Exhibit 10.10
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (as from time to time amended,
supplemented, restated, or otherwise modified, this "AGREEMENT") is entered into
effective January __, 1999 (the "EFFECTIVE DATE") by and among Keynote Systems
Incorporated, a California corporation (the "LENDER") and Xxxxx Xxxxxx, an
individual and Xxxx Xxxxxx, his spouse (COLLECTIVELY REFERRED TO AS the
"BORROWER"). This Agreement, the Note, as defined in SECTION 1.2, the Stock
Pledge Agreement, as defined in SECTION 1.3 and any other documents entered into
pursuant to this Agreement or in connection with this Loan, as defined in
SECTION 1.1, are hereinafter sometimes collectively referred to as the "LOAN
DOCUMENTS."
WHEREAS, Lender desires to loan a certain sum to Borrower and Borrower
wishes to borrow a certain sum from Lender in order that Borrower may purchase a
primary residence in northern California (the "PROPERTY");
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties and covenants set forth in this Agreement, Lender and Borrower hereby
agree as follows:
1. AMOUNT AND TERMS OF LOAN.
1.1 LOAN. Subject to the terms and conditions of this Agreement, and
in reliance on the representations, warranties and covenants of Borrower in this
Agreement, Lender shall loan Borrower the principal amount of One Hundred Fifty
Thousand Dollars ($150,000.00) (the "LOAN") for the purchase of the Property.
1.2 NOTE; INTEREST. Borrower's indebtedness to Lender under the Loan
Documents will be evidenced by a Secured Full Recourse Promissory Note executed
by Borrower substantially in the form attached as EXHIBIT A (the "NOTE"). The
Note will provide that annually compounded interest on the unpaid principal of
this Loan will accrue at a rate equal to nine percent (9%) per annum, which rate
is not less than the minimum rate established pursuant to Section 1274(d) of the
Internal Revenue Code of 1986, as amended, on the earliest date on which there
was a binding contract in writing for the Loan; PROVIDED, HOWEVER, that the rate
at which interest will accrue on unpaid principal under this Note will not
exceed the highest rate permitted by applicable law. All payments hereunder
shall be made in lawful tender of the United States. Interest will be payable
at maturity and will continue to accrue until the date on which all amounts
owing under the Loan Documents have been repaid in full.
1.3 SECURITY. Borrower's indebtedness to Lender under the Loan
Documents will be secured by (a) Borrower's pledge of certain shares of Lender's
Common Stock (the "PLEDGED SHARES") in accordance with the terms of a stock
pledge agreement, dated January __, 1999, substantially in the form attached as
EXHIBIT B (the "STOCK PLEDGE AGREEMENT"), and (b) such other assets of Borrower,
excluding any real property of Borrower, as to which Lender reasonably requests
security. Borrower shall immediately submit to Lender upon issuance all
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Lender equity securities that Borrower acquires pursuant to: (i) Borrower's
exercise of options to purchase Lender equity securities under Lender's 1996
Stock Option Plan or any subsequent or similar stock option plan or equity
incentive program of Lender, or (ii) any employee stock purchase agreement or
other similar plan of Lender.
1.4 MATURITY OF LOAN. The unpaid principal amount of this Loan and
all unpaid interest accrued thereon, together with any other related fees,
expenses or costs, will be immediately due and payable to Lender in full on the
date (the "MATURITY DATE") that is the earlier to occur of: (i) three (3) years
after the date of the Note, (ii) the date on which the unpaid principal amount
and interest due under this Loan becomes due and payable in full under SECTION
4.1, (iii) ninety (90) days after notice of demand for payment by Lender; and
(iv) thirty (30) days after expiration of the lockup period following
consummation of an underwritten initial public offering of Lender's Common
Stock.
1.5 PREPAYMENT. Borrower may prepay the unpaid principal and
interest due under this Loan at any time, without penalty, in whole or in part
in amounts of at least Ten Thousand Dollars ($10,000). Each prepayment will be
applied as follows: (i) first to the payment of accrued interest, and (ii)
second, to the extent that the amount of such prepayment exceeds the amount of
all such accrued interest, to the payment of principal on this Loan. Borrower
also agrees that, until this Loan is paid in full, Borrower shall, within not
more than thirty (30) days after any sale of any Pledged Shares, apply: (i) if
no default event has occurred under the Loan Documents and is continuing, fifty
percent (50%) of the net before tax proceeds from any sale by Borrower of the
Pledged Shares, or (ii) if a default event has occurred and is continuing, one
hundred percent (100%) of the net before tax proceeds from any sale by Borrower
of the Pledged Shares, to pay down this Loan in accordance with this Agreement.
