STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made by and between LYNX THERAPEUTICS,
INC., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx
("Purchaser").
WITNESSETH:
WHEREAS, Purchaser holds one stock option to purchase shares of common
stock of the Company pursuant to the Company's 1992 Stock Option Plan (the
"Plan") which Purchaser desires to exercise;
WHEREAS, Purchaser wishes to take advantage of the early exercise
provision of his options; and
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Purchaser hereby agrees to purchase from the Company, and the
Company hereby agrees to sell to Purchaser, an aggregate of fifty thousand
(50,000) shares of the Company's common stock (the "Stock"), for an exercise
price of ($5.00) per share (total exercise price: two hundred fifty thousand
dollars ($250,000), payable as follows:
Cash at Closing $ -0-
Promissory Note in the form
of Exhibit E (the "Note") $250,000
Total Exercise Price $250,000
The closing hereunder shall occur at the offices of the Company on the
date of this Agreement or at such other time and place as the parties may
mutually agree upon in writing.
At the closing, Purchaser shall deliver one (1) stock assignment in the
form of Exhibit B, duly endorsed (with date and number of shares left blank),
joint escrow instructions (the "Joint Escrow Instructions") in the form of
Exhibit C, duly executed by Purchaser, and the total exercise price (including
an executed Note in the form of Exhibit E if a portion of the total exercise
price is to be paid by promissory note and an executed pledge agreement in the
form of Exhibit F (the "Pledge Agreement") under which all shares of the Stock
acquired by Note shall be pledged as collateral security for the payment of the
indebtedness represented by the Note).
At the closing or as soon thereafter as practicable, the Company shall
deliver to the Escrow Agent (as defined in paragraph 8 below) share certificates
for all of the Stock that is to be subject to the Purchase Option (as defined in
paragraph 2 below), and shall deliver share certificates to Purchaser for all of
the Stock, if any, that is not to be subject to the Purchase Option or the
Pledge Agreement. The certificates for all of the Stock that is subject to the
Pledge Agreement but not the Purchase Option shall be retained by the Company as
security pursuant to the Pledge Agreement.
2. In accordance with the provisions of Section 408(b) of the
California General Corporation Law, fifty thousand (50,000) shares of the Stock
to be purchased by Purchaser pursuant to this Agreement with an exercise price
of five dollars ($5.00) per share shall be subject to the following option
("Purchase Option"):
(a) Subject to the provisions of Exhibit A, in the event that
Purchaser shall cease to be an employee of the Company for any reason (including
his death), or no reason, with or without cause, the Purchase Option may be
exercised. The Company shall have the right at any time within the ninety (90)
day period after Purchaser's termination of service with the Company and all
related companies or such longer period as may be agreed to by the Company and
Purchaser (for example, for purposes of satisfying the requirements of Section
1202(c)(3) of the Internal Revenue Code) to purchase from Purchaser or his
personal representative, as the case may
57.
be, at the price per share paid by Purchaser pursuant to this Agreement ("Option
Price"), up to but not exceeding the number of shares of the Stock set forth on
Exhibit A hereto which is incorporated herein by this reference.
(b) In addition, and without limiting the foregoing Purchase
Option, if at any time during the term of the Purchase Option, there occurs: (a)
a dissolution or liquidation of the Company; (b) a merger or consolidation
involving the Company in which the Company is not the surviving corporation; (c)
a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of other securities, cash or otherwise; or (d) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then: (i) if there is no successor to
the Company, the Company shall have the right to exercise its Purchase Option as
to all or any portion of the Stock then subject to the Purchase Option set forth
above to the same extent as if Purchaser's employment by the Company had ceased
on the date preceding the date of consummation of said event or transaction, or
(ii) the Purchase Option may be assigned to any successor of the Company, and
the Purchase Option shall apply if Purchaser shall cease for any reason to be an
employee of such successor on the same basis as set forth above. In that case,
references herein to the "Company" shall be deemed to refer to such successor.
(c) The Company shall be entitled to pay for any shares
purchased pursuant to its Purchase Option at the Company's option in cash, by
offset against any indebtedness given in payment for the Stock, or a combination
of both.
