants of Pledgor. Pledgor hereby covenants and agrees that he will
not enter into any additional margin, hedging or similar transaction including
shares of Common Stock of the Pledgee for a period of ninety (90) days from the
date hereof, other than the pledging of securities, if required, as additional
collateral for principal outstanding on the date hereof owed to Xxxxx Fargo
Bank.
5. Covenants of Pledgee. Pledgee hereby covenants and agrees that it will
review written records submitted by the Pledgor of expenses incurred by the
Pledgor on behalf of the Pledgee and that it will do so in an expeditious
fashion and will repay all resonable and bona fide expenses as the Pledgor can
reasonably documents based upon such records as the Pledgor submits.
6. Right of Repurchase; Full or Partial Cancellation of Secured Note Upon
Repurchase.
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(a) At any time after the date of this Agreement, immediately prior to
the consummation of any offering by Pledgee of shares of its Common Stock
(whether in a registered public offering or in a private placement) (an
"Offering"), the Pledgee shall have the right to repurchase up to that number of
Pledged Shares (but in no event more than the number of Pledged Shares) as
determined by a fraction, the numerator of which shall be equal to the amount of
principal and accrued and unpaid interest due under the Secured Note as of the
date of repurchase, and the denominator of which (the "Share Repurchase Price")
shall be calculated pursuant to the following formula:
S = Z - .5D - .15Z
Where:
S = the Share Repurchase Price;
Z = the price per share at which Common Stock of the Pledgee is
sold in the Offering;
D = the greater of (i) zero, or (ii) Z - $12.
(b) Upon Pledgee's exercise of its right of repurchase under subsection
(a) hereof, and without any further action on the part of the parties hereto,
there shall be a cancellation of all or a portion of the amount of principal and
accrued and unpaid interest due under the Secured Note, in an amount equal to
the number of shares of Pledged Stock repurchased pursuant to subsection (a)
hereof (the "Repurchased Shares) multiplied by the Share Repurchase Price. Such
amounts shall be applied first to accrued and unpaid interest under the Secured
Note and then to principal. further, Pledgee shall be entitled to cancel a
number of shares equal to the prorata portion of the expenses associated with
the offering allocable to the Repurchased Shares divided by the Share Repurchase
Price.
(c) Pledgee may determine in its discretion the timing of and amount of
any Offering.
(d) If Pledgor repays the Secured Note in whole or in part, then upon
each such repayment, Pledgee is authorized to deliver to itself for cancellation
that number of Pledged Shares, determined as follows:
P = principal paid x .025
where
P = the number of Pledged Shares to be cancelled by Pledgee
Upon any such repayment Pledgee shall release to Pledgor a number of Pledged
Shares (the "Released Shares"), determined as follows:
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Released Shares = Principal Paid x 1,882,500 - P
--------------
5,994,000
Where: P is determined as above
Principal Paid = the amount of the principal on the Note repayed in
such payment.
7. Release.
(a) In exchange for the benefits provided hereunder, Pledgor and
Pledgee hereby release each other and their respective members, directors,
officers, employees, agents, attorneys, legal successors and assigns of and from
any and all claims, actions and causes of action, whether now known or unknown,
which either now has, or at any other time had, or shall or may have against the
other based upon or arising out of any matter, cause, fact, thing, act or
omission whatsoever occurring or existing at any time to and including the date
hereof, including, but not limited to, breach of contract, tort claims of any
type or wrongful termination (the "Released Matters") with the exception of the
following claims: those arising under this Agreement or referred to herein,
including Section 5 hereof, and those relating to repayment of outstanding
debts.
(b) It is the intention of the parties in executing this Agreement, and
in giving and receiving the consideration called for by this Agreement, that
this Agreement shall be effective as a full and final accord and satisfaction
and mutual general release of and from all of the Released Matters.