1.6 AT WILL EMPLOYMENT. Borrower is an "at will" employee of Lender,
and nothing in this Agreement or any exhibit shall be construed as a promise of
continued employment.
2. COVENANTS OF BORROWER.
2.1 USE OF LOAN PROCEEDS. Borrower shall apply substantially all of
the Loan proceeds to the purchase of the Property.
2.2 FURTHER ASSURANCES. In addition to the obligations and documents
that this Agreement expressly requires Borrower to execute, deliver and perform,
Borrower will execute, deliver and perform any and all further acts or documents
which Lender may reasonably require in order to carry out the purposes of this
Agreement or any of the other Loan Documents.
3. CONDITIONS PRECEDENT TO OBLIGATIONS OF LENDER. The obligation of
Lender to make this Loan is subject to the satisfaction (or written waiver by
Lender) of each and all of the following conditions precedent:
3.1 NOTE AND STOCK PLEDGE AGREEMENT. Lender will have received from
Borrower the Note and the Stock Pledge Agreement, each duly executed by
Borrower.
3.2 LOAN EFFECTIVE DATE. The Effective Date of this Loan must be
earlier than January 31, 1999.
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4. DEFAULT BY BORROWER.
4.1 ACCELERATION. The unpaid principal and interest due under this
Loan will become immediately due and payable, without the need for any further
action on the part of Lender or any other holder of the Note: (i) upon
Borrower's sale, gift, assignment or other transfer of the Property, except for
transfers which, by law, cannot be restricted by a due-on-sale clause, (ii)
ninety (90) days after termination of Borrower's employment with Lender for any
reason, or (iii) upon Borrower's failure to apply the appropriate proceeds of
any sale of Pledged Shares to pay down this Loan in accordance with SECTION 1.5.
4.2 DEFAULT. Borrower will be deemed to be in default of this Loan
if: (i) Borrower fails to pay Lender (or, in the event another party holds the
Note, such holder) the full amount of unpaid principal and interest due under
this Loan on or before the Maturity Date, and (ii) Borrower does not cure this
failure to pay within five (5) calendar days after Lender gives Borrower written
notice of such failure to pay.
4.3 REMEDIES UPON DEFAULT. Upon Borrower's default of this Loan,
Lender may pursue its rights under the Note, the Stock Pledge Agreement, and any
other security agreements that the parties may enter into after the Effective
Date, and will have full recourse against any real, personal, tangible, and
intangible assets of Borrower. The rights and remedies of Lender herein
provided will be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise.
5. MISCELLANEOUS.
5.1 SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise provided
in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal representatives.
Lender may assign any of its rights and obligations under this Agreement.
Borrower shall not assign, whether voluntarily or by operation of law, any of
its rights and obligations under this Agreement, except with the prior written
consent of Lender. An assignment by operation of law includes, without
limitation, (i) a merger, reorganization, consolidation or other transaction in
which the shareholders of such party before such merger, reorganization,
consolidation or other transaction own less than fifty percent (50%) of the
outstanding voting equity securities of the surviving corporation, (ii) a sale
or other transfer of all or substantially all of the assets of such party, or
(iii) a transfer of more than fifty percent (50%) of the outstanding voting
equity securities of such party in one transaction or a series of related
transactions.
5.2 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.
5.3 NOTICES. Any and all notices required or permitted to be given to
a party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to provide such party sufficient notice under this
Agreement on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) one (1) business day after deposit with
an express overnight courier for United States deliveries, or two (2) business
days after such deposit for deliveries outside of the United States, with proof
of delivery from the courier
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requested; or (iii) three (3) business days after deposit in the United
States mail by registered or certified mail (return receipt requested) for
United States deliveries. All notices for delivery outside the United States
will be sent by express courier. All notices not delivered personally will
be sent with postage and/or other charges prepaid and properly addressed to
the party to be notified at the address of Lender's principal executive
offices, or at such other address as such other party may designate by ten
(10) days advance written notice to the other parties hereto. Notices to
Lender will be marked "Attention: President."
