LOAN AND PLEDGE AGREEMENT
-------------------------
This Loan and Pledge Agreement (the "Agreement") dated
as of June 11, 1999, by and between Cistron Biotechnology, Inc.,
a Delaware corporation ("Cistron"), and Bruce C. Galton
("Galton").
1. Pursuant to the terms of the Separation From
Employment Agreement, dated May 5, 1999, Cistron hereby loans to
Galton the amount of Two hundred Seventy Seven Thousand Eight
Hundred and Five ($277,805.07) Dollars and Seven Cents (the
"Loan"), on a non-recourse basis secured only by the One Million
Three Hundred Sixty Five Thousand Nine Hundred Sixty (1,365,960)
shares of Cistron common stock, $.01 par value per share (the
"Shares"), being purchased by Galton upon exercise of options to
purchase the Shares.
2. The Loan is evidenced by a non-recourse,
promissory note (the "Note") executed by Galton in favor of
Cistron, secured by a pledge of the Shares by Galton. Galton
does not assume any personal liability or responsibility for the
failure to pay the principal amount of the. The sole remedy
available upon such failure shall be to proceed against the
Collateral in accordance with the terms of this Agreement.
3. The Note shall be due and payable in full on the
earliest of June 10, 2002, the merger or sale of Cistron, or the
liquidation or dissolution of Cistron. In addition, the Note
shall be due and payable in part or in whole to the extent
provided under paragraph 4.
4. Galton agrees to do, execute, acknowledge,
deliver, file and take any and all such other actions as Cistron
may deem necessary or advisable in order to direct Cistron's
transfer agent for its common stock that beginning on the date
hereof and ending on the date the Note is paid in full, the
transfer agent shall pay all proceeds from the sale of Shares
and any dividends or other distributions of cash on the Shares
directly to Cistron. Cistron shall apply such proceeds, dividends
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or distributions to the reduction of the principal
amount of the Note. In connection with any sale of the Shares
prior to the full payment of the Note, Cistron shall deliver the
certificates representing the Shares to the transfer agent for
Cistron's common stock upon receipt of the foregoing proceeds
from any such sale.
5. Galton hereby pledges with Cistron as collateral
(the "Collateral") security for the due and punctual payment of
the Note in accordance with its terms and the performance by
Galton of his obligations under the Note, the Shares (which
include any other securities or property receivable or
distributable with respect thereto after the date hereof). The
certificate(s) representing the Shares, together with a stock
power(s) attached thereto executed in blank by Galton, are being
delivered to Cistron and shall be retained by Cistron until the
Note has been paid in full. At the time the Note shall have
been paid in full, Cistron shall deliver to Galton the
certificate representing the Shares, together with the stock
power.
6. So long as no Event of Default (as hereinafter
defined) shall have occurred and be continuing Galton shall have
the irrevocable proxy to vote and have all other consensual
rights with respect to the Shares, and Cistron shall deliver to
Galton any proxies, reports or other materials received by it
which are necessary to enable Galton to exercise such rights.
Upon the occurrence of an Event of Default, all voting and other
consensual rights of Galton in the Shares shall cease and may be
exercised by Cistron.
7. Upon the occurrence of an Event of Default,
Cistron shall have and may exercise all rights and remedies
afforded to a secured party under the New Jersey Uniform Commercial
Code, including, without limitation, the right to sell the Shares at
a public or private sale (provided that Cistron shall give Galton at
least 5 days prior written notice of the date in which any public sale
is to be held or the date after which any private sale may be made),
at which sale Cistron may purchase
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the Shares (free from any right of redemption by Galton, which right is
hereby waived and released) and have the right to retain the Shares in
full satisfaction of Galton's obligations under the Note in accordance
with the provisions of the New Jersey Uniform Commercial Code.
8. Each of Galton and Cistron has all power and
authority necessary to enter into and consummate the
transactions contemplated by this Agreement and this Agreement
is valid and enforceable against each of Cistron and Galton in
accordance with its terms. Galton has not created or permitted
any lien or encumbrance to attach to the Shares, other than the
pledge set forth in this Agreement.
9. If any of the following events ("Events of
Default") shall occur:
(a) Galton shall default in the payment of any
part of the principal on the Note when the same shall become due
and payable, whether at maturity, by acceleration or otherwise;
(b) Galton shall default in the performance or
compliance with any term or provision contained in this
Agreement;
(c) Galton shall (i) become insolvent or be
unable, or admit in writing his inability, to pay his debts as
they mature, (ii) make a general assignment for the benefit of
creditors, (iii) be adjudicated a bankrupt or insolvent or file
a voluntary petition in bankruptcy, (iv) file a petition or an
answer seeking an arrangement with creditors or to take
advantage of any insolvency law or (v) file an answer admitting
to the material obligations of, or consent to, or default in
answering, or fail to have dismissed within 60 days after the
filing thereof, a petition filed against him in any bankruptcy
or insolvency proceeding; or
(d) If any of the Shares shall be encumbered,
pledged, attached or levied upon or seized at any legal
proceeding; then the holder of the Note may at any time by
written notice to Galton (or without such notice with respect to
subsection (c) above), declare the entire unpaid
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principal on the Note to be forthwith due and payable, without other
notices or demands of any kind, all of which are hereby waived by
Galton.
10. Galton will do, execute, acknowledge, deliver,
file and record all such further acts, conveyances, transfers
and assurances as Cistron may deem necessary or advisable to
perfect, preserve, protect and continue the pledge granted by
this Agreement.
11. All notices and communications provided for
herein shall be delivered or mailed by registered or certified
mail, postage prepaid, or telegraphed, addressed as follows:
If to Cistron at:
Cistron Biotechnology, Inc.
10 Bloomfield Avenue
Pine Brook, New Jersey 07058
If to Galton:
Mr. Bruce C. Galton
8 Holden Lane
Madison, New Jersey 07940
or such other address or to the attention of such other person
as the recipient party has specified by prior written notice to
the sending party.
12. All representations and warranties made by Galton
and Cistron herein shall survive the making of the Loan and the
delivery of the Note hereunder.
13. No delay on the part of Cistron in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude other or further exercise
thereof, or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies which Cistron would
otherwise have.
14. This Agreement and the Note shall be construed
under the laws of the State of
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New Jersey applicable to agreements made and performed entirely
in such State.
15. This Agreement shall be binding upon the
successors and assigns of the parties hereto; provided, however,
that this Agreement and the Shares shall not be assignable by
Galton.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.
CISTRON BIOTECHNOLOGY, INC.
By: /s/FRANKLIN J. IRIS
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FRANKLIN J. IRIS
Title: CHAIRMAN AND CEO
/s/ BRUCE C. GALTON
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BRUCE C. GALTON
