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EXHIBIT 10.40
PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (the "Agreement") made and entered
into as of this third day of October, 2000 by and among XXXXXX X. XXXXXX
(hereinafter referred to as "Pledgor"), Viragen, Inc., a Delaware corporation
(hereinafter referred to as "Pledgee") and ATLAS XXXXXXXX P.A. (hereinafter
referred to as "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Xxxxxx X. Xxxxxx (the Pledgor referred to in this Agreement)
is the Member of the Board of Directors of Viragen, Inc (the Pledgee referred to
in this Agreement) and entered into a Stock Option Agreement with the Pledgee on
October 6, 1995, a copy of which is attached hereto as Exhibit A;
WHEREAS, pursuant to such Stock Option Agreement, Pledgor was afforded
the right to acquire 100,000 shares of Common Stock of the Pledgee at $0.50 per
share for an aggregate purchase price of $50,000.
WHEREAS, the Pledgor has executed a five-year promissory note in the
principal amount of $50,000 (the "Note") in favor of Pledgee for the purchase
price payable in respect to the acquisition of the 100,000 shares of Common
Stock of the Pledgee, a copy of which is attached hereto as Exhibit B;
WHEREAS, to secure the payment of the Note, Pledgor has agreed to grant
Pledgee a security interest in all 100,000 shares of the Common Stock of the
Pledgee (the "Pledged Shares"); and
WHEREAS, the Pledgor and the Pledgee have requested the Escrow Agent to
act as escrow agent for the Pledged shares in accordance with the terms of this
Agreement;
NOW, THEREFORE, in consideration of the premises, covenants and
agreement hereinafter set forth, the parties mutually agree as follows:
1. SECURITY INTEREST. Pledgor hereby grants to Pledgee a first
lien security interest, superior to all other liens and
encumbrances, in and to the Pledged Shares. Copies of stock
powers representing the Pledged Shares, endorsed in blank, are
attached hereto as Exhibit "C". The Pledged Shares and stock
powers shall be held by Escrow Agent as collateral for the
indebtedness owed by the Pledgor to Pledgee pursuant to the
Note.
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2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor hereby
represents, warrants and covenants that, except for the
security interest granted hereunder, and except that the
Pledged Shares are partially paid shares subject to assessment
for the balance of the purchase price as represented by the
principal amount of the Note, Pledgor is the legal and
equitable owner of the Pledged Shares and holds same free and
clear of all liens, charges, encumbrances and security
interest of every kind and nature, and that Pledgor will make
no assignment, pledge, mortgage, hypothecation or transfer of
the Pledged Share; that Pledgor has good right and legal
authority to pledge the Pledged Shares in the manner hereby
done or contemplated and will defend Pledgor's title to the
Pledged Shares against the claim of all persons whomsoever;
that no consent or approval of any governmental body or
regulatory authority, or of any securities exchange, is
necessary to the validity of the pledge effected hereby,
except for any consents or approvals which have been obtained;
that the pledge of the Pledged Shares is effective to vest in
Pledgee the rights of the Pledgor in the Pledged shares set
forth herein; and that the Pledged Shares have been duly and
validly authorized.
3. RIGHT TO VOTE. Except as otherwise provided herein, during the
term of this Agreement and so long as Pledgor is not in
default in the performance of any of the terms of this
Agreement or in the payment of principal or interest under the
Note, the Pledgor shall be entitled to all rights of
ownership, including, but not limited to, the right to vote
the Pledged shares on all corporate questions.
4. ADJUSTMENTS. In the event that, during the term of this
Agreement, any stock dividend shall be declared an or with
respect to any of the Pledged Shares, or there is a
reclassification, readjustment, merger, consolidation, stack
split or any other change is made in the capital structure of
the Pledgee which has issued the Pledged Shares or any
successor thereto, all new, substituted and additional shares
or other securities issued by reason of such a change shall be
delivered and held by Escrow Agent under the terms of this
Agreement in the same manner as the Pledged Shares.
