PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT ("Pledge Agreement") dated January, 1997 is made between
OAKLEY, INC. (the "Company"), and ▇▇▇▇▇ FARGO BANK NATIONAL ASSOCIATION, acting
as agent (the "Agent") for the lenders set forth in the Credit Agreement.
WHEREAS
A. The Lenders and the Company entered into a credit agreement dated
20 June 1995, as amended and restated as of 15 August 1995 and as the
same may be amended from time to time (the "Credit Agreement").
B. Pursuant to the Credit Agreement the Company has agreed to provide the
Lenders (as defined in the Credit Agreement) with a pledge of 65% of
the shares which it owns or will own in certain foreign companies. It
is a condition to the Credit Agreement that the Company shall execute
and deliver a pledge agreement shortly after acquiring any such shares.
C. On 19 November 1996, the Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇ entered into a Share Purchase Agreement (the "Purchase
Agreement") providing for the sale of all of the share capital (the
"Shares") of Oakley (U.K.) Limited ("Oakley UK").
D. Pursuant to the Purchase Agreement the Company became the legal and
beneficial owner of 1,000 fully paid ordinary shares of L.1 each.
E. The Company now wishes to pledge to the Lenders 65% of the Shares as
security for their obligations under the Credit Agreement.
AGREEMENT
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In consideration of the premises and in order to induce the Lenders to
enter into the third amendment to the Credit Agreement and for other
good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Agent hereby agree as follows:-
1 GRANT OF SECURITY INTEREST
The Company pledges, hypothecates, assigns, transfers, sets over and
delivers unto the Agent a security interest in 65% of the Shares the
Company owns in the share capital of Oakley UK, including, without
limitation, the Shares set forth on Schedule A attached hereto, as such
schedule may from time to time be amended, altered or changed. Said
pledged Shares are hereinafter referred to as "Pledged Shares". The
Pledged Shares includes all proceeds thereof, whether tangible or
intangible, including, but not limited to, all cash, additional shares or
other property at any time, and from time to time, receivable or otherwise
distributable in respect of, in exchange for, or in substitution of, any
and all such shares, together with the proceeds thereof, including,
without limitation, any share rights, rights to subscribe, liquidation
dividends, share dividends, new securities or securities representing
split shares, or other property or distributions to which the Company is
or may hereafter become entitled to receive on account of the Pledged
Shares.
2 OBLIGATIONS SECURED
This Pledge Agreement is made, and the security interest created hereby is
granted to the Lenders, as security for payment and performance of all
liabilities and obligations of the Company to the Lenders under the Credit
Agreement.
3 REPRESENTATIONS, WARRANTIES AND AGREEMENTS
The Company hereby represents, warrants and agrees that:
3.1 the Company is the legal and equitable owner of all of the Pledged
Shares;
3.2 the security interest intended to be created hereby constitutes a
valid perfected security interest in the Pledged Shares purported or
intended to be covered hereby upon possession of such Pledged Shares
by the Lender, free of all liens, except as created under the Credit
Agreement;
3.3 no action of, or filing with, any governmental agency, bureau or
commission is required by law to authorise the execution and delivery
of this Pledge Agreement or the pledge of the Pledged Shares or to
continue the perfected status of the security interest, or if so
required such action or filing has been made; and
3.4 the Pledged Shares represent 65% of the issued and outstanding Shares
of Oakley UK.
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4 COVENANTS WITH RESPECT TO PLEDGED SHARES
The Company agrees with the Lenders with respect to the Pledged Shares as
follows:-
4.1 The Company shall cause 65% of any additional shares issued to it by
Oakley UK whether for value paid by the Company, or otherwise, to be
forthwith delivered to the Agent as provided for in the Credit
Agreement and pledged hereunder.
4.2 So long as no Event of Default (as defined below) shall have occurred
and be continuing, the Company shall be entitled to exercise any and
all voting and/or consensual rights and powers with respect to the
Pledged Shares or any part thereof; provided, however, that the
Company shall not exercise such voting and/or consensual rights in a
manner as would violate the terms and provisions of the Credit
Agreement.
4.3 So long as no Event of Default shall have occurred and be continuing,
the Company shall be entitled to retain and use any and all cash
dividends paid on the Pledged Shares, but any and all shares and/or
liquidating dividends, other distributions in property made on or in
respect of Pledged Shares, or received in exchange for the Pledged
Shares or any part thereof as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether
voluntary or involuntary, of the issuer of the Pledged Shares shall be
and become part of the Pledged Shares pledged hereunder and, if
received by the Company, 65% shall forthwith be delivered to the Agent
to be held subject to the terms of this Pledge Agreement.
