COLLATERAL PLEDGE AND SECURITY AGREEMENT
THIS COLLATERAL PLEDGE AND SECURITY AGREEMENT ("Agreement") is made and
entered into effective as of this 28th day of September, 1999, by and between
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, a resident of the State of Washington (hereinafter referred to as
"Executive") and
▇▇▇▇ SHIPYARDS CORPORATION, a Delaware corporation with its chief executive
office
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (the
"Company").
P R E L I M I N A R Y S T A T E M E N T
A. The Company has heretofore granted to Executive the right and option
(the "Option") to
acquire 75,000 shares of the Company's common stock, $.01 par value (the
"Pledged Shares") in
exchange for payment of an exercise price of $4.50 per share (the "Exercise
Price").
B. The Option is fully vested, and on the date hereof, Executive
exercised the Option to
acquire the Pledged Shares and has executed and delivered to the Company a
Promissory Note in
an original principal amount of THREE HUNDRED THIRTY SEVEN THOUSAND FIVE
HUNDRED AND NO/100 DOLLARS ($337,500.00) (the "Note") in full payment of the
aggregate Exercise Price therefor.
C. As a material inducement to the Company to accept the Note and as
security therefor, the
Company has required that Executive pledge, assign and grant to the Company a
first priority
lien and security interest in the Collateral (as hereinafter defined)
pursuant to the terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set
forth herein, and as a material inducement to the Company to accept the Note
and for other good
and valuable consideration, the mutuality, receipt and sufficiency of which
are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Definitions. All capitalized terms in this Agreement shall have the
meanings defined in this
Agreement, or if not defined herein, their meaning given in the Preliminary
Statement (all such
meanings to be equally applicable to both the singular and plural forms of
the terms defined
unless otherwise specified).
1.1 "Collateral" shall mean all of Executive's personal assets, including
but not limited to,
right, title and interest in and to the property more particularly described
in Section 2 of this
Agreement, whether such property is now owned or hereafter acquired.
1.2 "Event of Default" shall have the meaning set forth in Section 8 of
this Agreement.
1.3 "Secured Obligations" means the obligations secured by this Agreement
as described in
Section 3 of this Agreement.
2. Grant of Security Interest.
2.1 Executive hereby pledges and assigns to the Company, and hereby
grants to the Company,
a security interest in the Collateral and a general lien upon and right to
set off against the Pledged
Shares, together with all proceeds of any sale, transfer or other disposition
of any such Pledged
Shares, and any stocks, securities or other property purchased with the
proceeds from the sale of
such Pledged Shares and any substitutions therefor, any and all stocks,
securities and/or other
property resulting from any stock splits, stock rights, rights to subscribe,
options, dividends paid
in stock and/or new securities paid and/or distributed in respect of such
Pledged Shares, and all
dividends and other distributions or property from time to time received,
receivable or otherwise
distributed in respect of or in exchange for any or all of the foregoing,
together with all additions,
substitutions and/or replacements thereof, and all proceeds of any of the
foregoing.
2.2 Upon execution of this Agreement, Executive shall deliver to the
Company all certificates
evidencing the Pledged Shares duly endorsed in blank for transfer or
accompanied by irrevocable
stock powers (duly executed in blank with signature guaranteed), and any
other endorsements,
assignments and/or documents of conveyance which the Company may now or
hereafter require,
in its sole and absolute discretion.
3. Secured Obligations. Executive has pledged to the Company and has
granted to the
Company a security interest in the Collateral to secure: (a) the payment by
Executive of all
unpaid principal of, and interest now or hereafter to accrue on, the Note,
and (b) all costs and
expenses paid or incurred by the Company in connection with the preservation
and/or
enforcement of all of its rights and remedies under the Note and this
Agreement as more
particularly described in Section 12 (collectively referred to as the
"Secured Obligations"). The
Company shall hold the Shares upon the terms and provisions of this
Agreement, and the
security interest in the Collateral granted to the Company pursuant to this
Agreement shall
continue until all of the Secured Obligations have been paid in full to the
Company.
4. Representations and Warranties. Executive represents and warrants to
the Company as
follows, which representations and warranties shall survive the execution and
delivery of this
Agreement and the delivery of the Pledged Shares to the Company:
4.1 Executive has full right, power and authority to enter into and
perform this Agreement.
This Agreement has been duly entered into and delivered by Executive and
constitutes the legal,
valid and binding obligation of Executive, enforceable against Executive in
accordance with its
terms.