(c) In furtherance of the intentions set forth herein, each of the
parties hereto acknowledges that it is familiar with Section 1542 of the Civil
Code of the State of California, which provides as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
(d) Each of the parties hereto waives and relinquishes any right or
benefit which it has or may have under Section 1542 of the Civil Code of the
State of California or any similar provision of the statutory or nonstatutory
law of any other jurisdiction, to the full extent that it may lawfully waive all
such rights and benefits pertaining to the subject matter of this Agreement. In
connection with such waiver and relinquishment, each of the parties hereto
acknowledges that it is aware that it or its attorneys or accountants may
hereafter discover claims or facts in addition to or different from those which
it now knows or believes to exist with respect to the subject matter of this
Agreement or the other parties hereto, but that it is its intention hereby
fully, finally and forever to settle and release all of the Released Matters
which now exist, may exist or heretofore have existed between them, except as
otherwise expressly provided. In furtherance of this intention, the releases
herein given shall be and remain in effect as full and complete mutual general
releases notwithstanding the discovery or existence of any such additional or
different claims or facts.
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8. No Disparagement. Each party agrees not to make public disparaging
remarks regarding the other.
9. Authorization of Pledgee Action. Pledgor irrevocably authorizes and
empowers Pledgee, at any time and from time to time, without notice and at
Pledgor's expense, either in its own name or in Pledgor's name, to:
(a) collect by legal proceedings or otherwise all dividends (except
cash dividends other than liquidating dividends), interest, principal payments
and other sums now or hereafter payable upon or on account of the Pledged
Collateral;
(b) demand, collect, and receive payment of any and all monies or
proceeds represented by, or due with respect to, the Pledged Collateral;
(c) enter into any extension, reorganization, deposit, merger, or
consolidation agreement, or any agreement in any way relating to or affecting
the Pledged Collateral, and in connection therewith Pledgee may deposit or
surrender control of such Pledged Collateral thereunder, accept other property
in exchange for such Pledged Collateral and do and perform such acts and things
as it may deem proper, and any money or property received in exchange for such
Pledged Collateral shall be applied to the indebtedness under the Secured Note
or thereafter held by it Pledgee to the provisions hereof;
(d) insure, possess and preserve the Pledged Collateral;
(e) cause the Pledged Collateral to be transferred to its name or to
the name of its nominee;
(f) exercise as to such Pledged Collateral all the rights, powers, and
remedies of an owner, except that so long as the indebtedness due under the
Secured Note is not in default Pledgor shall retain all voting rights as to the
Pledged Collateral.
(g) deal in all respects with the Pledged Collateral as the holder
thereof, and Pledgor irrevocably constitutes and appoints Pledgee as its
attorney to do any and all things Pledgee deems necessary or desirable to effect
this Agreement and the Secured Note and the enforcement of Pledgee's rights and
remedies hereunder and thereunder.
10. Expenses. All advances, charges costs and expenses, including
reasonable attorneys' fees, incurred or paid by Pledgee in exercising any right,
power or remedy conferred by this agreement, or in the enforcement thereof,
shall become a part of the indebtedness due under the Secured Note and secured
hereunder and shall be paid to Pledgee by the Pledgor immediately and without
demand.
11. Default. At the option of Pledgee and without necessity of demand or
notice, all or any part of the indebtedness due under the Secured Note shall
immediately become due and payable irrespective of any agreed maturity, upon the
happening of any of the following events:
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(a) failure to keep or perform any of the terms or provisions of this
Agreement not cured within ten (10) days of written notice of such failure ;
(b) default in the payment of principal or interest under the Secured
Note when due if not cured within ten (10) days of notice of such default;
(c) the levy of any attachment, execution or other process against the
Pledged Collateral; or
(d) the insolvency, commission of an act of bankruptcy, general
assignment for the benefit of creditors, filing of any petition in bankruptcy or
for relief under the provisions of Xxxxx 00, Xxxxxx Xxxxxx Code, Bankruptcy, of,
by or against Pledgor.
12. Foreclosure. In the event Pledgee forecloses hereunder, Pledgee shall
be entitled to the economic benefits of Section 6 if and to the extent the fair
market value of stock at the time is above $3.16.
13. Proceeds of Foreclosure. The proceeds of the sale of any of the Pledged
Collateral and all sums received or collected by Pledgee from or on account of
the Pledged Collateral shall first be applied by Pledgee to the payment of
expenses incurred or paid by Pledgee in connection with any sale, transfer or
delivery of the Pledged Collateral and to the payment of any other costs,
charges, attorneys' fees or expenses mentioned herein, and then to the payment
of the indebtedness under the Secured Note or any part hereof. Thereafter,
Pledgee shall pay any remaining balance to the Pledgor.