5.4 FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
5.5 TITLES AND HEADINGS. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically
stated, all references herein to "sections" and "exhibits" will mean "sections"
and "exhibits" to this Agreement.
5.6 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein, and including, but not limited to, the Loan Documents constitute the
entire agreement and understanding of the parties with respect to the subject
matter of this Agreement, and supersede all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.
5.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.
5.8 SEVERABILITY. If any provision of this Agreement is determined
by any court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Agreement. Notwithstanding the
forgoing, if the value of this Agreement based upon the substantial benefit of
the bargain for any party is materially impaired, which determination as made by
the presiding court or arbitrator of competent jurisdiction shall be binding,
then this Agreement will not be enforceable against such affected party and both
parties agree to renegotiate such provision(s) in good faith.
5.9 FACSIMILE SIGNATURES. This Agreement may be executed and
delivered by facsimile and upon such delivery the facsimile signature will be
deemed to have the same effect as if the original signature had been delivered
to the other party.
5.10 AMENDMENT AND WAIVERS. This Agreement may be amended only by a
written agreement executed by each of the parties hereto. No amendment of or
waiver of, or modification of any obligation under this Agreement will be
enforceable unless set forth in a writing signed by the party against which
enforcement is sought. Any amendment effected in accordance with this section
will be binding upon all parties hereto and each of their respective successors
and assigns. No delay or failure to require performance of any provision of
this
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Agreement shall constitute a waiver of that provision as to that or any other
instance. No waiver granted under this Agreement as to any one provision
herein shall constitute a subsequent waiver of such provision or of any other
provision herein, nor shall it constitute the waiver of any performance other
than the actual performance specifically waived.
5.11 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended to confer upon any third party any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
5.12 JURISDICTION. The parties agree that any controversy or claim
arising out of or relating to this Agreement shall be tried and litigated
exclusively in a state or federal court with jurisdiction located in San Mateo
County in the State of California.
5.13 WAIVER OF JURY TRIAL. The parties waive any right they may have
to a trial by jury in respect of any litigation based on, or arising out of,
under or in connection with, this Agreement or any other Loan Document, or any
course of conduct, course of dealing, verbal or written statement or other
action of any loan party or any secured party.
5.14 ATTORNEYS' FEES. If either party hereto commences or maintains
any action at law or in equity (including counterclaims or cross-complaints)
against the other party hereto by reason of the breach or default or claimed
breach or default of any term or provision of this Agreement or any other Loan
Document, then the prevailing party in said action will be entitled to recover
its reasonable attorneys' fees and court costs incurred therein. This provision
does not limit Lender's ability to recover additional expenses under the Note.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Loan
and Security Agreement as of the Effective Date.
BORROWER: LENDER:
KEYNOTE SYSTEMS INCORPORATED
____________________________ _______________________________________
XXXXX XXXXXX XXXXX XXXXX
President and Chief Executive Officer
____________________________
XXXX XXXXXX
ATTACHMENTS:
Exhibit A - Secured Promissory Note
Exhibit B - Stock Pledge Agreement
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EXHIBIT A
SECURED FULL RECOURSE PROMISSORY NOTE
San Mateo, California
$150,000.00 January __, 1999
For value received, Xxxxx Xxxxxx, an individual, and Xxxx Xxxxxx, his
spouse (collectively referred to as the "BORROWER") hereby promise to pay to the
order of Keynote Systems Incorporated, a California corporation (the "COMPANY")
on or before January __, 2002, at the Company's principal place of business at
Xxx Xxxx Xxxxx Xxxxxx, Xxx Xxxxx, XX 00000, or at such other place as the
Company may direct, the principal sum of One Hundred Fifty Thousand Dollars
($150,000.00), together with interest at the rate of nine percent (9%) per
annum compounded annually, which rate is not less than the minimum rate
established pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as
amended, on the earliest date on which there was a binding contract in writing
for this Secured Full Recourse Promissory Note (as may be amended, restated,
supplemented or otherwise modified from time to time (the "NOTE"); PROVIDED,
HOWEVER, that the rate at which interest will accrue on unpaid principal under
this Note will not exceed the highest rate permitted by applicable law. All
payments of accrued interest will be payable on maturity of this Note. All
payments hereunder shall be made in lawful tender of the United States.
Interest will continue to accrue until the date on which all amounts owing on
this Note have been repaid in full.
This Note is issued pursuant to that certain Loan and Security Agreement
dated January __, 1999, between the Company and Borrower (the "LOAN AGREEMENT").
