Exhibit 10.3A
INTELLIGENT CONTROLS, INC.
EMPLOYEE RESTRICTED STOCK PURCHASE AGREEMENT
This Agreement is made as of the 1st day of May, 1998, by and between
Intelligent Controls, Inc., a Maine corporation (the "Company"), and Roger
E. Brooks ("Purchaser").
In consideration of the mutual covenants and representations herein
set forth, the Company and Purchaser agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
of this Agreement, the Company hereby agrees to sell to Purchaser and
Purchaser agrees to purchase from the Company on the Closing Date (as herein
defined), 486,923 shares (the "Shares") of the Company's common stock, no
par value (the "Common Stock"), at a price of $3.25 per share (the "Issue
Price"). The purchase price for the Shares shall be paid by Purchaser as
follows:
(i) $250,000 in cash; and
(ii) $1,332,500 by promissory note in the form attached hereto
as Exhibit A (the "Note"). As security for the payment of the Note
and any renewal or modification thereof, Purchaser hereby grants to
the Company a security interest in, and pledges and delivers to the
Company, the Shares, to be held in escrow pursuant to Section 7
hereof.
2. CLOSING. The purchase and sale of the Shares shall occur at a
closing (the "Closing") to be held at such time and place as designated by
the Company by written notice to Purchaser. The Closing shall take place at
the principal office of the Company or at such other place as shall be
designated by the Company. At the Closing, the Company will issue a
certificate representing the Shares registered in the name of Purchaser
against receipt of the Note and a certified check in the amount of $250,000.
3. (a) REPURCHASE OPTION. In the event Purchaser's employment with
the Company is terminated as provided in Section 4 of that certain
Employment Agreement between the Company and Purchaser dated as of May 1,
1998 (the "Employment Agreement"), the Company shall have the option to
repurchase up to all of the Unvested Shares (as defined below) at the Issue
Price. In the event the Company exercises its repurchase option as set
forth in this Section 3(a), the Company shall, within thirty (30) days after
Purchaser's termination of employment, give to Purchaser a written notice
specifying the number of Unvested Shares it is electing to repurchase and
the time for closing, which closing shall be held at the Company's principal
office and shall occur no earlier than 10 days and no later than 20 days
after the date such notice is given. Upon the date of any such notice from
the Company, the interest of Purchaser in the Unvested Shares specified in
such notice shall automatically terminate, except for Purchaser's right to
receive payment from the Company for such Unvested Shares. Payment for such
Unvested Shares may, at the option of the Company, be made by cancellation
of the corresponding amount due under the Note.
(b) VESTING. The repurchase option set forth in Section 3(a) with
respect to the Shares shall lapse and such Shares shall automatically become
vested (all Shares as to which such repurchase option shall have not lapsed
being referred to as "Unvested Shares"):
(i) with respect to 76,923 Shares at the time of the Closing;
(ii) with respect to 25,625 of the remaining number of Shares
upon the passage of every three months;
(iii) with respect to all of the remaining Shares upon the sale
of all or substantially all of the Company's assets or stock, or a
upon a "change of control" of the Company. A "change of control"
means:
(A) any person or entity, other than an existing Company
shareholder, becomes the beneficial owner of 50% or more of the
voting power of the Company;
(B) a change in the majority of the Company's directors,
other than a change approved by the Company's current
shareholders; or
(C) a sale of substantially all of the Company by sale of
assets, stock, merger, consolidation or other reorganization;
provided, however, that a reorganization or recapitalization of
the Company not constituting a sale to a purchaser for value
will not constitute a sale resulting in a lapse of such
repurchase option; and
(iv) with respect to 102,500 of the remaining number of Shares
in the event of termination of Purchaser's employment with the Company
pursuant to Sections 4(b) or 4(c) of the Employment Agreement (or upon
an event treated as a termination without "cause" pursuant to Section
5(e) or 5(f) of the Employment Agreement), in addition to any Shares
which have previously vested.