5. DEFAULT. In the event of default by the Pledgor under the
Note, in addition to any right or remedy which it may have
hereunder, the Pledgee shall have all of the rights and
remedies of a secured party under Article 9 of the Uniform
Commercial Code as it is now or hereafter in effect in the
State of Florida, including without limitation the right to
retain or to sell or otherwise dispose at all or any portion
of the Pledged Shares. Upon the occurrence of a default under
the Note, the Pledgee shall, in its sole discretion, have the
right to cancel the Pledged Shares or to offer for sale, and
to sell, all or any of the Pledged Shares at any private or
public sale; provided, however, that the Pledge shall give to
the Pledgor at least ten (10) business days notice of the
time, date and place of any such private or public sale, which
provision for notice, the Pledgor hereby expressly agrees is
commercially reasonable. Furthermore, the Pledgor hereby
expressly agrees that the Pledgee may (1) sell all or any
portion of the Pledged Shares at any private or public sale
for cash, upon credit, or for other property, for immediate or
future delivery, and for such price or prices and on such
terms as the Pledgee in its sole discretion shall deem
appropriate, (ii) bid on and purchase the Pledged Shares at
any private or public sale, and (iii) hold any of the Pledged
shares purchased by the Pledgee at any private or public sale
in its own right, free and clear of any and all claims of
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the Pledgor. The Pledgee may, from time to time, upon such
default, sell all or any part of the Pledged Shares. The
Pledgor hereby appoints Pledgee an its attorney-in-fact to
execute such documents and take such action as may be
necessary to accomplish the provisions of this Agreement,
including, without limiting the generality of the foregoing,
the right to ask for, demand, xxx for, collect, receive and
give acquittance for any and all monies due or to become due
with respect to or in connection with any of the Pledged
shares, to endorse checks, drafts, orders and other
instruments for the payment of money representing any interest
or dividend or other distribution with respect to or in
connection with the Pledged shares or any part thereof and to
give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with
respect thereto and to sell, assign, endorse, pledge, transfer
and make any agreement respecting same, or otherwise deal with
the name. Such appointment in irrevocable and coupled with an
interest. Unless Pledgee retains the Pledged Shares in full
satisfaction or Pledgor's obligations under the Note as
provided herein, Pledgee shall apply the proceeds of
disposition of the Pledge shares in the manner provided by
Florida law. In lieu of any such sale, Pledgee may retain the
Pledged Shares in full satisfaction or partial satisfaction of
Pledgor's obligations under the Note.
6. ESCROW. Pledgor shall deposit with Escrow Agent the Pledged
shares, along with the aforesaid stock powers (all of which
items shall hereinafter be referred to as the "Pledged
Documents" including all stock assignments), to be held in
escrow for future delivery as follows:
a. Escrow Agent shall deliver the Pledged Documents to
Pledgee within ten (10) business days after receiving
an affidavit signed by Pledgee stating that:
(i) Pledgor is in default under the Note and all
periods of time within which to cure such
default have expired;
(ii) Pledgee is accelerating the entire unpaid
balance due under the Note; and
(iii) Pledgee demands delivery of the Pledged
Documents.
Pledgee shall simultaneously furnish Pledgor with a
copy of such affidavit. If Escrow Agent has not
received any protest or objection from Pledgor within
ten (10) business days of receipt of such affidavit,
the Pledged Documents shall be delivered to the
Pledgee. Upon such delivery of the Pledged Documents,
Escrow Agent's duties hereunder shall terminate.
b. In the event Escrow Agent has received written
instructions signed by both Pledgor and Pledgee
notifying Escrow Agent of a sale of a portion of the
Pledged, Escrow Agent may release a portion or all of
the Pledged Shares, as provided in such written
instruction, and if Escrow Agent is designated to be
the recipient of the proceeds from the sale of all or
a portion of the Pledged Shares, then Escrow Agent
shall deliver any such proceeds received in
accordance with such written instructions.
c. In the event Escrow Agent has not delivered the
Pledged Documents pursuant to subparagraph a. above,
then Escrow Agent shall deliver the
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Pledged Documents; to Pledgor within ten (10)
business day; after receipt of the original of the
Note marked. "Paid in full", accompanied by
instructions from Pledgor indicating that the Note
has been paid in full and the Pledged documents shall
be delivered to Pledgor at the address specified
therein. Upon such delivery of the Pledged Documents,
Escrow Agent's duties hereunder shall terminate.