The following is a statement of the additional rights and obligations of the
holder of this Note and the terms and conditions to which this note is subject,
and to which the holder, by the acceptance of this Note, agrees:
1. SECURITY. Payment of this Note is secured by Borrower's pledge of
certain shares of Company equity securities (the "PLEDGED SHARES") in accordance
with the terms of a stock pledge agreement by and between the Company and
Borrower.
2. ACCELERATION. The unpaid principal and interest due under this Note
will become immediately due and payable, without the need for any further action
on the part of the Company or any other holder of this Note: (i) upon Borrower's
sale, gift, assignment or other transfer of the Property (as defined in the Loan
Agreement), except for transfers which, by law, cannot be restricted by a
due-on-sale clause, (ii) ninety (90) days after termination of Borrower's
employment with the Company for any reason, (iii) upon Borrower's failure to
apply the appropriate proceeds of any sale of Pledged Shares to pay down this
Note in accordance with SECTION 4, (iv) thirty (30) days after expiration of the
lockup period following consummation of an initial public offering of Company's
Common Stock, and (v) ninety (90) days after notice of demand for payment by
Company. Each of the events described in this SECTION 2 constitutes an
"ACCELERATION EVENT". In any case, this Note shall become due and payable in
full no later than three years after the date of this Note.
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3. DEFAULT. Borrower will be deemed to be in default under this Note if:
(a) Borrower fails to pay the holder of this Note the full amount of unpaid
principal and interest due under this Note on or before: (i) the date that is
three years after the date of this Note, or (ii) such earlier date as dictated
by the occurrence of an Acceleration Event; and (b) Borrower does not cure this
failure to pay within five (5) calendar days after the Company gives Borrower
written notice of such failure to pay. Upon any default under this Note,
Company will have full recourse against any real, personal, tangible, and
intangible assets of Borrower, and may pursue any and all contractual, legal,
and equitable remedies available to it.
4. PREPAYMENT. Borrower may prepay the unpaid principal and interest due
under this Note at any time, without penalty, in whole or in part, in amounts of
at least Ten Thousand Dollars ($10,000). Each prepayment will be applied as
follows: (a) first to the payment of accrued interest, and (b) second, to the
extent that the amount of such prepayment exceeds the amount of all such accrued
interest, to the payment of principal on this Note. Borrower also agrees that,
until this Note is paid in full, Borrower shall immediately apply: (a) if no
default event has occurred and is continuing, fifty percent (50%) of the net
before tax proceeds from any sale by Borrower of the Pledged Shares, or (b) if a
default event has occurred and is continuing, one hundred percent (100%) of the
net before tax proceeds from any sale by Borrower of the Pledged Shares, to pay
down this Note in accordance with this Note and the Loan Agreement.
5. ASSIGNMENT. This Note is freely transferable and assignable by the
Company and each subsequent holder. Any reference to the Company herein will be
deemed to refer to any subsequent transferee of this Note at such time as such
transferee holds this Note. Borrower may not assign or delegate this Note,
whether by voluntary assignment or transfer, operation of law or otherwise.
6. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise provided in
this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal representatives.
7. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.
8. NOTICES. Any and all notices required or permitted to be given to a
party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to provide such party sufficient notice under this
Agreement on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) one (1) business day after deposit with
an express overnight courier for United States deliveries, or two (2) business
days after such deposit for deliveries outside of the United States, with proof
of delivery from the courier requested; or (iii) three (3) business days after
deposit in the United States mail by registered or certified mail (return
receipt requested) for United States deliveries. All notices for delivery
outside the United States will be sent by express courier. All notices not
delivered personally will be sent with postage and/or other charges prepaid and
properly addressed to the party to be notified at the address of the Company's
principal executive office, or at such other address as such other party may
designate by ten (10) days advance written notice to the other parties hereto.
Notices to the Company will be marked "Attention: President."
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9. FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
10. TITLES AND HEADINGS. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically
stated, all references herein to "sections" and "exhibits" will mean "sections"
and "exhibits" to this Agreement.
11. ENTIRE AGREEMENT. This Agreement and the documents referred to
herein, including but not limited to the Loan and Security Agreement, constitute
the entire agreement and understanding of the parties with respect to the
subject matter of this Agreement, and supersede all prior understandings and
agreements, whether oral or written, between or among the parties hereto with
respect to the specific subject matter hereof.
12. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which when so executed and delivered will be deemed an original, and all of
which together shall constitute one and the same agreement.
13. SEVERABILITY. If any provision of this Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Agreement. Notwithstanding the
forgoing, if the value of this Agreement based upon the substantial benefit of
the bargain for any party is materially impaired, which determination as made by
the presiding court or arbitrator of competent jurisdiction shall be binding,
then this Agreement will not be enforceable against such affected party and both
parties agree to renegotiate such provision(s) in good faith.
14. AMENDMENT AND WAIVERS. This Agreement may be amended only by a
written agreement executed by Company and Borrower. No amendment of or waiver
of, or modification of any obligation under this Agreement will be enforceable
unless set forth in a writing signed by the party against which enforcement is
sought. Any amendment effected in accordance with this section will be binding
upon all parties hereto and each of their respective successors and assigns. No
delay or failure to require performance of any provision of this Agreement shall
constitute a waiver of that provision as to that or any other instance. No
waiver granted under this Agreement as to any one provision herein shall
constitute a subsequent waiver of such provision or of any other provision
herein, nor shall it constitute the waiver of any performance other than the
actual performance specifically waived.
Borrower hereby waives presentment, notice of non-payment, notice of
dishonor, protest, demand and diligence.
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IN WITNESS WHEREOF, Borrower has executed this Secured Full Recourse
Promissory Note as of the date and year first above written.
BORROWER:
________________________________
XXXXX XXXXXX
________________________________
XXXX XXXXXX
ACCEPTED AND ACKNOWLEDGED:
KEYNOTE SYSTEMS INCORPORATED
________________________________
XXXXX XXXXX, President and
Chief Executive Officer
SIGNATURE PAGE TO NOTE BY XXXXX XXXXXX AND XXXX XXXXXX TO
KEYNOTE SYSTEMS INCORPORATED DATED JANUARY __, 1999
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EXHIBIT B
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement is entered into effective January __, 1999 (as
from time to time amended, restated, supplemented, or otherwise modified, this
"AGREEMENT"), by Xxxxx Xxxxxx, an individual and Xxxx Xxxxxx, his spouse
(collectively referred to as (the "PLEDGOR") in favor of Keynote Systems
Incorporated, a California corporation (the "SECURED PARTY").
WHEREAS, Pledgor and Secured Party have entered into that certain Loan
and Security Agreement, dated January __, 1999 (as may be amended,
supplemented or otherwise modified from time to time, the "LOAN
AGREEMENT"). The term "LOAN DOCUMENTS" and all other capitalized terms
used in this Agreement that are not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in the Loan
Agreement; and
WHEREAS, all shares of Secured Party capital stock or other equity
securities that Borrower acquires pursuant to: (i) Borrower's
exercise of options to purchase Secured Party equity securities under
Secured Party's 1996 Stock Option Plan or any subsequent or similar
stock option plan of Secured Party, or (ii) any employee stock
purchase agreement or other similar plan of Secured Party, are to be
issued by Secured Party subject to the terms of this Agreement
immediately upon their issuance. All such Secured Party equity
securities shall be identified on SCHEDULE 1 or on an Addendum to
SCHEDULE 1 upon their issuance; and
WHEREAS, Pledgor is the legal and beneficial owner of the shares of
capital stock or other equity securities identified on such SCHEDULE 1
or addenda as being owned by Pledgor (collectively, the "PLEDGED
SHARES"); and
WHEREAS, it is a condition precedent under the Loan Agreement to
making the Loan that Pledgor shall agree to make the pledges
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the promises set forth in this
Agreement and to induce Secured Party to make the Loan, Pledgor hereby
agrees with Secured Party as follows:
1. STOCK PLEDGE PROVISIONS.
1.1 PLEDGE. Pledgor hereby pledges to Secured Party, and grants to
Secured Party a security interest in, all of Pledgor's, right, title, and
interest in and to the following (the "PLEDGED COLLATERAL"): (i) all of the
Pledged Shares; (ii) the certificates, if any, representing the Pledged Shares;
and (iii) all dividends, cash, instruments and other property or proceeds, from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares.