4.4 So long as no Event of Default hereunder shall have occurred and be
continuing, the Lenders shall execute and deliver to the Company, or
cause to be executed and delivered to the Company, as appropriate, all
such proxies, powers of attorney, dividend orders and other
instruments as the Company may reasonably request for the purpose of
enabling the Company to exercise the voting and/or consensual rights
and powers which it is entitled to exercise pursuant to Section 4.2
above and/or to receive the dividends which it is authorised to retain
pursuant to Section 4.3 above.
4.5 Upon and after the occurrence and continuance of an Event of Default
and upon written notice from the Agent, all rights of the Company to
exercise the voting and/or consensual rights and powers which the
Company is entitled to exercise pursuant to Section 4.2 hereof and/or
to receive the dividends which
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the Company is authorised to receive and retain pursuant to Section
4.3 hereof shall cease and the Company hereby agrees that it shall not
exercise or attempt to exercise in any manner whatsoever any of such
rights or powers. All such rights shall thereupon immediately vest in
the Lenders. Once such rights have vested, the Lenders shall have the
sole and exclusive right and authority to exercise such voting and/or
consensual rights and powers and/or to receive and retain all
dividends. Any and all money and other property paid over to or
received by the Agent pursuant to the provisions of this Section 4.5
shall be retained by the Agent as additional collateral herein.
4.6 The Company shall cause the following notice to be inserted on and to
remain on the Register of Members and Share Ledger of Oakley UK:-
TAKE NOTICE THAT 65% OF THE SHARES IN OAKLEY (U.K) LIMITED FROM TIME
TO TIME REGISTERED IN THE NAME OF OAKLEY, INC. ARE PLEDGED TO ▇▇▇▇▇
FARGO BANK NATIONAL ASSOCIATION (AS AGENT FOR A GROUP OF LENDERS)
UNDER A CERTAIN PLEDGE AGREEMENT DATED JANUARY 1996 (THE "AGREEMENT").
THIS NOTICE IS INTENDED TO STOP THE TRANSFER OF THE SAID SHARES
WITHOUT PRIOR NOTICE OF THE INTERESTS OF ▇▇▇▇▇ FARGO BANK NATIONAL
ASSOCIATION (AND THE GROUP OF LENDERS) AND NOT THE PAYMENT OF ANY
DIVIDEND THEREOF OR INTEREST THEREON. OAKLEY (U.K.) LIMITED WILL NOT
REGISTER ANY TRANSFER OF ANY SECURITIES REGISTERED IN THE NAME OF
OAKLEY, INC. AND PLEDGED TO ▇▇▇▇▇ FARGO BANK NATIONAL ASSOCIATION
PURSUANT TO THE AGREEMENT WITHOUT FIRST GIVING 20 DAYS' WRITTEN NOTICE
OF RECEIPT OF EVERY SUCH TRANSFER TO ▇▇▇▇▇ FARGO BANK NATIONAL
ASSOCIATION WHOSE ADDRESS FOR SERVICE FOR THIS PURPOSE IS: ORANGE
COAST REGIONAL, COMMERCIAL BANKING OFFICIAL, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
5 SECURED PARTIES APPOINTED ATTORNEYS-IN-FACT
The Company hereby constitutes and appoints the Agent the true and lawful
attorney-in-fact of the Company for the purpose of carrying out the
provisions of this Pledge Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Agent shall
have the right, but subject always to any mandatory requirement of
applicable law, after the occurrence of an Event of Default, and during the
continuance thereof, with full power of substitution either in the Agent's
name or in the name of the assignor, to ask for, demand, ▇▇▇ for, collect
and receive any and all moneys due or to become due under and by virtue of
any Pledged Shares, to endorse checks, drafts, orders and other instruments
for the payment or money payable
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to the Company, representing any interest or dividend or other distribution
payable in respect of the Pledged Shares or any part thereof or on account
thereof and to give full discharge for the same, to settle, compromise,
prosecute, or defend any action, claim or proceeding with respect thereto,
and to sell, assign, endorse, pledge, transfer and make any agreement
respecting, or otherwise deal with, the same; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Agent or Lenders to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by it, or to present or file
any claim or notice, or take any action with respect to the Pledged Shares
or any part thereof or the monies due or to become due in respect thereof
or any property covered thereby, and no action taken by the Agent or
Lenders pursuant to this Pledge Agreement or omitted to be taken with
respect to the Pledged Shares or any part thereof shall give rise to any
defense, counterclaim or offset in favour of the Company or to any claim or
action against the Agent or Lenders.