(d) As used herein, employment with the Company shall include
employment with an affiliate of the Company.
(e) This Agreement is not an employment contract and nothing
in this Agreement shall be deemed to create in any way whatsoever any obligation
on the part of Purchaser to continue in the employ of the Company, or of the
Company to continue Purchaser in the employ of the Company.
(f) In the event that the Stock's Fair Market Value (as
defined in the Plan) is equal to or exceeds the Option Price on the date that
the Purchaser ceases to be employed, the Company shall exercise its Purchase
Option to the extent permitted by law.
3. The Purchase Option may be exercised by giving written notice of
exercise delivered or mailed as provided in paragraph 14. Upon providing of such
notice and payment or tender of the purchase price, the Company shall become the
legal and beneficial owner of the Stock being purchased and all rights and
interests therein or related thereto.
4. If from time to time during the term of the Purchase Option there is
any stock dividend or liquidating dividend or distribution of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company, then, in such event, any and all new,
substituted or additional securities or other property to which Purchaser is
entitled by reason of his ownership of Stock will be immediately subject to the
Purchase Option and be included in the word "Stock" for all purposes of the
Purchase Option with the same force and effect as the shares of Stock then
subject to the Purchase Option. While the total Option Price shall remain the
same after each such event, the Option Price per share of Stock upon exercise of
the Purchase Option shall be appropriately adjusted.
5. All certificates representing any shares of Stock of the Company
subject to the provisions of this Agreement shall have endorsed thereon legends
in substantially the following form:
(i) "The shares represented by this certificate are subject to
an option set forth in an agreement between the corporation and the registered
holder, or his predecessor in interest, a copy of which is on file at the
principal office of this corporation. Any transfer or attempted transfer of any
shares subject to such option is void without the prior express written consent
of the issuer of these shares."
58.
(ii) Any legend required to be placed thereon by the
California Commissioner of Corporations.
6. As security for his faithful performance of the terms of this
Agreement and to insure the availability for delivery of Purchaser's Stock upon
exercise of the Purchase Option herein provided for, Purchaser agrees, at the
closing hereunder (or as soon thereafter as practicable), to deliver (or have
the Company deliver on the Purchaser's behalf) to and deposit with the Secretary
of the Company ("Escrow Agent"), as Escrow Agent in this transaction, three (3)
stock assignments duly endorsed (with date and number of shares left blank) in
the form attached hereto as Exhibit B, together with a certificate or
certificates evidencing all of the Stock subject to the Purchase Option; said
documents are to be held by the Escrow Agent and delivered by said Escrow Agent
pursuant to the Joint Escrow Instructions of the Company and Purchaser set forth
in Exhibit C attached hereto and incorporated herein by this reference, which
instructions shall also be delivered to the Escrow Agent at the closing
hereunder (or as soon thereafter as practicable). If a portion of the total
purchase price is paid by a promissory note, the Stock is also subject to the
Pledge Agreement, and possession of the certificates and stock assignments by
the Escrow Agent shall also constitute possession by the Company of such
instruments pursuant to the Pledge Agreement.
7. Purchaser shall not sell or transfer any of the Stock subject to the
Purchase Option or any interest therein so long as such Stock is subject to the
Purchase Option or the Pledge Agreement.
8. The Company shall not be required (i) to transfer on its books any
shares of Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
9. Subject to the provisions of paragraphs 7 and 8 above, Purchaser
(but not any unapproved transferee) shall, during the term of this Agreement,
exercise all rights and privileges of a stockholder of the Company with respect
to the Stock.
10. Purchaser acknowledges receipt of a copy of Section 260.141.11 of
Title 10 of the California Administrative Code, attached hereto as Exhibit D.
11. The parties agree to execute such further instruments and to take
such further action as reasonably may be necessary to carry out the intent of
this Agreement.
12. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Office Box, by registered or certified mail
with postage and fees prepaid, addressed to the other part hereto at his address
hereinafter shown below his signature or at such other address as such part may
designate by ten (10) days' advance written notice to the other part hereto.
13. This Agreement shall bind and inure to the benefit of the
successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, inure to the benefit of and be binding upon
Purchaser, his heirs, executors, administrators, successors, and assigns.