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1.2 SECURITY INTEREST. This Agreement secures, and the Pledged
Collateral is security for, the full and prompt payment by Pledgor when due
(whether at stated maturity, by acceleration or otherwise) of, and the
performance by Pledgor of, all of Pledgor's current and future obligations under
this Agreement and each of the Loan Documents to which Pledgor is a party,
including without limitation principal, interest, fees, and expenses (including
any interest, fees, or expenses that, but for the provisions of the Bankruptcy
Code, would have accrued). The security interest in the Pledged Collateral
created by this Agreement will continue, and the provisions of this Agreement
will remain in full force and effect, until the termination of this Agreement
pursuant to Section 1.7.
1.3 REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to the Secured Party that, as of the date each of the Pledged Shares is
issued: (i) Pledgor is the legal and beneficial owner of the Pledged Collateral
free and clear of any lien, and (ii) Pledgor has the right to pledge and grant
to the Secured Party a security interest in the Pledged Collateral.
1.4 TRANSFERS AND OTHER LIENS. Pledgor agrees that Pledgor will not:
(i) sell or otherwise dispose of, or grant any option or warrant with respect
to, any of the Pledged Collateral except as permitted by the Loan Agreement, or
(ii) create or permit to exist any lien upon or with respect to any of the
Pledged Collateral, except for the lien created pursuant to this Agreement.
1.5 FURTHER ASSURANCES. Pledgor agrees to promptly execute and
deliver all further instruments and documents, and take all further action that
may be necessary or desirable, or that Secured Party may reasonably request, in
order to perfect and protect the lien granted or purported to be granted hereby
or to enable Secured Party to exercise and enforce its rights and remedies with
respect to any Pledged Collateral. Pledgor agrees to defend the title to the
Pledged Collateral and Secured Party's lien on the Pledged Collateral against
the claim of any other third party and to maintain and preserve such lien until
indefeasible payment in full of all obligations.
1.6 SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
obligation contained in this Agreement, Secured Party may itself perform, or
cause performance of such obligation, and the expenses of Secured Party incurred
in connection therewith shall be payable by Pledgor under Section 3.1 and
constitute obligations secured by this Agreement.
1.7 TERMINATION OF SECURITY INTEREST. This Agreement, and the
security interests created or granted by this Agreement, shall automatically
terminate and be released on the date at which the Loan has been fully and
finally paid in cash. Upon any release of the security interest created by this
Agreement in any of the Pledged Collateral pursuant to this Section 1.7, Secured
Party shall promptly:
(a) return, transfer and deliver to Pledgor all certificates,
instruments and other property held by Secured Party pursuant to this Agreement
representing or evidencing such Pledged Collateral as shall not have been sold
or otherwise applied pursuant to the terms of this Agreement, all without
recourse upon, or representation or warranty whatsoever by, Secured Party,
except that the same shall be free and clear of any claims, liens or
encumbrances created by or in respect of Secured Party, and at the cost and
expense of Pledgor, and
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(b) execute and deliver to Pledgor such instruments as may be
reasonably requested by Pledgor acknowledging the release of such security
interest with respect to such Pledged Collateral.
2. DELIVERY AND POSSESSION OF PLEDGED COLLATERAL.
2.1 DELIVERY OF PLEDGED COLLATERAL. All certificates or instruments,
if any, representing or evidencing the Pledged Collateral shall be issued to and
held by or on behalf of Secured Party pursuant to this Agreement and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party.
2.2 RIGHTS TO VOTE AND RECEIVE DIVIDENDS. As long as no event of
default shall have occurred under the Loan Agreement and be continuing:
(a) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or any other
Loan Documents;
(b) Pledgor shall be entitled to receive and retain (subject to
any lien thereon in favor of Secured Party) any and all dividends or
distributions paid in respect of the Pledged Collateral, other than any and all:
(i) dividends paid or payable other than in cash in
respect of, and instruments and other property received receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral;
(ii) dividends and other distributions paid or payable in
cash in respect of any Pledged Shares in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus; and
(iii) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, all of which shall be
forthwith delivered to Secured Party; and
(c) Secured Party shall execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of enabling Pledgor to exercise
the voting and other rights which it is entitled to exercise pursuant to Section
2.2(a) and to receive the dividends or distributions which it is authorized to
receive and retain pursuant to Section 2.2(b).
2.3 ADJUSTMENTS. Secured Party shall have the right at any time to
exchange certificates representing or evidencing any of the Pledged Collateral
for certificates of smaller or larger denominations.