6 EVENT OF DEFAULT
Any of the following events ("Events of Default") constitute an Event of
Default:
6.1 an "Event of Default" under Section 8 of the Credit Agreement which
shall have occurred and shall be continuing; or
6.2 the failure of the Company to perform any covenant set forth in this
Pledge Agreement and the continuance of such failure for ten (10) days
after notice thereof has been delivered to the Company by the Agent or
a misrepresentation by the Company in any material respect in this
Pledge Agreement or in connection with any of the obligations; or
6.3 the Pledged Shares or any part thereof, shall be executed or levied
upon, or attached, and such action shall continue unstayed and
undischarged for ten (10) days after the date of execution, levy or
attachment; or
6.4 the Company shall sell, transfer, assign or otherwise dispose of the
Pledged Shares by operation of law or otherwise, except for sales,
transfers, assignments or disposition permitted by this Pledge
Agreement or the Credit Agreement.
7 REMEDIES UPON DEFAULT
7.1 If an Event of Default shall have occurred and be continuing, the
Agent may sell, assign, transfer, endorse and deliver the whole or,
from time to time, any
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part of the Pledged Shares at public or private sale or at any
broker's board or on any securities exchange, with respect to all or
any part of the Pledged Shares, for cash, upon credit or for other
property, for immediate or future delivery, and for such price or
prices and on such terms as the Agent in its reasonable discretion
shall deem appropriate.
7.2 Upon consummation of any such sale the Agent shall have the right to
assign, transfer, endorse and deliver to the purchaser or purchasers
thereof the Pledged Shares so sold.
7.3 Each such purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the Company,
and the Company hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which the Company now
has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
7.4 At any such sale, the Pledged Shares, or portion thereof to be sold,
may be sold in one lot as an entirety or in separate portions, as the
Agent may (in its sole and absolute discretion) determine.
7.5 The Agent shall not be obligated to make any sale of the Pledged
Shares if it shall determine not to do so, regardless of the fact that
notice of sale of the Pledged Shares may have been given.
7.6 The Agent may, without notice or publication, adjourn any public or
private sale or cause the same to adjourn from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the
same was so adjourned.
7.7 In case sale of all or any part of the Pledged Shares is made on
credit or for future delivery, the Pledged Shares sold may be retained
by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay
for the Pledged Shares so sold and, in case of any such failure, such
Pledged Shares may be sold again upon like notice.
7.8 At any sale made pursuant to this Pledge Agreement, the Agent may bid
for or purchase, free (to the extent permitted by law) from any right
of redemption, stay and/or appraisal which the Company now has or may
at any time in the future have under any rule of law or statute now
existing or hereafter enacted (and any such rights are hereby waived
and released to the
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extent permitted by law), any part of or all the Pledged Shares
offered for sale and may make payment on account thereof by using any
claim then due and payable to the Agent, as a credit against the
purchase price, and such secured party may, upon compliance with the
terms of sale, hold, retain and dispose of such property without
further accountability to the Company therefor.
7.9 For the purposes hereof, a written agreement to purchase all or any
part of the Pledged Shares shall be treated as a sale thereof; the
Agent shall be free to carry out such sale and the Company shall not
be entitled to the return of any Pledged Shares subject thereto,
notwithstanding the fact that, after the Agent shall have entered into
such an agreement, all Events of Default may have been paid in full or
otherwise ceased to exist as herein provided.
7.10 As an alternative to exercising the power of sale herein conferred
upon it, the Agent may proceed by suit or suits at law or in equity to
foreclose this Pledge Agreement and sell the Pledged Shares or any
portion thereof, pursuant to judgment or decree of a court or courts
having competent jurisdiction.
7.11 The Agent shall not incur any liability as a result of the sale or any
part of the Pledged Shares, at any private sale conducted in any
manner which is commercially reasonable.
8 DUTY TO PRESERVE THE PLEDGED SHARES
The Agent shall use reasonable care in the custody and preservation of any
Pledged Shares in its possession but need not take any steps to preserve
the rights of prior parties.