Without limiting the generality of the foregoing, the Purchase Option of the
Company hereunder shall be assignable by the Company at any time or from time to
time, in whole or in part. Should the right of repurchase be assigned by the
Company, the assignee shall pay to the Company cash equal to the excess, if any,
of the Stock's Fair Market Value (as defined in the Plan) over the Option Price.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 14th day of April 1997.
LYNX THERAPEUTICS INC.
By Xxx Xxxxx
-----------------------------
Xxx Xxxxx
59.
Chief Executive Officer
Address: 0000 Xxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
PURCHASER
/s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Address:
---------------------------
---------------------------
ATTACHMENTS:
Exhibit A Vesting Schedule
Exhibit B Assignment Separate from Certificate
Exhibit C Joint Escrow Instructions
Exhibit D Cal. Admin. Code, Title 10, Section 260.141.11
Exhibit E Promissory Note
Exhibit F Pledge Agreement
60.
Exhibit A
VESTING SCHEDULE
Number of Shares
Subject to
If Cessation of Employment Occurs: Purchase Option:
On or before April 13, 1998 50,000 shares
On or after April 14, 1998
but on or before May 13, 1998 49,167 shares
On or after the first day of The prior month's
every month but on or before the amount less
last day of such month shares 833 shares
For purposes of this Agreement, "Cause" shall mean misconduct by
Purchaser, including (i) conviction of any felony or any crime involving moral
turpitude or dishonesty; (ii) participation in a fraud or act of dishonesty
against the Company; (iii) willful breach of the Company's policies; (iv)
intentional damage to the Company's property; or (v) conduct by Purchaser which
in the good faith and reasonable determination of the Board demonstrates gross
unfitness to serve. Physical or mental disability shall not constitute "Cause. "
For purposes of this Agreement, any material diminution in responsibilities,
duties or compensation other than for Cause will be treated, upon notice by
Purchaser to the Company, as a termination without Cause.
61.
Exhibit C
JOINT ESCROW INSTRUCTIONS
Secretary
Lynx Therapeutics, Inc.
0000 Xxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Dear Sir:
As Escrow Agent for both Lynx Therapeutics, Inc., a Delaware
corporation ("Company"), and the undersigned purchaser of stock of the Company
("Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Stock Purchase Agreement
("Agreement"), dated, April 14, 1997, to which a copy of these Joint Escrow
Instructions is attached as Exhibit C, in accordance with the following
instructions:
1. In the event that the Company or an assignee shall elect to exercise
the Purchase Option set forth in the Agreement, the Company or its assignee will
give to Purchaser and you a written notice specifying the number of shares of
stock to be purchased, the purchase price, and the time for a closing hereunder
at the principal office of the Company. Purchaser and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.
2. At the closing you are directed to: (a) date any stock assignments
necessary for the transfer in question, (b) fill in the number of shares being
transferred, and (c) deliver same, together with the certificate evidencing the
shares of stock to be transferred, to the Company against the simultaneous
delivery to you of the purchase price (which may include suitable acknowledgment
of cancellation of indebtedness) of the number of shares of stock being
purchased pursuant to the exercise of the Purchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
4. This escrow shall terminate upon expiration or exercise in full of
the Purchase Option, whichever occurs first.
5. If, at the time of termination of this escrow, you should have in
your possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of same to Purchaser and shall be discharged of
all further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Company that the property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Company.
6. Except as otherwise provided in these Joint Escrow Instructions,
your duties hereunder may be altered, amended, modified or revoked only by a
writing signed by all of the parties hereto.
7. You 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 by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while
acting in good faith, and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
62.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and you are
hereby expressly authorized to comply with and obey orders, judgments or decrees
of any court. In case you obey or comply with any such order, judgment or decree
of any court, you shall not be liable to any of the parties hereto or to any
other person, firm or corporation 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.
