COLLATERAL PLEDGE AGREEMENT
THIS COLLATERAL PLEDGE AGREEMENT ("Agreement") is made this 24th day of
September, 1996, by and among XXXX XXXXXX, a resident of the State of California
("Pledgor") and XXXX SPORTS, INC., a California corporation (BSI).
1. Pledge.
As security for Pledgor's promissory note ("Note") to BSI of
even date herewith, which Note evidences the indebtedness of the Pledgor to BSI,
Pledgor hereby pledges, mortgages, hypothecates, assigns, transfers, delivers,
sets over and confirms unto BSI, its successors and assigns, the following
property, to wit:
Any and all options to purchase shares of BSI or any of its affiliates,
however received or whenever granted, either registered to or
exercisable by the Pledgor, together with all proceeds thereof,
additions thereto and substitutions therefor, including without
limitation any other securities, cash or other properties distributed
with respect to the foregoing options to purchase stock or other
securities subject to this Agreement, whether as a result of merger,
consolidation, dissolution, reorganization, recapitalization, interest
payment, stock split, stock dividend, reclassification or redemption or
any other change declared or made in the capital structure of BSI, or
otherwise,
as collateral security for the payment in full when due of any and all
obligations and indebtedness of Pledgor to BSI, whether direct, indirect or
contingent, whether now existing or hereafter incurred and whether or not
otherwise secured (hereinafter collectively referred to as the "Obligations"),
including, without limitation, all obligations and indebtedness of Pledgor under
the Note and any extensions, amendments and renewals thereto. In the event of a
conflict or inconsistency between the terms hereof and the terms of the Note,
the terms of the Note shall control. Pledgor warrants and represents that
Pledgor has the right to pledge, mortgage, hypothecate, assign, transfer,
deliver, set over and confirm unto BSI all of the foregoing options to purchase
shares free of any encumbrance subject only to the terms of any plan or plans by
or pursuant to which such options were issued or awarded.
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Pledgor hereby agrees promptly to pledge and deposit hereunder with BSI
any stock, securities, or other property with respect to any of the options or
securities represented thereby, whether taken in substitution for or in addition
to the above described property. Such stock, other securities and property shall
stand pledged and assigned for the Obligations in the same manner as the
property described in the first paragraph hereof. All of the property described
in this Section 1 and in the first and second paragraphs hereof is hereinafter
called the "Pledged Property."
2. Voting Power, Dividends, Etc.
(a) Unless and until an Event of Default (as hereinafter
defined) or an event which, with the passage of time or giving of notice or both
would constitute an Event of the Default, has occurred, the Pledgor shall have
the right to exercise all voting, consensual and other powers of ownership
pertaining to the Pledged Property, and the Pledgor shall be entitled to receive
and retain any dividends on the Pledged Property paid in cash out of earned
surplus on BSI to the extent such dividends are reasonable in amount and paid in
the ordinary course of business. To the extent not so permitted, such sums shall
be applied to the amount owing under the Note.
(b) Pledgor hereby irrevocably appoints the President of BSI
as Pledgor's proxy holder with respect to the Pledged Property with full power
and authority to vote such Pledged Property and otherwise act with respect to
such Pledged Property on behalf of Pledgor, provided that this proxy shall be
operative only upon an Event of Default. This Proxy shall be irrevocable for so
long as any of the Obligations remain in existence, and shall be coupled with an
interest. If any Event of Default shall have occurred, then whether or not any
holder of the Note, or the Obligations, exercises any available options to
declare the note or the Obligations due and payable or seeks or pursues any
other relief or remedy available to such holder under this Pledge Agreement or
the Obligations:
(i) The President of BSI, or his nominee or nominees,
shall forthwith, without further action on the part of any person, have the sole
and exclusive right to exercise the proxy granted above and all voting,
consensual and other powers of ownership pertaining to the Pledged Property and
shall exercise such powers in such manner as such person, in his sole reasonable
discretion, shall determine to be necessary, appropriate or advisable, and, if
BSI shall so request in writing, the Pledgor agrees to execute and deliver to
BSI such other and additional powers, authorizations, proxies, dividends and
such other documents as BSI may reasonably request to secure to BSI the rights,
powers and authorities intended to be conferred upon BSI by this Subsection (b);
and
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(ii) All dividends and other distributions on the
Pledged Property shall be deposited in a sinking fund to be established for the
benefit of BSI, and, if BSI shall so request in writing, the Pledgor agrees to
execute and deliver to BSI appropriate additional dividend, distribution and
other orders and documents to that end.