9 FURTHER ASSURANCES
The Company agrees that it will join with the Agent in executing and at its
own expense, file or record such notices, financing statements or other
documents as may be necessary to perfect the security interest of the
Lenders hereunder and as the Lenders or their counsel may reasonably
request, such instruments to be in form and substance satisfactory to the
Lenders and their counsel, and that it will do such further acts and things
and execute and deliver to the Lenders such additional conveyances,
assignments, agreements and instruments as the Lenders may at any time
reasonably request in connection with the administration and enforcement of
this Pledge Agreement or relative to the Pledged Shares or any part thereof
or in order to assure and confirm unto the Lenders their rights, powers and
remedies hereunder.
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10 TERMINATION
This Pledge Agreement and the security interest of the Lenders hereunder
shall terminate when all obligations of the Company to the Lenders under
the Credit Agreement have been fully paid and performed. At that time the
Lenders shall forthwith reassign and deliver to the Company against the
Company's receipt such of the Pledged Shares (if any) as shall not have
been sold or otherwise applied by the Lenders pursuant to the terms hereof
and shall still be held by it hereunder. Any such reassignment shall be
without recourse upon, or warranty by, the Lenders and at the expense of
the Company.
11 NO WAIVER
No failure on the part of the Lenders to exercise, and no delay on its part
in exercising, any right, power of remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or the further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
12 GOVERNING LAW: AMENDMENTS
This Pledge Agreement has been executed and delivered in the State of
California and shall be construed in accordance with and governed by the
laws of said State, including the California Uniform Commercial Code. This
Pledge Agreement may not be amended or modified nor may any of the Pledged
Shares be released or the security interest granted hereby extended, except
in writing signed by the parties hereto.
13 SEVERABILITY
Any provision of this Pledge Agreement prohibited by the laws of any
jurisdiction shall, as to such jurisdiction be ineffective to the extent of
such prohibition, or modified to conform with such laws, without
invalidating the remaining provisions of this Pledge Agreement, and any
such prohibition in any jurisdiction shall not invalidate such provision in
any other jurisdiction; any impairment or invalidity of this Pledge
Agreement under the laws of any jurisdiction as security for any portion of
the obligation of the Company to the Lenders hereunder shall not impair or
invalidate this Pledge Agreement as security for any other portion thereof.
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14 BINDING AGREEMENT; NOTICES
This Pledge Agreement, and the terms, covenants and conditions hereof,
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that the Company shall not
be permitted to assign this Pledge Agreement or any interest herein or in
the Pledged Shares, or any part thereof, or otherwise pledge, encumber or
grant any option with respect to the Pledged Shares, or any part thereof,
or any cash or property held by the Agent as collateral under this Pledge
Agreement. No notice to or demand on the Company shall entitle the Company
to any other or further notice or demand in the same, similar or otherwise
circumstances. Any notice shall be conclusively deemed to have been
received and shall be effective on the day on which delivered if by hand,
telecopier or telex or, if sent by registered mail, upon receipt, addressed
to the Company or the Agent, as provided for on the final (signature) page
of this Pledge Agreement.
15 HEADINGS
Section headings used herein are for convenience only and are not to affect
the construction of or to be taken into consideration in interpreting this
Pledge Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
executed as of the day and year first above written.
Executed by and on behalf of ) OAKLEY, INC.
OAKLEY, INC ) /s/ LINK ▇▇▇▇▇▇▇
in the presence of ) -------------------------------------
Link ▇▇▇▇▇▇▇, Chief Operating Officer
Address: ) Attested:
10 Holland ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ) ------------------------------------
USA ) ▇▇▇▇▇ ▇▇▇▇▇▇▇
Attn: Link ▇▇▇▇▇▇▇, Esq. )
Executed by and on behalf of ) /s/ ▇▇▇▇▇▇▇ ▇. ___________
▇▇▇▇▇ FARGO BANK, ) ------------------------------------
NATIONAL ASSOCIATION ) ▇▇▇▇▇▇▇ ▇. ___________, Vice President
in the presence of ▇▇▇▇▇▇▇ ▇▇▇▇ )
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: ) ------------------------------------
Orange Coast Regional ) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Secretary
Commercial Banking Official )
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ )
Suite 900 )
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ )
USA )
Attn: Mr ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
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SCHEDULE A
Certificate No. No. of Shares Company's percentage
Ownership of Oakley UK
15 650 65%
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