4. STOCK SPLITS, ETC. If from time to time during the term of this
Agreement:
(a) there is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or
amount of any of the outstanding securities of the Company; or
(b) there is any consolidation, merger or sale of all or
substantially all of the assets 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 the Shares shall be immediately subject to this Agreement and be included
in the word "Shares" for all purposes with the same force and effect as the
Shares presently subject to the terms of this Agreement. While the
aggregate purchase price shall remain the same after each such event, the
number of shares vesting thereafter under Section 3(b) of this Agreement and
the purchase price per share upon exercise of the repurchase option
described in Section 3 shall be appropriately adjusted.
5. LEGENDS. All certificates representing any of the Shares subject
to the provisions of this Agreement shall have endorsed thereon the
following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
REPURCHASE OPTION IN FAVOR OF THE COMPANY AS SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
6. PURCHASER'S REPRESENTATIONS. In connection with his purchase of
the Shares, Purchaser hereby represents and warrants to the Company as
follows:
(a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Purchaser is
purchasing the Shares solely for his own account for investment and not with
a view to or for sale in connection with any distribution of the Shares or
any portion thereof and not with any present intention of selling, offering
to sell or otherwise disposing of or distributing the Shares or any portion
thereof in any transaction other than a transaction exempt from registration
under the Act. Purchaser also represents that the entire legal and
beneficial interest of the Shares is being purchased, and will be held, for
Purchaser's account only, and neither in whole or in part for any other
person. Purchaser either has a pre-existing business or personal
relationship with the Company or its officers, directors or controlling
persons or by reason of Purchaser's business or financial experience or the
business or financial experience of Purchaser's professional advisors who
are unaffiliated with and who are not compensated by the Company or any
affiliate or selling agent of the Company, directly or indirectly, could be
reasonably assumed to have the capacity to evaluate the merits and risks of
an investment in the Company and to protect Purchaser's own interests in
connection with this transaction.
(b) INFORMATION CONCERNING COMPANY. Purchaser has heretofore
discussed the Company and its plans, operations and financial condition with
the Company's officers and has heretofore received all such information as
Purchaser has deemed necessary and appropriate to enable Purchaser to
evaluate the financial risk inherent in making an investment in the Shares,
and Purchaser has received satisfactory and complete information concerning
the business and financial condition of the Company in response to all
inquiries in respect thereof.
(c) ECONOMIC RISK. Purchaser realizes that the purchase of the
Shares will be a highly speculative investment and involves a high degree of
risk, and Purchaser is able to hold the Shares for an indefinite period of
time and suffer a complete loss on his investment.
(d) RESTRICTED SECURITIES. Purchaser understands and acknowledges
that:
(i) the sale of the Shares has not been registered under the
Act, and the Shares must be held indefinitely unless subsequently
registered under the Act or an exemption from such registration is
available and the Company is under no obligation to register the
Shares;
(ii) the share certificate(s) representing the Shares will be
stamped with the legends specified in Section 7 hereof; and
(iii) the Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.
(e) DISPOSITION UNDER RULE 144. Purchaser understands that the
Shares are restricted securities within the meaning of Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"); that the exemption
from registration under Rule 144 will not be available in any event for at
least one year from the date of purchase and payment for the Shares, and
even then will not be available unless (i) a public trading market then
exists for the Common Stock, (ii) adequate information concerning the
Company is then available to the public, and (iii) other terms and
conditions of Rule 144 are complied with; and that any sale of the Shares
may be made only in limited amounts in accordance with such terms and
conditions.
(f) FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
his representations set forth above, Purchaser further agrees that he shall
in no event make any disposition of all or any portion of the Shares unless
and until:
(i) there is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or
(ii)(A) Purchaser shall have notified the Company of the
proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed
disposition, (B) Purchaser shall have furnished the Company with an
opinion of Purchaser's counsel to the effect that such disposition
will not require registration of such Shares under the Act, and (C)
such opinion of Purchaser's counsel shall have been concurred in by
counsel for the Company and the Company shall have advised Purchaser
of such concurrence.