9. You 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 the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel (including
without limitation the firm of Xxxxxx Godward LLP) and other experts as you may
deem necessary properly to advise you in connection with your obligations
hereunder, may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice to each party. In the event of any such termination, the Company may
appoint any officer or assistant officer of the Company as successor Escrow
Agent and Purchaser hereby confirms the appointment of such successor or
successors as his attorney-in-fact and agent to the full extent of your
appointment.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you may (but are not obligated to) retain in your possession without
liability to anyone all or any part of such securities until such dispute shall
have been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction after
the time for appeal has expired and no appeal has been perfected, but you shall
be under no duty whatsoever to institute or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in any United States Post Box, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties hereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten (l0) days' written notice to each of the other parties hereto:
COMPANY: Lynx Therapeutics, Inc.
0000 Xxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
PURCHASER: XXXXXX X. XXXXXX
00 XXXXX XXXXX
XXXXXXXX, XX 00000
ESCROW AGENT: Secretary
Lynx Therapeutics, Inc.
0000 Xxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
63.
16. By signing these Joint Escrow Instructions you become a party
hereto only for the purpose of such Joint Escrow Instructions; you do not become
a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that the Company and Lynx may at any time or from time to
time assign its rights under the Agreement and these Joint Escrow Instructions
in whole or in part.
Very truly yours,
LYNX THERAPEUTICS, INC.
By: /s/ Xxx Xxxxx
-------------------------------
Title: Chief Executive Officer
-----------------------------
PURCHASER:
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
ESCROW AGENT:
/s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx, Secretary
Lynx Therapeutics, Inc.
64.
EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED Xxxxxx X. Xxxxxx hereby sells, assigns and transfers unto
Lynx Therapeutics, Inc., a Delaware Corporation ("Company"), pursuant to that
certain Stock Purchase Agreement dated as of April 14, 1997 between the Company
and the undersigned (the "Agreement____________________ ) shares of the
Company's Common Stock, standing in its name on the books of said corporation
represented by Certificate ______________ herewith, and does hereby irrevocably
constitute and appoint the Company's Attorney to transfer the said stock on the
books of the said corporation with full power of substitution in the premises.
This Assignment may be used only in accordance with and subject to the terms and
conditions of the Agreement, in connection with the repurchase of shares of
Common Stock issued to the undersigned pursuant to the Agreement, and only to
the extent that such shares remain subject to the Company's Purchase Option
under the Agreement.
Dated:________________
Signature: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Print Name: Xxxxxx X. Xxxxxx
----------------------------
65.
Exhibit E
PROMISSORY NOTE
$250,000 Hayward, California
April 14, 1997
For Value Received, the undersigned hereby unconditionally promises to pay
to the order of Lynx Therapeutics, Inc., a Delaware corporation the (the
"Company"), at 0000 Xxx Xxxxxx Xxxxx, Xxxxxxx, XX 00000, or at such other place
as the holder hereof may designate in writing in lawful money of the United
States of America and immediately available funds, the principal sum of two
hundred fifty thousand ($250,000.00) together with interest accrued from the
date hereof on the unpaid principal at the rate of 6.49% per annum, or the
maximum rate permissible by law (which under the laws of the State of California
shall be deemed to be the laws relating to permissible rates of interest on
commercial loans), whichever is less, as follows:
Principal Repayment. The outstanding principal amount hereunder shall
be due and payable in full on April 13, 2002, subject to earlier repayment
as follows: If the undersigned sells shares of stock subject to the Pledge
Agreement of even date herewith between the undersigned and the Company,
then within twenty (20) days of such sale, the undersigned shall pay as
principal repayment, $5.00 per share for each share sold until the
undersigned sells fifty thousand (50,000) shares subject the Pledge
Agreement; and
Interest Payments. Interest shall be payable upon the expiration or,
termination of this Note and shall be calculated on the basis of a 360-day
year for the actual number of days elapsed;
provided, however, that in the event that the undersigned's employment by or
association with the Company is terminated for any reason prior to payment in
full of this Note, this Note shall be accelerated and all remaining unpaid
principal and interest hereunder shall become due and payable immediately after
such termination.
If the undersigned fails to pay any of the principal hereunder when due,
then the Company, at its sole option, shall have the right to accelerate this
Note, in which event the entire principal balance and all accrued interest
hereunder immediately shall become due and payable, and immediately collectible
by the Company pursuant to applicable law.
