Exhibit 10.20
EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is entered into as of June
16, 1995, by and between XXXXX XXXXXXX, an individual (the "Pledgor"), and
TERAYON CORPORATION, a California corporation (the "Company").
RECITALS
WHEREAS, pursuant to that certain Series A Preferred Stock Purchase
Agreement dated as of the date hereof, to which the Company and Pledgor are
parties (the "Agreement"), Pledgor has issued a promissory note in favor of the
Company (the "Note") in connection with the purchase by Pledgor of certain
shares of Series A Preferred Stock of the Company. All capitalized terms used
but not defined herein shall have the meaning ascribed to them in the Agreement;
and
WHEREAS, the Company is willing to accept the Note from Pledgor, but only
upon the condition, among others, that Pledgor shall have executed and delivered
to the Company this Pledge Agreement and the Pledged Shares (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, conditions, representations and warranties contained herein, the
parties hereto do hereby agree as follows:
1. PLEDGE. Pledgor hereby pledges to the Company, and grants to the
Company a first priority security interest in, Fifty Thousand (50,000) shares of
Series A Preferred Stock owned by Pledgor (the "Pledged Shares") and the
certificates representing such Pledged Shares.
2. SECURITY INTEREST. The foregoing pledge and security interest hereby
granted to the Company are given as security for the complete and faithful
performance, payment, observance and fulfillment of Pledgor's obligations under
the Note (all of which are hereinafter referred to collectively as the
"Liabilities"). The certificates representing the Pledged Shares shall be
delivered to Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx as escrow agent (the
"Escrow Agent") to be held by it in escrow pursuant to the terms of the Escrow
Agreement of even date attached hereto as Exhibit B-1. The Pledged Shares shall
be accompanied by a stock assignment separate from certificate, attached hereto
as Exhibit B-2, endorsed in blank, and the books of the Company shall contain a
legend to reflect the pledge of, and the grant to the Company of a security
interest in, the Pledged Shares. From and after the occurrence of an Event of
Default (as defined below), the Company shall have the right, at any time in its
discretion and without
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notice to Pledgor, to request Escrow Agent to transfer to or to register in the
name of the Company or any of its nominees any or all of the Pledged Shares.
3. DIVIDENDS AND DISTRIBUTIONS. To the extent Pledgor is entitled to
receive dividends or distributions as a shareholder of the Company, such amounts
shall be paid to Pledgor until such time, if any, as the Company has effectively
exercised its right to request transfer of the Pledged Shares pursuant to
Section 2 above.
4. EVENT OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default hereunder (any of such occurrences are herein
referred to as an "Event of Default"):
(a) Pledgor fails to pay any amount due the Company under the Note or
this Agreement or Pledgor fails to observe or perform any other of the
covenants, conditions and agreements contained therein or herein;
(b) Any representation or warranty made by Pledgor to the Company in
this Agreement proves untrue in any material respect or is breached; or
(c) Any Event of Default under, and as defined in the Note, shall
occur.
5. MAINTENANCE OF PRIORITY OF SECURITY INTEREST. Pledgor shall not, shall
not attempt to, and shall not permit a third party to assign, pledge, mortgage,
lease, hypothecate or otherwise encumber, sell or otherwise dispose of the
Pledged Shares or suffer or permit to be incurred any liens on or security
interest in such Pledged Shares. In addition, Pledgor agrees that Pledgor shall
defend the Pledged Shares held by Pledgor against the claims and demands of all
parties. Pledgor agrees, at Pledgor's sole cost and expense, to secure, re-
execute, deliver and re-deliver all documents reasonably requested by the
Company to enable the Company to perfect, preserve and protect its security
interest in and on the Pledged Shares, and does hereby authorize the Company to
file and record any such documents for such purposes. In the event that the
Company declares any share dividend, reclassification, readjustment or makes any
other change in its structure, all new, substituted or additional shares or
other securities issued to Pledgor by reason of such change shall be subject to
the security interest of the Company described herein. All references to the
"Pledged Shares" shall include such new, substituted or additional shares or
other securities and immediately upon the issuance of such new, substituted or
additional shares or other securities, Pledgor shall deliver the certificates
representing such shares or other securities to Escrow Agent, accompanied by a
stock power and assignment separate from certificate (or other comparable
assignment instrument in the case of the issuance of securities other than
stock) endorsed in blank.