7. ESCROW. As security for the faithful performance of the terms of
this Agreement and the Note and to ensure the availability for delivery of
the Shares upon exercise of the repurchase option of the Company herein
provided, Purchaser agrees to deliver to and deposit with the Secretary of
the Company, to be held in escrow by the Company as pledgee, two stock
assignments duly endorsed (with date and number of shares blank) with the
certificate or certificates evidencing the Shares. Such documents are to be
held by the Company pursuant to the terms of that certain Pledge Agreement
between the Company and Purchaser of even date herewith. After the Note has
been fully repaid, the Company shall deliver to Purchaser all vested Shares.
8. TRANSFERS NOT RECOGNIZED. The Company shall not be required (i)
to transfer on its books any of the Shares which shall have been transferred
in violation of any of the provisions of 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. RIGHTS AS STOCKHOLDER. Subject to the provisions of Section 3 and
Section 7, Purchaser shall, during the term of this Agreement, exercise all
rights and privileges of a stockholder of the Company with respect to the
Shares, including without limitation the right to vote and the right to
receive any dividends payable with respect thereto.
10. TAXES. Purchaser acknowledges that an amount equal to the fair
market value of the Shares, to the extent in excess of the Issue Price,
shall constitute income received by Purchaser for income tax purposes, and
that provision must be made for income taxes to be withheld by the Company
with respect to the Shares, whenever and to the extent that the Shares vest
pursuant to Section 3(b) of this Agreement, or upon the execution of this
Agreement if Purchaser makes an election pursuant to Section 83(b) of the
Internal Revenue Code. Purchaser agrees that Purchaser will make
appropriate provisions for the collection and payment of such withholding
taxes, in whatever manner is reasonably determined by the Company, including
without limitation payment by Purchaser to the Company of cash in the amount
of required withholding taxes or withholding from other compensation due
Purchaser. The parties believe that the fair market value of the Shares at
the Closing Date equals the Issue Price.
11. MISCELLANEOUS. (a) Any notice hereunder shall be in writing
personally delivered by courier or mailed by registered or certified mail,
postage prepaid, and addressed to Purchaser at the address appearing in the
records of the Company or to the Company at its principal executive offices,
or at such other address as may be specified by Purchaser or the Company to
the other party by notice given in the manner herein provided. A notice
shall be deemed to have been given and received upon the earlier of (i)
three business days after the date on which it is deposited in the U.S.
mails or (ii) receipt by the party to whom such notice is directed.
(b) No waiver by a party hereto of a breach of any provision of this
Agreement shall be deemed to be a waiver of any preceding or subsequent
breach of the same or any other provision thereof.
(c) Purchaser acknowledges that the remedy at law for any breach of
this Agreement will be inadequate, and agrees that the Company shall, in
addition to whatever other remedies it may have, be entitled to injunctive
relief.
(d) This Agreement shall be governed by the laws of the State of
Maine. This Agreement sets forth the entire agreement between the parties
concerning the subject matter hereof and supersedes any prior agreements and
understandings relating to the subject matter hereof. No amendment or
modification hereof will be effective unless it is in writing and signed by
the parties.
(e) The Company may assign its rights and delegate its duties under
this Agreement, including its rights under Section 3 hereof. If any such
assignment or delegation requires consent of any state securities
authorities, the parties agree to cooperate in requesting such consent.
This Agreement shall inure to the benefit of the successors and assigns of
the Company and, subject to the restrictions on transfer herein set forth,
be binding upon Purchaser, his heirs, executors, administrators, successors
and assigns.
(f) Nothing in this Agreement shall affect in any manner whatsoever
the right or power of the Company, or a parent or subsidiary of the Company,
to terminate Purchaser's employment, for any reason, with or without cause.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
INTELLIGENT CONTROLS, INC.