2.4 REASONABLE CARE. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which Secured Party accords its own property, it being understood that
Secured Party shall not have any responsibility for: (i)
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ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral,
whether or not Secured Party has or is deemed to have knowledge of any such
matter, or (ii) taking any necessary steps to preserve rights against any
person with respect to any Pledged Collateral.
3. ADDITIONAL PROVISIONS UPON DEFAULT.
3.1 REMEDIES UPON DEFAULT. The rights and remedies granted to
Secured Party by this Section 3 will be in addition to all the rights, powers
and remedies of Secured Party under the Loan Documents. All such rights and
remedies will be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise. If any event of default under the Loan Agreement
shall have occurred and be continuing:
(a) Secured Party may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for in this
Agreement or otherwise available to it, all the rights and remedies of a secured
party after default under the California Commercial Code or any other applicable
law in effect in the State of California at that time, and Secured Party may
also, without notice except as specified below, sell the Pledged Collateral or
any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any office of Secured Party or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Secured
Party may deem commercially reasonable. Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to
Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not officer such Pledged Collateral to more
than one (1) offeree. With respect to Pledged Collateral consisting of
securities registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), Secured Party will comply with applicable securities laws in
connection with any foreclosure sale.
(b) Pledgor recognizes that by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral, to limit purchasers to those which will agree, among other
things, to acquire such securities for their own account, for investment, and
not with a view to the distribution or resale. Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale without such restrictions and,
notwithstanding such circumstances, agrees that any such sale shall be deemed to
have been made in a commercially reasonable manner. Secured Party shall be
under no obligation to delay the sale of any of the Pledged Collateral for the
period of time necessary to permit Pledgor to register such securities for
public sale under the Securities Act, or under applicable state securities laws,
even if Pledgor would agree to do so.
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(c) In the event of a sale of Pledged Collateral in accordance
with the provisions of this Section 3.1, notwithstanding anything to the
contrary contained elsewhere in this Agreement, all of the net before tax
proceeds from any such sale shall be applied by Secured Party, or paid directly
to Secured Party, to pay down the Loan in accordance with the Loan Agreement.
3.2 RIGHTS IN PLEDGED COLLATERAL UPON DEFAULT. Upon the occurrence
and during the continuance of an event of default under the Loan Agreement:
(a) upon notice by Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 2.2(a) shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights;
(b) all rights of Pledgor to receive the dividends or
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 2.2(b) shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole right to
receive and hold as Pledged Collateral such dividends or distributions;
(c) All dividends or distributions which are received by Pledgor
contrary to the provisions of Section 3.2(b) shall be received in trust for the
benefit of Secured Party, shall be segregated from other property or funds of
Pledgor and shall be forthwith delivered to Secured Party;
(d) Pledgor shall, if necessary to permit Secured Party to
exercise the voting and other rights which it may be entitled to exercise
pursuant to Section 2.2(a) and to receive all dividends and distributions which
it may be entitled to receive under Section 2.2(b), execute and deliver to
Secured Party, from time to time and upon written notice of Secured Party,
appropriate proxies and other instruments as Secured Party may reasonably
request; and
(e) Secured Party shall have the right, to the extent permitted
under any applicable law, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in its name or in the name of any of its
nominees any or all of the Pledged Collateral.
The foregoing shall not in any way limit Secured Party's power
and authority granted pursuant to Section 3.3.
3.3 SECURED PARTY APPOINTED ATTORNEY-IN-FACT AND PROXY. Subject to
Section 3.1, Pledgor hereby irrevocably constitutes and appoints Secured Party
and any officer or agent of Secured Party, effective upon the occurrence and
during the continuance of an event of default under the Loan Agreement, with
full power of substitution, as its true and lawful attorney-in-fact and proxy
with full irrevocable power and authority in the place and stead of Pledgor and
in the name of Pledgor or in its own name, from time to time in Secured Party's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute and deliver any and all documents
and instruments which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement. Without limiting the generality of
the foregoing, Pledgor hereby gives Secured Party the power and right, on behalf
of Pledgor, upon the occurrence and during the continuance of an event of
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default under the Loan Agreement, to receive, endorse and collect all
instruments made payable to Pledgor representing any dividend or distribution in
respect of the Pledged Collateral or any part thereof, to give full discharge
for the same, and to vote or grant any consent in respect of the Pledged Shares
authorized by Section 3.1. Pledgor hereby ratifies, to the extent permitted by
law, all that any said attorney shall lawfully do or cause to be done by virtue
hereof. This power, being coupled with an interest, is irrevocable until, and
shall automatically terminate upon, the termination of this Agreement pursuant
to Section 1.7.
