COLLATERAL PLEDGE AGREEMENT
THIS COLLATERAL PLEDGE AGREEMENT ("Agreement") is made this 17th day of
April, 2000, by and among Xxxx Xxxxxx, a resident of the State of California
("Pledgor") and XXXX SPORTS, INC, a California corporation (XXXX).
1. Pledge
As security for Pledgor's promissory note ("Note") to XXXX of even date
herewith, which Note evidences the indebtedness of the Pledgor to XXXX, Pledgor
hereby pledges, mortgages, hypothecates, assigns, transfers, delivers, sets over
and confirms unto XXXX, its success and assigns, the following property, to wit:
Any and all options to purchase shares or equity investment in XXXX 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 equity investment 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 XXXX, or
otherwise,
as collateral security for the payment in full when due of any and all
obligations and indebtedness of Pledgor to XXXX, 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 XXXX all of the foregoing options to purchase
shares or equity investment free of any encumbrance subject only to the terms of
any plan or plans by or pursuant to which such options or investment were issued
or awarded.
Pledgor hereby agrees promptly to pledge and deposit hereunder with XXXX
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 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 XXXX
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 Chief Operating Officer of
XXXX 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
Obligations:
(i) The Chief Operating Officer of XXXX, 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 XXXX shall so request in writing, the Pledgor agrees to
execute and deliver to XXXX such other and additional powers, authorizations,
proxies, dividends and such other documents as XXXX may reasonably request to
secure to XXXX the rights, powers and authorities intended to be conferred upon
XXXX by this Subsection (b); and
(ii) All dividends and other distribution on the Pledged Property
shall be deposited in a sinking fund to be established for the benefit of XXXX,
and, if XXXX shall so request in writing, the Pledgor agrees to execute and
deliver to XXXX 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 XXXX 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 Section 3 shall
be begun, XXXX 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 an officer or agent or auctioneer
or attorney for, XXXX, at XXXX'x place of business or elsewhere, for cash, upon
credit or future delivery, and at such price or prices as XXXX shall, in its
sole discretion, determine, and XXXX 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 XXXX shall have the right to deliver, assign and transfer to the
Purchase thereof the Pledged Property so sold. Each purchaser (including XXXX)
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. XXXX 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 XXXX 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. XXXX shall
not be obligated to make any sale pursuant to any notice. XXXX 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 may 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 XXXX until the selling price is
paid by the purchaser thereof, but XXXX shall not incur any liability in case of
the 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 therefor, under a
judgment or decree of a court or courts of competent jurisdiction.
The Chief Operating Officer of XXXX, 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
XXXX, ratify and confirm any sale or sales by executing and delivery to XXXX or
to such purchaser or purchasers all such instruments as may, in the sole
judgement of XXXX, 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 XXXX, without any
marshaling of assets, in the following order:
(a) first, the payment of all of the costs and expenses of such sale,
including, without limitation, reasonable compensation to XXXX and its agents,
attorneys and counsel, and all other reasonable expenses, liabilities and
advances made or incurred by XXXX 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, her 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. Chief Operating Officer of XXXX Appointed Attorney-in-Fact; Indemnity.
Upon an Event of Default, the Chief Operating Officer of XXXX, 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 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 XXXX to exercise, and no delay on the part of
XXXX in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by XXXX 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. XXXX shall forthwith assign,
transfer and deliver to the Pledgor or her 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 warrantees 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 than 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 grated to XXXX hereunder shall continue to exist
and may be exercised by XXXX.
(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 XXXX 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 XXXX.
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 XXXX, and any subsequent
holder of the Note or the Obligations.
11. Additional Instruments and Assurance.
The Pledgor hereby agrees, at her own expense, to execute and deliver, from
time to time, any and all further or other instruments, and to perform such acts
as XXXX may reasonable request for purposes of this Agreement and to secure to
XXXX, 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 XXXX 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 her address, at 00000 Xxxxxxxxxxxxx, Xxxx
Xxxxx, XX 00000, or if to XXXX at 0000 Xxx Xxxxxxx, Xxx Xxxx, 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 Untied 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.
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 XXXX, 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 X. Xxxxxx
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Xxxx Xxxxxx
XXXX SPORTS, INC.
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
Xx. Vice President