By: /s/ Alan Lukas
Title: President
PURCHASER:
/s/ Roger E. Brooks
PROMISSORY NOTE
$1,332,500.00 Saco, Maine
May 6, 1998
FOR VALUE RECEIVED, the undersigned, Roger E. Brooks, hereby promises
to pay to the order of Intelligent Controls, Inc. (the "Payee"), as
hereinafter provided, the principal sum of ONE MILLION THREE HUNDRED THIRTY
TWO THOUSAND FIVE HUNDRED DOLLARS, with interest on all unpaid principal,
from and including the date hereof, at the rate of 5.69% per annum,
compounded annually [the applicable federal rate as of the date hereof].
Interest shall be computed on the basis of a year of 360 days and actual
number of days elapsed.
Said principal sum and interest thereon shall be due and payable on
demand on or after May 6, 2003.
The undersigned shall have the right at any time or times, without
penalty, to prepay, up to the entire unpaid principal balance hereof,
provided that there is paid with each such payment all interest accrued and
unpaid on the amount thereof to the date of payment.
The amount of all principal and (to the extent permitted by then
applicable law) all interest which is not paid when due (whether on demand
or by acceleration) shall bear interest, until payment of such overdue
amount in full, at the rate of twelve percent (12%) per annum, or the
maximum rate of interest, if lower, permitted by applicable law.
All payments of interest and principal shall be made at the principal
office of the Payee, at 74 Industrial Park Road, Saco, Maine 04072, or at
such other place as the holder hereof may from time to time designate. All
payments hereunder shall first be applied to unpaid accrued interest and the
balance, if any, to principal. If, however, the holder has incurred costs
and expenses of collection in enforcing this note, as described below, such
payments shall first be applied thereto.
The occurrence of any of the following events shall constitute a
default under this note:
A. default in the payment of any principal or interest hereunder
when due;
B. assignment for the benefit of creditors by the undersigned;
C. commencement of any proceeding under any law of any
jurisdiction, now or hereafter in force, relating to bankruptcy,
insolvency or otherwise to the protection or relief of debtors
or the readjustment of indebtedness, by or against the
undersigned; or
D. termination of the undersigned's employment by the Payee for any
reason.
Upon any default described in paragraphs B and C above, this note
shall automatically become immediately due and payable. Upon any default
described in paragraph A above, this note, at the option of the holder,
shall become immediately due and payable. Upon any default described in
paragraph D above, this note, at the option of the holder, shall become due
and payable on or after the 90th day following the date the undersigned's
employment by the Payee is terminated, provided that if such termination of
employment is due to the undersigned's death or disability in accordance
with Section 4(c) of the Employment Agreement dated May 1, 1998 between the
undersigned and the Payee (the "Employment Agreement") or effected by the
Payee without "cause" in accordance with Section 4(b) of the Employment
Agreement [or upon an event treated as a termination without "cause"
pursuant to Section 5(e) or 5(f) thereof], then this note, at the option of
the holder, shall only become due and payable on or after the first
anniversary of the date the undersigned's employment by the Payee is so
terminated.
The undersigned hereby, to the fullest extent permitted by applicable
law, (a) waives presentment, demand, notice, protest and all other demands
and notices, in connection with delivery, acceptance, performance, default,
acceleration or enforcement of or under this note; and (b) agrees to pay to
the holder, on demand, all costs and expenses of collection, including,
without limitation, reasonable attorneys' fees and legal expenses, incurred
by the holder in enforcing this note, whether or not litigation is
commenced.
No failure by the holder to exercise, or delay by the holder in
exercising, any right or remedy hereunder shall operate as a waiver thereof
or of any other right or remedy and no single or partial exercise of any
right or remedy shall preclude any other or further exercise thereof or of
any other right or remedy. Acceptance by the holder of any payment after
the maturity of this note has been accelerated shall not constitute a waiver
of such acceleration.
This note shall be full recourse only with respect to $200,000 of the
principal amount hereof and the interest on such portion of the principal
amount (such principal and interest being herein referred to as the
"Recourse Amount"). All payments of principal and interest hereunder shall
be deemed to have been applied first to principal and interest due hereunder
which is not included in the Recourse Amount.
This note is secured by and entitled to the benefits of a Pledge
Agreement of even date between the Payee and the undersigned.