4. GENERAL PROVISIONS.
4.1 SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise provided
in this Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal representatives.
The Secured Party may assign any of its rights and obligations under this
Agreement. The Pledgor may not assign, whether voluntarily or by operation of
law, any of its rights and obligations under this Agreement, except with the
prior written consent of the Secured Party. An assignment by operation of law
includes, without limitation, (i) a merger, reorganization, consolidation or
other transaction in which the shareholders of such party before such merger,
reorganization, consolidation or other transaction own less than fifty percent
(50%) of the outstanding voting equity securities of the surviving corporation,
(ii) a sale or other transfer of all or substantially all of the assets of such
party, or (iii) a transfer of more than fifty percent (50%) of the outstanding
voting equity securities of such party in one transaction or a series of related
transactions.
4.2 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.
4.3 NOTICES. Any and all notices required or permitted to be given
to a party pursuant to the provisions of this Agreement will be in writing and
will be effective and deemed to provide such party sufficient notice under this
Agreement on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) one (1) business day after deposit with
an express overnight courier for United States deliveries, or two (2) business
days after such deposit for deliveries outside of the United States, with proof
of delivery from the courier requested; or (iii) three (3) business days after
deposit in the United States mail by registered or certified mail (return
receipt requested) for United States deliveries.
All notices for delivery outside the United States will be sent
by express courier. All notices not delivered personally will be sent with
postage and/or other charges prepaid and properly addressed to the party to be
notified at the principal executive offices of Secured Party, or at such other
address as such other party may designate by ten (10) days advance written
notice to the other parties hereto. Notices to the Secured Party will be marked
"Attention: President."
4.4 FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
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4.5 TITLES AND HEADINGS. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically
stated, all references herein to "sections" and "exhibits" will mean "sections"
and "exhibits" to this Agreement.
4.6 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein, including but not limited to, the Loan Documents, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Agreement, and supersede all prior understandings and agreements, whether
oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.
4.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.
4.8 SEVERABILITY. If any provision of this Agreement is determined
by any court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or unenforceable clause or provision had (to the extent not
enforceable) never been contained in this Agreement. Notwithstanding the
forgoing, if the value of this Agreement based upon the substantial benefit of
the bargain for any party is materially impaired, which determination as made by
the presiding court or arbitrator of competent jurisdiction shall be binding,
then this Agreement will not be enforceable against such affected party and both
parties agree to renegotiate such provision(s) in good faith.
4.9 FACSIMILE SIGNATURES. This Agreement may be executed and
delivered by facsimile and upon such delivery the facsimile signature will be
deemed to have the same effect as if the original signature had been delivered
to the other party.
4.10 AMENDMENT AND WAIVERS. This Agreement may be amended only by a
written agreement executed by each of the parties hereto. No amendment of or
waiver of, or modification of any obligation under this Agreement will be
enforceable unless set forth in a writing signed by the party against which
enforcement is sought. Any amendment effected in accordance with this section
will be binding upon all parties hereto and each of their respective successors
and assigns. No delay or failure to require performance of any provision of
this Agreement shall constitute a waiver of that provision as to that or any
other instance. No waiver granted under this Agreement as to any one provision
herein shall constitute a subsequent waiver of such provision or of any other
provision herein, nor shall it constitute the waiver of any performance other
than the actual performance specifically waived.
4.11 WAIVER OF JURY TRIAL. Pledgor and Secured Party waive any right
they may have to a trial by jury in respect of any litigation based on, or
arising out of, under or in connection with, this Agreement or any other Loan
Document, or any course of conduct, course of dealing, verbal or written
statement or other action of any loan party or any secured party.
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IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed
and delivered by its duly authorized officer on the date first above written.
PLEDGOR:
_____________________________________
XXXXX XXXXXX
_____________________________________
XXXX XXXXXX
ACCEPTED AND ACKNOWLEDGED:
SECURED PARTY
KEYNOTE SYSTEM INCORPORATED
_____________________________________
XXXXX XXXXX, President and
Chief Executive Officer
SIGNATURE PAGE TO STOCK PLEDGE AGREEMENT
BY XXXXX XXXXXX AND XXXX XXXXXX DATED JANUARY __, 1999
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