Pledgee agrees to deliver the Note to Pledgor marked
"paid in full", immediately upon satisfaction
thereof.
7. DISPUTE. It is specifically understood and agreed that should
any dispute arise between the parties hereto concerning this
Agreement or its construction, or for any other reason, the
Escrow Agent in its sole discretion, shall have the right to
deposit the Pledged Documents held by it pursuant to this
Escrow Agreement and any documents relating thereto that may
have been delivered to the Escrow Agent, with the Clerk of the
Circuit Court of Broward County, Florida, and notify all
parties concerned, and whereupon, all liability hereunder on
the part of the Escrow Agent shall fully cease except to the
extent of accounting for the Pledged Documents and any other
documents that may have been delivered to it.
8. INTERPLEADER. In the event the Escrow Agent places the Pledged
Documents that have actually been delivered to Escrow Agent in
the registry of the Circuit Court in and for Broward County,
Florida, and files an action of interpleader naming Pledgor
and Pledgee, and other necessary parties, Escrow Agent shall
be released and relieved from any and all further obligations
and liabilities hereunder or in connection herewith. Pledgor
and Pledgee hereby, jointly and severally, indemnify and hold
Escrow Agent harmless from any damages or losses arising
hereunder or in connection herewith, including, but not
limited to, all costs and expenses incurred by Escrow Agent in
connection with the filing at such action and reasonable
attorneys' teen and costs for Escrow Agent's attorney(s)
through and including all appeals.
9. NATURE OF ESCROW AGENT'S DUTIES. It is agreed that the duties
of Escrow Agent are only such as are herein specifically
provided and are purely ministerial in nature. Hence, Escrow
Agent shall not be held liable for any matter or thing except
for Escrow Agent's gross negligence or willful misconduct.
Pledgor and Pledgee shall at all times hereafter, jointly and
severally indemnify Escrow Agent and hold Escrow Agent
harmless from any claim assorted against it and for any
damages, costs, expenses, liability and/or losses sustained by
Escrow Agent (except for Escrow Agent's gross negligence or
willful misconduct), including, but not limited to, reasonable
attorneys' fees and costs for Escrow Agent's attorney(s)
through and including all appeals and whether or not
litigation is instituted. The obligations and duties of the
Escrow Agent are confined to those specifically enumerated in
this Agreement. The Escrow Agent shall not be subject to nor
be under any obligation to ascertain or construe the terms and
conditions of any instrument whether or not now or hereafter
deposited with or delivered to the Escrow Agent or referred to
in this Agreement. Nor shall the Escrow Agent be obliged to
inquire as to the form, execution and sufficiency or validity
or any instruments, or to inquire as to the identity,
authority or rights of any person executing or delivering the
same.
10. RETENTION OF LEGAL COUNSEL. It is agreed that Escrow Agent
shall have full discretion as to whom it may retain as legal
counsel to protect its interests (including retaining itself
as a law firm) and same shall not affect or in
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any way prejudice or limit Escrow Agent's entitlement to
reasonable attorneys' fees for the services of such attorneys
as set forth in this Escrow Agreement.
11. VENUE. It is recognized that this Escrow Agreement shall be
deemed to have been entered into by the parties hereto in
Broward County, Florida, and that the property which is the
subject of thin Escrow Agreement is located in Broward County,
Florida. Therefore, it is agreed that venue with respect to
any matter arising herefrom shall only lie in Broward County,
Florida, except to the extent, and only to the extent, that
this provision with respect to venue is deemed in
contravention of any applicable law.
12. AMBIGUITY: CONFLICTING INSTRUCTIONS. In the event the Escrow
Agent shall be uncertain as to its duties or rights hereunder
or shall receive instructions, claims or demands from any of
the parties hereto or from third persons with respect to the
Pledged documents held hereunder, which in its sole opinion,
are in conflict with any provision of this Agreement, it shall
be entitled to refrain from taking any action until it shall
be directed otherwise in writing by all the parties hereto and
said third persons, if any, or by a final order or judgment of
a court of competent jurisdiction.