6. RIGHT TO CONTEST LIEN. Pledgor shall, without demand, notify the
Company in writing within ten (10) days after Pledgor is notified of or
otherwise discovers that a lien, security interest, charge or other encumbrance
of any kind or nature whatsoever has attached to all or any part of the Pledged
Shares (collectively, a "Lien"). Pledgor shall have the right to contest in
good faith, with due diligence and by appropriate proceedings, without cost or
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expense to the Company, the validity, applicability or amount of any such Lien;
provided, however, that Pledgor, prior to commencing such contest, shall have
furnished to the Company a bond, guarantee or security, satisfactory in form and
substance to the Company, to the extent that the contesting of such Lien does
not suspend the enforcement of the Lien.
7. TAXES. Pledgor shall pay promptly any and all taxes, assessments,
charges and liens against the Pledged Shares (including any and all interest,
penalties and related provisional fees in connection therewith) (collectively, a
"Tax Lien "); provided, however, that Pledgor shall have the right to contest in
good faith, with due diligence and by appropriate proceedings, the validity,
amount or imposition of any Tax Lien, if prior to commencing such contest,
Pledgor shall have delivered to the Company a bond, guarantee or other security,
satisfactory in form and substance to the Company.
8. PLEDGOR'S FAILURE TO PAY TAXES AND OTHER ITEMS. If Pledgor fails to
make any payment or do any act required of Pledgor hereunder, then the Company
shall have the right, but not the obligation, without notice to or demand upon
Pledgor, and without releasing Pledgor from any obligation under the Note or
this Agreement, to make or do the same, and to pay, purchase, contest or
compromise any Lien or Tax Lien which in the Company's judgment places its
security interest in the Pledged Shares or Pledgor's title to the Pledged Shares
in jeopardy, and in exercising any such rights, to expend whatever reasonable
amounts the Company in its sole discretion may deem necessary therefor,
including reasonable attorneys' fees and expenses. Any amounts expended by the
Company pursuant to this Section 8 shall be a demand obligation owing by Pledgor
from the date the Company expends such amount until repaid.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Pledgor hereby
represents, warrants and covenants to the Company:
(a) Pledgor has the authority to execute, deliver and perform the
covenants and obligations to be performed by Pledgor under this Agreement and to
grant and create in favor of the Company the security interest in the Pledged
Shares granted hereby;
(b) The execution, delivery and performance by Pledgor of this
Agreement and the creation of the security interest in the Pledged Shares does
not violate any provisions of law or violate any provisions of, or result in a
default or acceleration of any obligation under, any agreement or instrument of
any kind or any undertaking, order, decree or judgment to which Pledgor is a
party or by which Pledgor is bound;
(c) The execution, delivery and performance of this Agreement by
Pledgor and the creation of the security interest in the Pledged Shares does not
violate any provisions of, or result in a default or acceleration under, any
agreement or instrument of any kind or any order, decree or judgment to which
Pledgor is a party or by which Pledgor is bound;
(d) No consent, approval or authorization of, or registration or filing
with, any governmental body or authority, or any other person, firm or entity
not a party hereto, is or shall be required as a condition to the valid
execution, delivery, performance or enforceability
3.
of this Agreement or as a condition to the validity of the Company's first and
prior security interest in the Pledged Shares;
(e) This Agreement is the valid obligation of Pledgor, binding and
enforceable against Pledgor in accordance with the terms hereof, and Pledgor is
fully familiar with all the covenants, terms and conditions hereof;
(f) On the date hereof and at all times hereafter, Pledgor shall
continue to own and hold good title to the Pledged Shares free and clear of all
claims, liens and encumbrances other than the security interest granted to the
Company herein, and Pledgor, at his sole expense, shall defend such title to the
Pledged Shares against the claims and demands of all parties;
(g) The security interest granted to the Company in the Pledged Shares
is and at all times hereafter shall be, a valid, first and prior security
interest, free and clear of all other liens, claims and encumbrances;
(h) There are no subscription warrants or other options exercisable
with respect to the Pledged Shares; and
(i) The Company's security interest in the Pledged Shares is granted to
the Company free and clear of any restrictive stock agreements, stock redemption
agreements, cross purchase agreements, buy-sell agreements or any other similar
agreement (including restrictive stock legends on the share certificates) which
have the effect of limiting or restricting a shareholder's right or power to
transfer or encumber the Pledged Shares.