3. Sale of Pledged Property After an Event of Default.
If any Event of Default shall have occurred, then, unless the Note and
the Obligations shall have been paid in full at or before the time BSI gives
Pledgor the notice provided for in Subsection (a) of this Section 3 or at or
before the time the suit provided for in Subsection (b) of this Sections 3 shall
be begun, BSI may, in its sole discretion, without further demand, advertisement
or notice, except as expressly provided for in Subsection (a) of this section 3,
(i) apply the cash, if any, then held by him as collateral hereunder, for the
purposes and in the manner provided in Section 4 hereof, and (ii) if there shall
be no such cash or the cash so applied shall be insufficient to make in full all
payments provided in Subsections (a) and (b) of Sections 4 hereof:
(a) Sell the Pledged Property, or any part thereof, in one or
more sales, at public or private sale, conducted by any officer or agent or
auctioneer or attorney for, BSI, at BSI's place of business or elsewhere, for
cash, upon credit or future delivery, and at such price or prices as BSI shall,
in its sole discretion, determine, and BSI may be the purchaser of any or all of
the Pledged Property so sold and shall hold the same thereafter in its own
right, free from any claims of Pledgor or any right of redemption of Pledgor.
Upon any such sale BSI shall have the right to deliver, assign and transfer to
the Purchaser thereof the Pledged Property so sold. Each purchaser (including
BSI) at any such sale shall hold the Pledged Property so sold including, without
limitation, any equity or right of redemption of the Pledgor, which the Pledgor
hereby specifically waives, to the extent he may lawfully do so, and all rights
of redemption, stay or appraisal which he has or may have under any rule of law
of statute now existing or hereafter adopted. BSI shall give the Pledgor at
least five (5) days' written notice, in case of public or private sale. Any such
public sale shall be held at such time or times within ordinary business hours
as BSI shall fix in the notice of such sale. At any such sale the Pledged
Property may be sold in one lot as an entity or in separate parcels. BSI shall
not be obligated to make any sale pursuant to any notice. BSI may, without
notice or publication, adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, or any adjournment
thereof, and any such sale my be made at any time or place to which the same may
be so adjourned without further notice or publication. In case of any sale of
all or any part of the Pledged Property for credit or for future delivery, the
Pledged Property so sold may be retained by BSI until the selling price is paid
by the purchaser thereof, but BSI shall not incur any liability in case of the
Collateral Pledge Agreement/Page 3
failure of such purchaser to take up and pay for the Pledged Property so sold,
and in case of any such failure, such Pledged Property may again be sold under
and pursuant to the provisions hereof; or
(b) Proceed by a suit or suits at law or in equity to
foreclose upon this Agreement and sell the Pledged Property, or any portion
thereof, under a judgment or decree of a court of courts of competent
jurisdiction.
The President of BSI, as attorney-in-fact pursuant to section 5 hereof
may, in the name and stead of the Pledgor, make and execute all conveyances,
assignments and transfers of the Pledged Property sold pursuant to Subsection
(a) or (b) of this Section 3. The Pledgor shall, if so requested by BSI, ratify
and confirm any sale or sales by executing and delivering to BSI or to such
purchaser or purchasers all such instruments as may, in the sole judgment of
BSI, be advisable.
4. Application of Proceeds.
If an Event of Default exists, the proceeds of any sale, or of
collection, of all or any part of the Pledged Property shall be applied by BSI,
without any marshaling of assets, in the following order:
(a) first, to the payment of all of the costs and expenses of
such sale, including, without limitation, reasonable compensation to BSI and its
agents, attorneys and counsel, and all other reasonable expenses, liabilities
and advances made or incurred by BSI in connection therewith; and
(b) second, to the payment of the principal of and premium, if
any, and interest on the Note, and all obligations of the Pledgor under the Note
and this Agreement and then to pay any other Obligations; and
(c) finally, to the payment to the Pledgor, his successors or
assigns, or their respective heirs, executors or administrators, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, or any surplus remaining from such proceeds
after payments of the character referred to in Subsections (a) and (b) of this
Section 4 shall have been made.
5. President of BSI Appointed Attorney-in-Fact; Indemnity.
Upon an Event of Default, the President of BSI, his successors and
assigns, is hereby appointed attorney-in-fact, with full power of substitution,
of the Pledgor for the purpose of carrying out the provisions of the Pledge
Agreement and taking any action and executing any instruments which such
attorney-in-fact may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact
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is irrevocable and coupled with an interest. The Pledgor will indemnify and save
harmless such person from and against any liability or damage which he may
incur, in good faith and without gross negligence, in the exercise and
performance of any of its or his powers and duties specifically set forth
herein.