This note shall be assignable by the Payee. The word "holder", as
used herein, shall mean the Payee or any endorsee of this note who is in
possession of it, or the bearer if this note is at the time payable to
bearer.
A record of all payments of interest and principal shall be kept on
separate records of the holder and no such record need be made or kept on
this note.
This note shall take effect as an instrument under seal and shall be
governed by and construed in accordance with the law of the State of Maine.
Witness:
/s/ Sharon Binette /s/ Roger E. Brooks
Roger E. Brooks
Address: 16 Deerfield Road
Sherborn, MA 01770
PLEDGE AGREEMENT
The undersigned, Roger E. Brooks, an individual residing at 16
Deerfield Road, Sherborn, MA 01770 (the "Pledgor"), hereby agrees with
Intelligent Controls, Inc., a Maine corporation having its principal place
of business at 74 Industrial Park Road, Saco, Maine 04072 (the "Pledgee"),
as follows:
1. PLEDGE. For valuable consideration, the receipt whereof is hereby
acknowledged by the Pledgor, the Pledgor hereby pledges, assigns and
transfers to the Pledgee, and grants to the Pledgee a continuing security
interest in, the shares of stock listed on Schedule A hereto (the "Original
Stock") and all other Collateral (as hereinafter defined), to secure the due
and punctual payment and performance of all of the liabilities and
obligations of the Pledgor under that certain promissory note (the "Note")
of even date herewith made by the Pledgor and payable to the order of the
Pledgee in the original principal amount of $1,332,500, including principal,
interest and costs and expenses of collection, and all liabilities and
obligations of the Pledgor under this Agreement (collectively, the
"Obligations"). The Original Stock and all proceeds thereof, including,
without limitation, all stock dividends and "stock splits", if any, to which
the Pledgor may be entitled (collectively, with the Original Stock, the
"Stock"), all payments in lieu of fractional shares of Stock, all dividends,
distributions and other payments made on or in respect of any Stock and all
other property which the Pledgor may become entitled to receive on account
thereof, are sometimes referred to herein collectively as the "Collateral".
2. PAYMENT AND PERFORMANCE OF OBLIGATIONS. The Pledgor shall pay,
perform and observe each of the Obligations when due or required.
3. VOTING POWER. Prior to an event of default (as defined in the
Note), the Pledgor shall be entitled to exercise all voting powers
pertaining to the Stock for all purposes not inconsistent with the
provisions of this Agreement. The Pledgee shall have the right, in its
discretion, to cause the transfer to itself or its nominee of any or all
Collateral, at any time or times, upon and after the occurrence of any such
event of default and to exercise all voting powers pertaining to the Stock
for all purposes. Such transfer shall not constitute a sale or other
disposition of Collateral.
4. DISPOSITION OF COLLATERAL.
(a) Upon and after any event of default which is then continuing, the
Pledgee shall have, in addition to rights and remedies otherwise available
to it, all of the rights and remedies of a secured party on default under
the Uniform Commercial Code (the "Code") then in effect in the State of
Maine.
(b) If any notice to the Pledgor of the sale or other disposition of
Collateral is required by then applicable law, seven (7) days' prior notice
(or, if longer, the shortest period of time permitted by then applicable
law) to the Pledgor of the time and place of any public sale of Collateral
or of the time after which any private sale or any other intended
disposition is to be made shall constitute reasonable notification.
(c) The Pledgee is authorized, at any such date, if the Pledgee deems
it advisable to do so, in order to comply with any applicable securities
laws, to restrict (i) the prospective bidders or purchasers to persons who
will represent and agree, among other things, that they are purchasing the
Stock for their own account for investment, and not with a view to the
distribution or resale thereof, or (ii) the manner of such sale or other
disposition. Sales made subject to such restrictions shall be deemed to
have been made in a commercially reasonable manner.
