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EXHIBIT 10.10
SECURITY AGREEMENT
This Security Agreement is made as of October 31, 1996 between
SpectRx, Inc., a Delaware corporation ("Pledgee"), and Xxxx X. Xxxxxxx
("Pledgor").
Recitals
Pursuant to Pledgor's Note dated and given to Pledgee on the date
hereof (the "Note"), Pledgor has borrowed $200,000.00 from Pledgee and wishes
to secure repayment of the Note with shares of Pledgee's Common Stock and Laser
Atlanta Optics, Inc.'s ("LAO") Common Stock (the "Shares").
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In
consideration of the loan of $200,000.00 to Pledgor under the Note, Pledgor,
pursuant to the Georgia Commercial Code, hereby pledges 33,334 Shares of
Pledgee's Common Stock and 6,000,000 Shares of LAO's Common Stock (herein
sometimes referred to as the "Collateral") represented by Pledgee's certificate
number 37 and LAO's certificate numbers 64 and 65, duly endorsed in blank or
with executed stock powers, and herewith delivers said certificates to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, ("Pledgeholder"), who
shall hold said certificates subject to the terms and conditions of this
Security Agreement.
The pledged stock (together with an executed blank stock assignment
for use in transferring all or a portion of the Shares to Pledgee if, as and
when required pursuant to this Security Agreement) shall be held by the
Pledgeholder as security for the repayment of the Note, and any extensions or
renewals thereof, executed by Pledgor, and the Pledgeholder shall not encumber
or dispose of such Shares except in accordance with the provisions of this
Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to
Pledgee, its successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the
principal sum of the Note secured hereby, together with interest thereon, at
the time and in the manner provided in the Note.
b. Encumbrances. The Shares are free of all other
encumbrances, defenses and liens, and Pledgor will not further encumber the
Shares without the prior written consent of Pledgee.
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c. Margin Regulations. In the event that Pledgee's
Common Stock is now or later becomes margin- listed by the Federal Reserve
Board and Pledgee is classified as a "lender" within the meaning of the
regulations under Part 207 of Title 12 of the Code of Federal Regulations
("Regulation G"), Pledgor agrees to cooperate with Pledgee in making any
amendments to the Note or providing any additional collateral as may be
necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as
all payments of principal and interest are made as they become due under the
terms of the Note, Pledgor shall have the right to vote all of the Shares
pledged hereunder.
4. Stock Adjustments. In the event that during the term of the
pledge any stock dividend, reclassification, readjustment or other changes are
declared or made in the capital structure of Pledgee or LAO, all new,
substituted and additional shares or other securities issued by reason of any
such change shall be delivered to and held by the Pledgee under the terms of
this Security Agreement in the same manner as the Shares originally pledged
hereunder. In the event of substitution of such securities, Pledgor, Pledgee
and Pledgeholder shall cooperate and execute such documents as are reasonable
so as to provide for the substitution of such Collateral and, upon such
substitution, references to "Shares" in this Security Agreement shall include
the substituted shares of capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of
this pledge, subscription options or other rights or options shall be issued in
connection with the pledged Shares, such subscription options, other rights and
options shall be the property of Pledgor and, if exercised by Pledgor, all new
stock or other securities so acquired by Pledgor as it relates to the pledged
Shares then held by Pledgeholder shall be immediately delivered to
Pledgeholder, to be held under the terms of this Security Agreement in the same
manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants
contained in this Security Agreement for a period of 10 days after written
notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the Georgia
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary
rules under Regulation G, there shall be released from this pledge a portion of
the pledged Shares held by Pledgeholder hereunder upon payments of the
principal of the Note. The number of the pledged Shares which shall be
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released shall be that number of full Shares which bears the same proportion to
the initial number of Shares pledged hereunder as the payment of principal
bears to the initial full principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not
sell, withdraw, pledge, substitute or otherwise dispose of all or any part of
the Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the
payment of all indebtedness secured hereby, at which time the remaining pledged
stock shall be promptly delivered to Pledgor, subject to the provisions for
prior release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for
the property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due
and payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee
agree that the enforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of
the terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted
and governed under the laws of the State of Georgia.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR"
_________________________________
Xxxx X. Xxxxxxx
Address: _________________________________
_________________________________
"PLEDGEE" SPECTRX, INC.,
a Delaware corporation
By: _________________________________
Title: _________________________________
"PLEDGEHOLDER" XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Professional Corporation
By: _________________________________
Title: _________________________________
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NOTE
$200,000.00 Norcross, GA
October 31, 1996
FOR VALUE RECEIVED, Xxxx X. Xxxxxxx promises to pay to SpectRx, Inc.,
a Delaware corporation (the "Company"), or order, the principal sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00) together with simple
interest at the rate of 6.72% per annum.
Principal and accrued interest shall be due and payable on the earlier
of (a) October 31, 2001, and (b) the date which is 120 days after the date when
the undersigned shall cease to be an employee or consultant of the Company.
Should the undersigned fail to make full payment of principal and accrued
interest for a period of 10 days or more after the due date thereof, the whole
unpaid balance on this Note of principal and accrued interest shall become
immediately due at the option of the holder of this Note. Payments of
principal and accrued interest shall be made in lawful money of the United
States of America.
The undersigned may at any time prepay all or any portion of the
principal owing hereunder.
This Note is secured in part by a pledge of the Company's Common Stock
and the Common Stock of Laser Atlanta Optics, Inc. under the terms of a
Security Agreement of even date herewith and is subject to all the provisions
thereof.
The holder of this Note shall not have full recourse against the
undersigned, and shall be required to proceed against the collateral securing
this Note in the event of default.
In the event the undersigned shall cease to be an employee or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be due and payable on the date which is 120 days
after the date on which the undersigned ceases to be an employee or consultant
of the Company.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
____________________________________
Xxxx X. Xxxxxxx
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, Xxxx X. Xxxxxxx, hereby sell, assign and
transfer unto ______________________________(__________) shares of the Common
Stock of SpectRx, Inc. standing in my name of the books of said
corporation represented by Certificate No. 37 herewith and do hereby
irrevocably constitute and appoint Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, to transfer the said stock on the books of the within
named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Security
Agreement (the "Agreement") between SpectRx, Inc. and the undersigned dated
October 31, 1996.
Dated: _______________, 19__
Signature:
______________________________
Xxxx X. Xxxxxxx
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to foreclose on the
pledged shares, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, Xxxx X. Xxxxxxx, hereby sell, assign and
transfer unto ______________________________(__________) shares of the Common
Stock of Laser Atlanta Optics, Inc. standing in my name of the books of
said corporation represented by Certificate Nos. 64 and 65 herewith and do
hereby irrevocably constitute and appoint Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, to transfer the said stock on the books of the within
named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Security
Agreement (the "Agreement") between SpectRx, Inc. and the undersigned dated
October 31, 1996.
Dated: _______________, 19__
Signature:
______________________________
Xxxx X. Xxxxxxx
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to foreclose on the
pledged shares, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
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CONSENT OF SPOUSE
I, ____________________, spouse of Xxxx X. Xxxxxxx, have read and
approve the foregoing Security Agreement (the "Agreement"). In consideration
of the Company's non-recourse loan of $200,000.00 to my spouse, secured by the
pledge of 33,334 shares of the Common Stock of SpectRx, Inc. and 6,000,000
shares of the Common Stock of Laser Atlanta Optics, Inc. as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement
or any shares pledged pursuant thereto under the community property laws or
similar laws relating to marital property in effect in the state of our
residence as of the date of the signing of the foregoing Agreement.
Dated: _______________, 1996
______________________________________
Signature of Spouse