10. RIGHTS AND REMEDIES UPON DEFAULT.
(a) No remedy herein or in any other documents executed in connection
herewith conferred on or reserved to the Company is intended to be exclusive of
any other remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder, under any other
document now or hereafter existing at law or in equity. No delay or omission to
exercise any right or power shall be construed to be a waiver of any such
default or acquiescence therein, and every such right and power may be exercised
from time to time and as often as may be deemed expedient. No acceptance of any
payment of any kind or nature whatsoever during the continuance of an Event of
Default shall constitute a waiver of such Event of Default. No waiver of an
Event of Default hereunder shall affect or alter (i) this Agreement, and the
same shall continue in full force and effect, or (ii) the rights of the Company
with respect to any other then existing or subsequent Event of Default.
(b) The Company may recover from Pledgor all of its expenses
(including, without limitation, reasonable attorneys' fees and expert witness
fees) incurred in enforcing any of its rights under this Agreement.
4.
11. IRREVOCABLE PROXY. Pledgor does hereby irrevocably constitute and
appoint the Company and the Company's successors and assigns as Pledgor's proxy
with respect to the Pledged Shares, with full power, in the same manner, to the
same extent, and with the same effect as if Pledgor were to do the same:
(a) To attend all meetings of shareholders of the Company held from
the date hereof, and to vote the Pledged Shares at any such meeting in such
manner as the Company shall, in its sole discretion, deem appropriate;
(b) To consent, in the sole discretion of the Company, to any and all
actions by or with respect to the Company for which the consent of the
shareholders of the Company is or may be necessary or appropriate; and
(c) Without limitation, to do all things which Pledgor can or could do
as a shareholder of the Company giving to the Company full power of
substitution and revocation;
provided, however, that this proxy shall not be exercisable by the Company, and
Pledgor alone shall have the foregoing powers, so long as there is no Event of
Default. This proxy shall terminate at such time as this Agreement is
terminated as provided in Section 17 below. Pledgor hereby revokes any proxy or
proxies heretofore given to any person or persons, and agrees not to give any
other proxy in derogation hereof until such time as this Agreement is terminated
as provided below. Pledgor and the Company hereby specifically agree that the
proxies granted hereunder are coupled with an interest and shall be and remain
irrevocable until this Agreement is terminated as provided below. In
furtherance of the agreements of Pledgor set forth in this Section 11, Pledgor
hereby agrees to deliver to the Company from time to time, Pledgor's proxy in
substitution of the proxy given hereunder.
12. ATTORNEY-IN-FACT. Pledgor hereby appoints the Company as Pledgor's
attorney-in-fact without imposing any obligations on the Company, for the
purpose of executing, delivering, recording or filing any instruments or
documents or performing any other acts that the Company deems appropriate to
perfect and continue the security interest granted hereunder. The power of
attorney granted herein is coupled with an interest and is irrevocable until
this Agreement is terminated as provided below.
13. MISCELLANEOUS.
(a) This Agreement, shall constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and shall supersede all
other prior agreements, written or oral, with respect thereto.
(b) This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither party may assign or transfer its respective rights or obligations
of the other party hereto without the prior written consent of the other party
hereto.
5.
(c) This Agreement may be amended, modified, renewed or extended but
only by a written instrument, executed by both of the parties hereto in the
manner of the execution of this Agreement.
(d) This Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of California as applied to contracts
entered into and to be performed entirely within the State of California.
(e) All parties hereto shall, from time to time, do and perform such
other and further acts and execute and deliver any and all such other and
further instruments as may be required or reasonably requested by any other
party to establish, maintain and protect the respective rights and remedies of
such other party and to carry out and effect the intents and purposes of this
Agreement.
(f) All documents, agreements, certificates and instruments herein
required shall be in form and substance satisfactory in all respects to the
Company in his sole discretion and shall be provided at the sole cost and
expense of Pledgor.
(g) The representations and warranties hereunder shall survive the
execution hereof and the Company may enforce such representations and warranties
at any time. Pledgor's covenants shall survive the execution hereof and shall
be performed fully and faithfully by Pledgor and at all times.
(h) If any term or provision of this Agreement, or the application
thereof to any circumstance, shall be invalid, illegal or unenforceable to any
extent, such term or provision shall not invalidate or render unenforceable any
other term or provision of this Agreement, or the application of such term or
provision to any other circumstance. To the extent permitted by law, the
parties hereto hereby waive any provision of law that renders any term or
provision hereof invalid or unenforceable in any respect.
(i) Time is of the essence in this Agreement.
(j) Any notice, demand or any other instruments authorized by this
Agreement to be served on or given to a party hereto shall be sufficiently
served or given for all purposes when served upon or given to such party in
accordance with the Note.