(d) If all or any part of the Collateral is sold on credit or for
future delivery, the Collateral so sold may be retained by the Pledgee until
the purchase price is paid in full. The Pledgee shall incur no liability in
case of the failure of the purchaser to pay for the Collateral as so sold,
or of the failure of the Pledgee to make any sale of Collateral after giving
notice thereof, and in case of any such failure, such Collateral may again
be sold upon the same notice as in the case of an original sale.
(e) All moneys received by the Pledgee from any collection or any
sale or other enforcement or disposition of Collateral shall be applied to
Obligations as provided in paragraph 5 hereof.
(f) Upon payment in full of all Obligations, the Pledgor shall be
entitled to the return of all Collateral, including cash, which has not been
used or applied toward the payment of Obligations (unless another person is
legally entitled thereto). If there is a deficiency, the Pledgor shall be
responsible for the same, together with interest thereon at the rate of
twelve percent (12%) per annum, except as otherwise specifically provided in
the Note. Any return of Collateral by the Pledgee to the Pledgor shall be
without representation or warranty of any nature whatsoever and wholly
without recourse.
5. APPLICATION OF PROCEEDS. The Pledgee shall apply all moneys
received by it from any collection or any sale or other enforcement or
disposition of Collateral to Obligations in the following order: first, to
the payment of any costs and expenses of collection of the Note and any
costs and expenses incurred in enforcing its rights hereunder, including,
without limitation, reasonable attorneys' fees and legal expenses, next to
interest on the Note, and the balance, if any, to principal of the Note.
6. DUTY OF PLEDGEE. The Pledgee shall have no duty as to the
collection or protection of any Collateral (beyond reasonable care in the
custody and preservation of Collateral while actually in its possession) or
to preserve any rights with respect to any Collateral, including, without
limitation, rights against prior parties; and the sole duty of the Pledgee
shall be to receive payments and any Stock issued to the Pledgor, as and
when received by the Pledgee, and to apply any such payments against
Obligations as provided in paragraph 5.
7. RIGHTS OF PLEDGEE. The Pledgee, in its discretion, may apply any
and all proceeds of disposition of Collateral and other amounts collected or
received, pursuant to this Agreement or in the exercise of its rights,
remedies and powers hereunder, against Obligations, and may exercise said
rights, remedies and powers without regard to the existence of any other
security or sources of payment for any of the Obligations.
8. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and
warrants to the Pledgee as follows:
(a) The Pledgor is the sole owner, and (as to Collateral to be
acquired after the date hereof) shall be the sole owner, of the Collateral,
and has and shall have the right to transfer all Collateral and to grant a
security interest therein to the Pledgee as provided in this Agreement.
(b) All of the Collateral is and shall be genuine, free and clear of
any restriction on transfer (except under any applicable securities laws),
lien, security interest, option or other charge or encumbrance, except in
favor of the Pledgee.
(c) No other pledge or assignment of any Collateral has or shall have
been made.
9. DUTIES OF PLEDGOR. Until all of the Obligations have been paid
and performed in full, the Pledgor
(a) Shall furnish to the Pledgee such stock powers and other
instruments of transfer as may be required by the Pledgee to assure the
transferability of Collateral.
(b) Shall pay or cause to be paid, on or before the date when due,
all taxes and assessments heretofore or hereafter levied or assessed against
the Collateral, or any part thereof, or on this Agreement or on any of the
Obligations.
(c) Shall furnish to the Pledgee, promptly upon receipt thereof,
copies of all material notices, requests and other writings received by the
Pledgor relating to Collateral, and shall give prompt written notice to the
Pledgee of any claim which may be made attacking or questioning the validity
of this Agreement or of the security interest granted hereby, and of any
legal proceeding which may be instituted against the Pledgor with respect
thereto; and, at the cost and expense of the Pledgor, shall diligently
endeavor to cure any alleged defect and shall take all necessary action for
the defense of such legal proceeding; and the Pledgee (whether or not named
as a party to any such legal proceeding) is hereby authorized and empowered
to take such additional action, as, in its judgment, may be necessary for
the defense of any such legal proceeding or the perfection, preservation or
protection of this Agreement and of the security interest granted hereby.