6. No Waiver.
No failure on the part of BSI to exercise, and no delay on the part of
BSI in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by BSI of any right,
power or remedy hereunder preclude any other or further right, power or remedy.
The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law or equity.
7. Termination of Pledge.
When all of the Obligations, including, without limitation, the
indebtedness evidenced or secured by the Note or this Agreement, shall have been
paid in full, this Agreement shall terminate. BSI shall forthwith assign,
transfer and deliver to the Pledgor or his assignees, without representation,
warranty or recourse, against appropriate receipts, all the Pledged Property, if
any, then held by him in pledge hereunder.
8. Representations and Warranties.
The Pledgor hereby represents and warrants that, when the Pledged
Property is pledged hereunder:
(a) Ownership of Pledged Property. Pledgor is the legal and
equitable owner of the Pledged Property free and clear of all liens, charges,
encumbrances and security interests of every kind and nature, other that those
created hereunder.
(b) Authority to Pledge. Pledgor has taken all action
necessary to make this Pledge and all obligations hereunder fully enforceable
against Pledgor.
(c) Continuous Security Interest. Pledgor hereby agrees that,
until payment of principal, interest, and all other sums owing pursuant to the
Note in accordance with the terms thereof and performance in full of all of the
Obligations and the covenants, conditions and agreements to Pledgor hereunder,
all rights, powers and remedies granted to BSI hereunder shall continue to exist
and may be exercised by BSI.
(d) Right to Transfer. Pledgor hereby represents and warrants
that on the date of this Agreement he has the absolute right and authority to
enter into this Agreement and thereby to create in favor of BSI
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a valid and binding security interest in the Pledged Property, subject to no
liens, charges, encumbrances or rights of others.
(e) No Transfer, Further Encumbering, Etc. Pledgor hereby
agrees not to directly or indirectly assign, transfer or convey or further
encumber the Pledged Property or any part thereof or interest therein without
the prior written consent of BSI.
9. Governing Law.
This Agreement shall in all respects be construed and interpreted in
accordance with and governed by the laws of the State of California applicable
to agreements made and to be performed entirely in California by California
residents.
10. Successor and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assign of the Pledgor and BSI, and any subsequent
holder of the Note or the Obligations.
11. Additional Instruments and Assurance.
The Pledgor hereby agrees, at his own expense, to execute and deliver,
from time to time, any and all further or other instruments, and to perform such
acts, as BSI may reasonably request for purposes of this Agreement and to secure
to BSI, and to all persons who may from time to time be the holder of the Note
or the Obligations, the benefits of all rights, authorities and remedies
conferred upon BSI by the terms of this Agreement.
12. Notices.
All notices and other communications provided for hereunder shall be in
writing (including telegraphic communication) and mailed or telegraphed or
delivered, if to the Pledgor, at his address at ___________________________
____________________________________________________ or if to BSI, at 00000 X.
Xxxxxx, Xxxxx X-0, Xxxxxxxxxx, XX 00000, ATTN: Chief Financial Officer, or, as
to each party, at such other address as shall be designated by such party in a
written notice to the other party, complying with the foregoing terms. All such
notices and communications shall, when mailed or telegraphed, be effective when
deposited in the United States Mail, postage prepaid, certified, registered or
express, return receipt requested, or delivered to the telegraph company or
overnight courier, charges prepaid, respectively, addressed as aforesaid.
13. Severability.
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In case any one or more of the provisions of this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had not been included.
14. Events of Default.
The Pledgor shall be in default under this Agreement upon the
occurrence of any one of the following events (herein referred to as an "Event
of Default"):
(a) Default by the Pledgor in the due observance or
performance of any covenant or agreement contained herein or breach by the
Pledgor of any representation or warranty herein contained; or
(b) any default by Pledgor in the payment or performance when
due of any of the Obligations, including, without limitation, the payment of the
principal of, or interest on, any indebtedness of Pledgor to BSI, as set forth
in the Note; or
(c) the occurrence of any event of default under the
provisions of the Note, and any other instrument, document or agreement securing
the indebtedness evidenced by the Note.
15. Heading.
The headings of the Sections of this Agreement have been inserted for
convenience of reference only and shall in no way affect the construction or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Collateral
Pledge Agreement as of the date first above written.
PLEDGOR:
/s/ Xxxx Xxxxxx
--------------------------------
Employee, Xxxx Xxxxxx
XXXX SPORTS, INC.
By /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
V.P. and Corporate Controller
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