(k) Without limiting the generality of any other provision of this
Agreement, in the event litigation is commenced to enforce the terms and
provisions of this Agreement, the prevailing party shall be entitled to an award
for reasonable attorneys' fees and expert witness fees and other court costs
incurred, which award shall be determined by the court.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all such counterparts shall together constitute but one and
the same instrument.
6.
15. HEADINGS. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof.
16. CONSTRUCTION. All references to the singular shall include the plural
and vice versa and all references to the masculine shall include the neuter or
feminine and vice versa. This Agreement has been reviewed and negotiated by
counsel for each party and no ambiguity in this Agreement shall be construed
against either party based upon its having prepared the same.
17. TERMINATION. This Agreement shall terminate upon the payment and
satisfaction of all the Liabilities. Upon receipt of notice of such termination
from Pledgor and the Company, Escrow Agent shall return to Pledgor the
certificates representing the Pledged Shares.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
PLEDGOR:
_____________________________________________
XXXXX XXXXXXX
THE COMPANY:
TERAYON CORPORATION
By: __________________________________________
Title: _______________________________________
7.
EXHIBIT B-1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of June
16, 1995, by and among XXXXX XXXXXXX, an individual ("Pledgor"), TERAYON
CORPORATION, a California corporation ("Pledgee"), and XXXXXX GODWARD XXXXXX
XXXXXXXXX & XXXXX (the "Escrow Agent").
RECITALS
WHEREAS, pursuant to that certain Stock Pledge Agreement of even date
herewith to which Pledgor and Pledgee are parties (the "Pledge Agreement"),
Pledgor pledged and granted to Pledgee a security interest in the Pledged
Shares; and
WHEREAS, pursuant to paragraph 2 of the Pledge Agreement, the certificates
representing the Pledged Shares are to be held by the Escrow Agent pursuant to
the terms and conditions of this Agreement; and
WHEREAS, the parties hereto desire to effect the provisions of paragraph 2
of the Pledge Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in the Pledge Agreement and herein, the parties hereto, intending to
be legally bound, do hereby agree as follows:
1. DEFINITIONS. All terms not otherwise described herein shall have the
meanings ascribed to them in the Pledge Agreement.
2. ESCROW FUND. Pledgee hereby authorizes Pledgor to deposit with the
Escrow Agent any certificates evidencing the Pledged Shares. The Pledged Shares
deposited with the Escrow Agent, together with any other property similarly
deposited pursuant to the Pledge Agreement, shall constitute an escrow fund (the
"Escrow Fund").
3. ATTORNEY-IN-FACT. Pledgor does hereby irrevocably constitute and
appoint the Escrow Agent as its attorney-in-fact and agent for the Escrow Period
(as hereinafter defined) to execute with respect to the Pledged Shares all
documents necessary or appropriate to make such securities negotiable and
complete any transaction contemplated in this Agreement or in the Pledge
Agreement, including but not limited to, any appropriate filing with state or
government officials.
1.
4. ESCROW PERIOD. The Escrow Fund shall remain in existence until the
Pledge Agreement is terminated in accordance with paragraph 17 thereof (the
"Escrow Period").
5. CLAIMS UPON ESCROW FUND. Upon the occurrence of an Event of Default,
Pledgee shall deliver to the Escrow Agent a certificate signed by Pledgee and
duly sworn before a notary public (a) stating that an Event of Default has
occurred and that Pledgee is, therefore, entitled to invoke its rights and
remedies arising under paragraph 10 of the Pledge Agreement, (b) describing the
specific Event of Default, and (c) stating the number of Pledged Shares which
Pledgee requests be transferred to, or registered in the name of, Pledgee or any
of its nominees, naming any such nominee(s). Upon receipt by the Escrow Agent
on or before the last day of the Escrow Period of such certificate, the Escrow
Agent shall (a) date the stock assignments necessary for the transfer in
question, (b) fill in the number of Pledged Shares that are being transferred,
and (c) deliver to, or register in the name of, Pledgee or any of its nominees,
as promptly as practicable, any or all of the Pledged Shares held in the Escrow
Fund.
6. ESCROW AGENT'S DUTIES.
(a) The Escrow Agent shall hold and safeguard the Escrow Fund during
the Escrow Period, shall treat such fund as a trust fund in accordance with the
terms of this Agreement and not as the property of Pledgor or Pledgee and shall
hold and dispose of the Escrow Fund only in accordance with the terms of this
Agreement and the Pledge Agreement.