(d) Shall promptly execute and deliver all notices and other writings
and take all such other action reasonably requested, at any time or times,
by the Pledgee to perfect, preserve and protect and continue perfected the
security interest granted hereby or to enable the Pledgee to exercise and
enforce its rights, remedies and powers hereunder with respect to
Collateral.
(e) Shall deliver, if received by the Pledgor, all Collateral,
immediately upon receipt thereof by the Pledgor (duly endorsed or assigned
to the Pledgee as appropriate), in the identical form received by the
Pledgor.
(f) Shall not sell, assign, transfer, encumber or otherwise dispose
of all or any part of the Collateral, or permit the Collateral to be sold,
assigned, transferred or otherwise disposed of or encumbered, except in
favor of the Pledgee, without the prior written consent of the Pledgee.
10. POWER OF ATTORNEY. The Pledgor hereby irrevocably constitutes
and appoints the Pledgee the true and lawful attorney of the Pledgor, with
full power of substitution, in the place and stead of the Pledgor and in the
name of the Pledgee or the Pledgor or otherwise, at any time or times, in
the discretion of the Pledgee, to take any action and to execute any
instrument or document which the Pledgee may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation,
(a) To receive, endorse and collect all checks and other orders or
instruments for the payment of money made payable to the Pledgor
representing any dividend payment or other distribution in respect of any or
all other Collateral and to give full discharge for the same.
(b) To execute endorsements, assignments or other instruments of
conveyance or transfer with respect to any or all Collateral.
(c) To demand, sue for, collect, receive and give acquittance for any
monies due and to become due under or in respect of any or all Collateral.
(d) To file any claims or take any action or institute any
proceedings which the Pledgee may deem necessary or advisable for the
collection of any or all Collateral or otherwise to enforce the rights of
the Pledgee with respect thereto.
This power of attorney shall not be affected by any subsequent disability or
incapacity of the Pledgor. No discretionary right, remedy or power granted
to the Pledgee in this Agreement shall be deemed to impose any obligation
whatsoever on the Pledgee with respect thereto (such rights, remedies and
powers being solely for the protection of the Pledgee). If, however, the
Pledgee elects to exercise any of such rights, remedies or powers, the
Pledgee shall not be accountable for more than it actually receives as a
result thereof, and it shall not be responsible to the Pledgor, except for
willful misconduct or bad faith.
11. WAIVERS. The Pledgor hereby waives presentment, demand, notice
and protest, notice of acceptance of this Agreement, and, except as
otherwise provided in paragraph 4, of all action by the Pledgee in reliance
hereon. No course of dealing by the Pledgee and no failure or delay by the
Pledgee in exercising any right, remedy or power hereunder shall operate as
a waiver thereof, and no single or partial exercise thereof shall preclude
any other or further exercise thereof or the exercise of any other right,
remedy or power of the Pledgee. No amendment, modification or waiver of any
provision of this Agreement shall in any event be effective unless contained
in a writing signed by the Pledgee, and then only to the extent specifically
set forth therein. The rights, remedies and powers of the Pledgee, not only
hereunder and under the Note, but also under the Employee Restricted Stock
Purchase Agreement of even date herewith between the Pledgor and the Pledgee
and under applicable law, are cumulative and may be exercised by the Pledgee
at such time or times as the Pledgee may elect.
12. NOTICES. No notice to or demand upon the Pledgor, in any
instance, shall entitle the Pledgor to any other or further notice or demand
under similar or other circumstances, unless expressly required by this
Agreement or applicable law. All demands, notices and other communications
from the Pledgee to the Pledgor hereunder shall be in writing and shall be
deemed effective when delivered in hand or when sent by certified or
registered mail, return receipt requested, or delivered to an express
courier service and addressed to the Pledgor at the address of the Pledgor
set forth in the introductory paragraph hereof, or such other address of
which notice hereafter becomes effective as provided in this paragraph. All
notices and other communications from the Pledgor to the Pledgee hereunder
shall be in writing and shall be deemed effective when actually received by
the Pledgee. Receipt shall be presumed if the Pledgor receives a return
receipt from the post office, indicating delivery of such notice or other
communication to the Pledgee at the address of the Pledgee set forth in the
introductory paragraph hereof, marked, "Att: Board of Directors" or such
other address of which notice hereafter becomes effective as provided in
this paragraph.
13. SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect any other provision which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable.
14. CAPTIONS. The captions in this Agreement have been included for
convenience of reference only, shall not define or limit the provisions
hereof and shall not have any legal or other significance whatsoever.
15. MISCELLANEOUS. This Agreement shall be governed by and construed
in accordance with the law of the State of Maine, shall be binding upon the
Pledgor and his heirs, legal representatives and assigns, and shall inure to
the benefit of the Pledgee and its successors and assigns. This Agreement
shall remain in full force and effect until all of the Obligations have been
paid and performed in full.
WITNESS the execution hereof under seal this 6th day of May, 1998.
Witness: Intelligent Controls, Inc.
/s/ Gregory S. Fryer By: /s/ Alan Lukas
Title: President
Witness:
/s/ Sharon L. Binette /s/ Roger E. Brooks
SCHEDULE A
PLEDGED STOCK
STOCK CERTIFICATE NO. NO. OF SHARES
Common Stock, no par
value, of Intelligent
Controls, Inc. IC 0667 76,923
Common Stock, no par
value, of Intelligent
Controls, Inc. IC 0668 410,000
ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE
Pursuant to the provisions of Section 83(b) of the Internal Revenue
Code, the undersigned (the "Taxpayer") hereby elects to include in gross
income, for the taxable year set forth below, the excess, if any, of the
fair market value of the property described below (valued as of the time of
transfer) over the amount (if any) paid therefor. Pursuant to the
provisions of Section 1.83-2(e)(7) of the Treasury regulations, the Taxpayer
hereby states that copies of this election have been furnished to the
persons described in Section 1.83-2(d) of such regulations.
(1) Name of Taxpayer: Roger E. Brooks
(2) Address of Taxpayer: 16 Deerfield Road
Sherborn, Massachusetts 01770
(3) Social Security Number: [ ]
(4) Description of Property
Covered by Election: 486,923 shares (the "Shares") of
common stock, no par value, of
Intelligent Controls, Inc., a Maine
corporation (the "Company")
(5) Date Property
Transferred: May 6, 1998
(6) Taxable Year For Which
Election is Made: 1998
(7) Fair Market Value of
Property At Time of
Transfer:* $1,582,500
(8) Amount Paid for Property: $1,582,500
(9) Nature of Restrictions
to Which Property is
Subject: The Shares vest as follows:
(i)76,923 Shares on the date of
issuance; (ii) 25,625 of the
remaining number of Shares upon the
passage of every three months;
(iii) immediately with respect to
all of the remaining Shares, upon
the sale of all or substantially
all of the Company's assets or
stock, or a upon a change of
control of the Company. A change
of control means: (A) any person
or entity, other than an existing
Company shareholder, becomes the
beneficial owner of 50% or more of
the voting power of the Company;
(B) a change in the majority of the
Company's directors, other than a
change approved by the Company's
current shareholders; or (C) a sale
of substantially all of the Company
by sale of assets, stock, merger,
consolidation or other
reorganization; provided, however,
that the reorganization or
recapitalization of the Company not
constituting a sale to a purchaser
for value will not constitute a
sale resulting in vesting of such
Shares; and (iv) with respect to
102,500 of the remaining number of
Shares, upon the Purchaser's death
or disability, or upon any of
certain events deemed to constitute
a termination of Purchaser's
employment by the Company without
cause, in addition to any Shares
which have previously vested.
Unvested Shares are subject to
repurchase by the issuer upon
termination of the Taxpayer's
employment by the Company at the
amount paid therefor.
Dated: May 8, 1998 /s/ Roger E. Brooks
* (determined without regard to any restrictions other than
restrictions which by their terms will never lapse)