13. NOTICES. Notices and deliveries under this Agreement shall be
given or made by certified mail, return receipt requested, as
follows:
PLEDGOR:
XXXXXX X. XXXXXX
0000 Xxxxxxx Xxxxxxx
Xxxxx Xxxxxxx, XX 00000
PLEDGEE:
VIRAGEN, INC.
000 XX 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
ESCROW AGENT:
ATLAS XXXXXXXX P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Ft. Xxxxxxxxxx, XX 00000
Or such other address as any of the above-mentioned parties
shall have designated in writing to the other parties.
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14. TERMINATION. All parties agree that the services of the Escrow
Agent may be terminated by the Escrow Agent or by the joinder
of both Pledgee and Pledgor upon thirty (30) days written
notice to the other. In the event of such termination, the
Pledgee and Pledgor shall mutually agree to a Successor Escrow
Agent. Failing such mutual agreement, application shall be
made to the appropriate court of Broward County, Florida, for
the appointment of a Successor Escrow Agent. Upon such
appointment, the Escrow Agent shall deliver all Pledged
Documents accordance with the terms of this Agreement.
15. MISCELLANEOUS.
a. BENEFIT OF AGREEMENT. This Agreement shall be binding
upon the parties hereto and their heirs, successors,
assigns and personal or legal representatives.
b. MODIFICATION. The Escrow Agent shall not be bound by
any modification, cancellation or rescission of this
Agreement unless in writing and signed by the parties
hereto. In no event, however, shall any modification
of this agreement, which shall affect the rights or
duties of the Escrow Agent, be binding upon Escrow
Agent unless it shall have given its prior written
consent.
c. ATTORNEYS' FEES. In the event Pledgor or Pledgee
shall seek to enforce this Agreement, whether or not
through litigation, the prevailing party shall be
entitled to receive reasonable attorneys' fees and
all costs incurred in connection with such
enforcement, including fees and costs of appeal.
d. FURTHER COOPERATION. From and after the date of this
Agreement, each of the parties hereto agrees to
execute whatever additional documentation or
instruments as are necessary to carry out the intent
and purpose of this Agreement.
e. WAIVER. No indulgences extended by any party hereto
or any other party shall be construed as a waiver of
any breach on the part of such other party, nor shall
any waiver of one breach be construed as a waiver of
any rights or remedies with respect to any subsequent
breach.
f. CONSTRUCTION. It is the intention of the parties that
the laws of the State of Florida shall govern the
validity of this Agreement, the construction of its
terms, and the interpretation of the rights and
duties of the parties. The parties agree and
acknowledge that each party has reviewed and revised
this Agreement and that the normal rule of
construction to the effect that any ambiguities are
to be resolved against the drafting parties shall not
be employed in the interpretation of this Agreement
or any amendment or exhibits thereto.
g. TRUTH OF RECITALS. The recitals and statements
contained on page 1 of this Agreement are true and
correct and are hereby incorporated into this
Agreement.
h. ENTIRE AGREEMENT. This Agreement sets forth the
entire agreement and understanding of the parties on
the subject matter hereof and supersedes all prior
agreements and understandings relating thereto.
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i. SEVERABILITY. The invalidity or unenforceability of
any particular provision of this Agreement shall not
affect the other provisions hereof and this Agreement
shall be construed in all respects as if such invalid
or unenforceable provision was omitted.
j. GENDER. Wherever the context shall so require, all
words herein in any gender shall be deemed to include
the masculine, feminine or neuter gender; all
singular words shall include the plural and all
plural shall include the singular.
k. HEADINGS. The headings used in this Agreement are
used for reference purposes only and are not to be
deemed controlling with respect to the contents
thereof.
l. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each such counterpart
shall for all purposes be deemed to be an original.
m. INCORPORATION BY REFERENCE. The Exhibits referred to
in this Agreement are hereby incorporated into this
Agreement by reference.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
PLEDGOR:
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
PLEDGEE:
VIRAGEN, INC.
By:
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Controller
ESCROW AGENT:
ATLAS XXXXXXXX P.A.
By:
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Authorized Person