14. No Presentment, No Demands, etc. Pledgee shall be under no duty or
obligation whatsoever to make or give any presentations, demands for
performance, notices of non-performance, protests, notices of protest or notices
of dishonor in connection with the Secured Note or any other obligations or
evidences of indebtedness held by Pledgee as collateral, or in connection with
the Secured Note or any other any other obligations or evidences of indebtedness
which constitute in whole or in part the indebtedness secured hereunder.
15. Rights and Remedies Not Exclusive. The rights, powers and remedies
given to Pledgee by this Agreement shall be in addition to all rights, powers
and remedies given to Pledgee by virtue of any statute or rule of law. Pledgee
may exercise its Pledgee's lien or right of set off with respect to the
indebtedness due under the Secured Note in the same manner as if the
indebtedness due under the Secured Note were unsecured. Any forbearance or
failure or delay by Pledgee in exercising any right, power or remedy hereunder
shall not be deemed to be a waiver of such right, power or remedy, and any
single or partial exercise of any right, power or remedy hereunder shall not
preclude the further exercise thereof; and every right, power and remedy of
Pledgee shall continue in full force and effect until such right, power or
remedy is specifically waived by an instrument in writing executed by Pledgee.
16. Release of Pledged Collateral. The pledge of and grant of a security
interest in the Pledged Collateral pursuant to this Agreement shall be of no
further force or effect and subject to Section 6 any remaining portion of the
Pledged Collateral shall be returned to Pledgor upon the
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payment in full of the Secured Note to Pledgee; provided, however, that this
Agreement shall be reinstated if any payment must be returned by Pledgee for any
reason, including, but not limited to, upon or after the insolvency, bankruptcy
or reorganization of Pledgor.
17. Notice. Unless otherwise set forth herein, all notices, demands,
requests and other written communications hereunder shall be given to Pledgee
and/or Pledgor by regular United States mail, postage prepaid and addressed as
follows:
If to Pledgee: SciClone Pharmaceuticals, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
If to
Pledgor: Xxxxxx X. Xxxxx
00000 Xxxx Xxxx
Xxx Xxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof, on the earlier of the third day
following the day on which it is posted or the date of its receipt by the party
to be notified and to prove the service of any such notice it shall be
sufficient to prove that the same was properly address and posted as aforesaid
or actually received by any party to whom such notice was delivered in person.
Pledgor and Pledgee shall each have the right to change its address for the
purpose of this Agreement by giving at least three (3) days' written notice of
any such change to the other party hereto.
18. Governing Law. This Agreement shall be governed by the laws of the
State of California, without giving effect to conflicts of law principles.
19. Waiver of Jury Trial. PLEDGOR AND PLEDGEE EACH HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, SUIT OR
PROCEEDINGS (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT,
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (B) IN ANY WAY
CONNECTED WITH OR RELATED TO OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT, THE REIMBURSEMENT AGREEMENT, OR
ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
PLEDGOR AND PLEDGEE HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION, CAUSE OF ACTION, SUIT OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL,
WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR COPY
OF THIS AGREEMENT WITH ANY COURT AS
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WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
20. Miscellaneous.
(a) This Agreement may not be amended or modified except by a written
instrument signed by Pledgee and Pledgor.
(b) This Agreement constitutes the entire agreement between Pledgee and
Pledgor with respect to the subject matter hereof and supersede all prior
agreements, understandings, offers and negotiations, oral or written, including,
but not limited to, the Unsecured Note, that certain Agreement dated as of July
10, 1997 by and between the Seller and the Company, that certain Letter
Agreement regarding Registration Rights Agreement dated as of July 10, 1997 by
and between the Seller and the Company, all of which shall be terminated and be
of no further force and effect upon the satisfaction of the obligations of the
parties set forth in Section 1 of this Agreement.
(c) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall together constitute
one and the same document.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
"PLEDGOR"
/s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
"PLEDGEE"
SCICLONE PHARMACEUTICALS, INC.
/s/ Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx
Chief Financial Officer
The parties agree to review the terms above to ensure they are consistent
and accurate and to promptly agree in good faith upon any changes necessary for
accuracy or consistency.
[INITIALED BY XXXXXX XXXXX AND XXXX X. XXXXXXX]
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