This Note may be prepaid at any time without penalty. All money paid toward
the satisfaction of this Note shall be applied first to the payment of interest
as required hereunder and then to the retirement of the principal.
The full amount of this Note is secured by a pledge of shares of Common
Stock of the Company, and is subject to all of the terms and provisions of the
Stock Purchase Agreement and the Pledge Agreement, each of even date herewith
between the undersigned and the Company.
The undersigned hereby represents and agrees that the amounts due under
this Note are not consumer debt, and are not incurred primarily for personal,
family or household purposes, but are for business and commercial purposes only.
The undersigned hereby waives presentment, protest and notice of protest,
demand for payment, notice of dishonor and all other notices or demands in
connection with the delivery, acceptance, performance, default or endorsement of
this Note.
The holder hereof shall be entitled to recover, and the undersigned agrees
to pay when incurred, all costs and expenses of collection of this Note,
including without limitation, reasonable attorney's fees.
This Note shall be governed by, and construed, enforced and interpreted in
accordance with the laws of the State of California, as applied to contracts
made and performed entirely within the State by its residents.
Signed /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
66.
Exhibit F
PLEDGE AGREEMENT
1. As collateral security for the payment of that certain $250,000.00
promissory note issued this date to Lynx Therapeutics, Inc. ("Pledgee") by the
undersigned (hereinafter called "indebtedness"), the undersigned hereby assigns,
transfers to and pledges with the Pledgee the securities listed on Schedule 1
hereto which, on the date hereof, were delivered for deposit with Pledgee,
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
undersigned is or may hereafter become entitled to receive on account of such
property, and in the event that the undersigned receives any such, the
undersigned immediately will deliver it to Pledgee to be held by Pledgee
hereunder in the same manner as the property originally pledged hereunder. All
property assigned, transferred to and pledged with Pledgee under this paragraph
is hereinafter called "collateral."
2. At any time, without notice, and at the expense of the undersigned,
Pledgee in its name or in the name of its nominee or of the undersigned may, but
shall not be obligated 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
said collateral; (b) enter into any extension, reorganization, deposit, merger,
or consolidation agreement, or any agreement in any wise relating to or
affecting the collateral, and in connection therewith may deposit or surrender
control of such collateral thereunder, accept other property in exchange for
such collateral and do and perform such acts and things as it may deem proper,
and any money or property received in exchange for such collateral shall be
applied to the indebtedness or thereafter held by it pursuant to the provisions
hereof; (c) insure, process and preserve the collateral; (d) cause the
collateral to be transferred to its name or to the name of its nominee; (e)
exercise as to such collateral all the rights, powers, and remedies of an owner,
except that so long as the indebtedness is not in default the undersigned shall
retain all voting rights as to the collateral.
3. The undersigned agrees to pay prior to delinquency all taxes,
charges, liens and assessments against the collateral, and upon the failure of
the undersigned to do so, Pledgee at its option may pay any of them and shall be
the sole judge of the legality or validity thereof and the amount necessary to
discharge the same.
4. 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 secured hereunder and shall be paid to Pledgee by the
undersigned immediately and without demand.
5. At the option of Pledgee and without necessity of demand or notice,
all or any part of the indebtedness of the undersigned immediately shall become
due and payable irrespective of any agreed maturity, upon the happening of any
of the following events: (a) failure to keep or perform any of the terms or
provisions of this agreement; (b) default in the payment of principal or
interest when due; (c) the levy of any attachment, execution or other process
against the 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 Title 11 of the
United States Code of, by, or against the undersigned.