(b) The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable for any act done or omitted
hereunder as Escrow Agent while acting in good faith and in the exercise of
reasonable judgment.
(c) The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person,
excepting only orders or process of courts of law, and the Escrow Agent is
hereby expressly authorized to comply with and obey orders, judgments or decrees
of any court. In the event the Escrow Agent obeys or complies with any such
order, judgment or decree of any court, the Escrow Agent shall not be liable to
any of the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(d) In the absence of willful misconduct by the Escrow Agent, the
Escrow Agent shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver this Agreement or any documents or papers deposited or called
for hereunder.
2.
(e) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to this Agreement or any
documents or certificates deposited with the Escrow Agent.
(f) Promptly following the termination of the Escrow Period, the
Escrow Agent shall deliver to Pledgor all of the Pledged Shares in the Escrow
Fund.
7. EXPIRATION OF INDEMNITY. Pledgee may make no claim against the Escrow
Fund after the expiration of the Escrow Period. The expiration of the Escrow
Period shall not affect any rights of Pledgee with respect to claims made prior
to such expiration. Nothing herein shall prohibit Pledgee, after the Escrow
Period has expired, from proceeding directly against Pledgor for a claim for
damages.
8. MISCELLANEOUS.
(a) Any notice or other communication required or permitted to be
given to the parties hereto shall be in writing and shall be deemed effective
upon the earlier of personal delivery (including confirmed delivery by
facsimile), the first business day after delivery to Federal Express or similar
delivery service specifying next day delivery, or the third business day after
mailing by certified or registered mail, postage prepaid, as follows (or at such
other address as the addressed party may have substituted by notice pursuant to
this paragraph 8):
IF TO PLEDGOR TO: XXXXX XXXXXXX
G&L Investments
000 Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, XX 00000
IF TO PLEDGEE TO: TERAYON CORPORATION
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
IF TO THE ESCROW AGENT: XXXXXX GODWARD XXXXXX XXXXXXXXX & XXXXX
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
(b) This Agreement, together with the Pledge Agreement, shall
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all other prior agreements, written or
oral, with respect thereto.
(c) This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that the parties may not
3.
assign or transfer their respective rights or obligations of the other parties
without the prior written consent of such other parties.
(d) This Agreement may be amended, modified, renewed or extended but
only by a written instrument, executed by the parties hereto in the manner of
the execution of this Agreement.
(e) This Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of California as applied to contracts
entered into and to be performed entirely within the State of California.
(f) All parties hereto shall, from time to time, do and perform such
other and further acts and execute and deliver any and all such other and
further instruments as may be required or reasonably requested by any other
party to establish, maintain and protect the respective rights and remedies of
such other parties and to carry out and effect the intent and purpose of this
Agreement.
(g) All documents, agreements, certificates and instruments herein
required shall be in form and substance satisfactory in all respects to Pledgee
in his sole discretion and shall be provided at the sole cost and expense of
Pledgor.
(h) If any term or provision of this Agreement, or the application
thereof to any circumstance, shall be invalid, illegal or unenforceable to any
extent, such term or provision shall not invalidate or render unenforceable any
other term or provision of this Agreement, or the application of such term or
provision to any other circumstance. To the extent permitted by law, the
parties hereto hereby waive any provision of law that renders any term or
provision hereof invalid or unenforceable in any respect.
(i) Time is of the essence in this Agreement.
(j) Without limiting the generality of any other provision of this
Agreement, in the event litigation is commenced to enforce the terms and
provisions of this Agreement, the prevailing party or parties shall be entitled
to an award for reasonable attorneys' fees and expert witness fees and other
court costs incurred, which award shall be determined by the court.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all such counterparts shall together constitute but one and
the same instrument.
10. HEADINGS. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof.
4.
11. CONSTRUCTION. All references to the singular shall include the plural
and vice versa and all references to the masculine shall include the neuter or
feminine and vice versa. This Agreement has been reviewed and negotiated by
counsel for each of the parties and no ambiguity in this Agreement shall be
construed against any of the parties based upon its having prepared the same.
12. ESCROW AGENT FEES. Any fees imposed by the Escrow Agent for its
service as such will be borne by Pledgor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
PLEDGOR:
__________________________________________
XXXXX XXXXXXX
PLEDGEE:
TERAYON CORPORATION
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
ESCROW AGENT:
XXXXXX GODWARD XXXXXX XXXXXXXXX & XXXXX
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
5.