6. In the event of the nonpayment of any indebtedness when due, whether
by acceleration or otherwise, or upon the happening of any of the events
specified in paragraph 5, Pledgee may then, or at any time thereafter, at its
election, apply, set off, collect or sell in one or more sales, or take such
steps as may be necessary to liquidate and reduce to cash in the hands of
Pledgee in whole or in part, with or without any previous demands or demand of
performance or notice or advertisement, the whole or any part of the collateral
in such order as Pledgee may elect, and any such sale may be made either at
public or private sale at its place of business or elsewhere, or at any broker's
board or securities exchange, either for cash or upon credit or for future
delivery; provided, however, that if such disposition is at private sale, then
the purchase price of the collateral shall be equal to the public market price
67.
then in effect, or, if at the time of sale no public market for the collateral
exists, then, in recognition of the fact that the sale of the collateral would
have to be registered under the Securities Act of 1933, as amended, and that the
expenses of such registration are commercially unreasonable for the type and
amount of collateral pledged hereunder, Pledgee and the undersigned hereby agree
that such private sale shall be at a purchase price mutually agreed to by
Pledgee and the undersigned or, if the parties cannot agree upon a purchase
price, then at a purchase price established by a majority of three independent
appraisers knowledgeable of the value of such collateral, one named by the
undersigned within 10 days after written request by the Pledgee to do so, one
named by Pledgee within such 10 day period, and the third named by the two
appraisers so selected, with the appraisal to be rendered by such body within 30
days of the appointment of the third appraiser. The cost of such appraisal,
including all appraiser's fees, shall be charged against the proceeds of sale as
an expense of such sale. Pledgee may be the purchaser of any or all collateral
so sold and hold the same thereafter in its own right free from any claim of the
undersigned or right of redemption. Demands of performance, notices of sale,
advertisements and presence of property at sale are hereby waived, and Pledgee
is hereby authorized to sell hereunder any evidence of debt pledged to it. Any
sale hereunder may be conducted by any officer or agent of Pledgee.
7. The proceeds of the sale of any of the collateral and all sums
received or collected by Pledgee from or on account of such collateral shall be
applied by Pledgee to the payment of expenses incurred or paid by Pledgee in
connection with any sale, transfer or delivery of the collateral, to the payment
of any other costs, charges, attorneys' fees or expenses mentioned herein, and
to the payment of the indebtedness or any part hereof, all in such order and
manner as Pledgee in its discretion may determine. Pledgee shall pay any balance
to the undersigned.
8. Pledgee shall be under no duty or obligation whatsoever to make or
give any presentments, demands for performance, notices of non-performance,
protests, notices of protest or notices of dishonor in connection with any
obligations or evidences of indebtedness held by Pledgee as collateral, or in
connection with any obligations or evidences of indebtedness which constitute in
whole or in part the indebtedness secured hereunder.
9. Pledgee at any time may deliver the collateral or any part thereof
to the undersigned and the receipt of the undersigned shall be a complete and
full acquittance for the collateral so delivered, and Pledgee shall thereafter
be discharged from any liability or responsibility therefor.
10. Upon the transfer of all or any part of the indebtedness, Pledgee
may transfer all or any part of the collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such collateral
so transferred, and the transferee shall be vested with all the rights and
powers of Pledgee hereunder with respect to such collateral so transferred; but
with respect to any collateral not so transferred Pledgee shall retain all
rights and powers hereby given.
11. Until all indebtedness shall have been paid in full, the power of
sale and all other rights, powers and remedies granted to Pledgee hereunder
shall continue to exist and may be exercised by Pledgee at any time and from
time to time irrespective of the fact that the indebtedness or any part thereof
may have become barred by any statute of limitations, or that the personal
liability of the undersigned may have ceased.
12. Pledgee agrees that so long as the indebtedness is not in default,
shares of common stock of Pledgee held hereunder as collateral for the
indebtedness shall be released from pledge as the indebtedness is paid, at the
rate of one share for Five Dollars ($5.00) of principal amount of indebtedness
paid for the first Two Hundred Fifty Thousand Dollars ($250,000) of principal
amount of indebtedness paid. Release from pledge, however, shall not result in
release from the provisions of those certain Joint Escrow Instructions of even
date herewith among the parties to this Pledge Agreement and the Escrow Agent
named therein, from the Purchase Option of Pledgee, set forth in the Stock
Purchase Agreement of even date herewith between the parties to this Pledge
Agreement.
13. 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 setoff with respect to the indebtedness in the same manner as if the
indebtedness 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
68.
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.
Dated: April 14, 1997
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
ATTACHMENT:
Schedule 1
69.