4.2 Executive has good and marketable title to the Pledged Shares, none
of which is now or
will hereafter be subject to any lien, charge, pledge, encumbrance, claim or
security interest of
any nature whatsoever, other than the security interest created by this
Agreement.
4.3 All of the Pledged Shares are fully paid and non-assessable.
Executive has taken all action
necessary to grant to the Company a first priority lien in and upon the
Pledged Shares.
4.4 Executive has not entered into any stock restriction or purchase
agreement with respect to
any of the Pledged Shares which would in any way restrict the sale, pledge or
other transfer
thereof or of any interest in or to the same.
4.5 The execution and delivery of this Agreement and the performance of
the transactions
contemplated hereby will not contravene or constitute a default under or
result in a lien upon any
property of Executive pursuant to any applicable law or decree or any
agreement, document or
instrument binding upon or affecting Executive or any of his or her assets,
other than the security
interest created by this Agreement.
4.6 There is no action, suit or proceeding pending or, to the best of
Executive's knowledge,
information and belief, threatened against Executive which could reasonably
be expected to have
a material adverse effect on the Collateral.
5. Affirmative Covenants. Executive covenants and agrees with the
Company that Executive
will observe and perform all of the following provisions until all of the
Secured Obligations have
been paid in full to the Company and this Agreement has been terminated by
the Company.
5.1 Executive will take all actions and will execute all documents and
instruments that may be
reasonably requested by the Company to perfect the Company's security
interest in all of the
Collateral in accordance with the requirements of applicable law.
5.2 Executive will promptly pay when due, and before penalties would
attach, all taxes,
assessments, charges, encumbrances and liens now or hereafter imposed upon or
affecting the
Collateral or any part thereof, unless Executive at his own expense is
contesting any such amount
in good faith by an appropriate proceeding timely instituted and which shall
operate to prevent
the collection or satisfaction of the lien or amount so contested.
5.3 Executive will keep the Collateral free and clear of all levies,
security interests and other
liens and charges whatsoever, excepting only the Company's security interest
in the Collateral.
5.4 Executive will appear in and defend any action or proceeding which
may affect his title to
the Collateral and/or the Company's perfected security interest in any of the
Collateral.
6. Negative Covenants as to Pledged Shares. Executive hereby covenants
and agrees with the
Company that he will not surrender or lose possession of the Pledged Shares
or any part thereof
(other than to the Company pursuant hereto), or sell, further encumber or
otherwise dispose of or
transfer the Pledged Shares or any part thereof or any of their respective
rights, titles or interests
therein without the prior written consent of the Company, which consent will
not be
unreasonably withheld if simultaneously with such sale, all Secured
Obligations are being paid in
full; provided, however, so long as no Event of Default has occurred and is
continuing,
Executive may, upon written notice to the Company, direct the Company to sell
all or any
portion of the Pledged Shares provided the net proceeds derived therefrom are
paid to the
Company to repay all of the Secured Obligations then outstanding in the
manner set forth in the
Note, and the balance, if any, shall be promptly remitted by the Company to
the Executive.
7. Certain Rights Respecting the Pledged Shares.
7.1 So long as no Event of Default has occurred and is continuing,
Executive may exercise all
voting rights with respect to the Pledged Shares. Provided, upon the
occurrence of any Event of
Default, and so long as such Event of Default exists, the Company may, at its
sole option,
exercise all voting rights with respect to the Pledged Shares, and for that
purpose Executive
hereby appoints any officer of the Company as its proxy and attorney-in-fact
for all purposes of
voting the Pledged Shares at any annual, regular or special meeting of the
Company and this
appointment shall be deemed coupled with an interest and is and shall be
irrevocable until all of
the Secured Obligations have been fully paid to the Company. All persons
whatsoever shall be
conclusively entitled to rely upon any oral or written certification of the
Company that it is
entitled to vote the Pledged Shares hereunder. Executive shall execute and
deliver to the
Company any additional proxies and powers of attorney that the Company may
reasonably
desire in its own name to effectuate the provisions of this Agreement.
7.2 Except to the extent the Company otherwise agrees in writing to the
contrary, all proceeds
generated from the sale and/or redemption of any of the Pledged Shares, and
all cash or stock
dividends or other distributions paid or payable or declared in respect of
the Pledged Shares, and
any and all other rights, options, securities or other instruments paid or
payable in respect of the
Pledged Shares shall be immediately remitted to the Company and, to the
extent of any cash
proceeds, applied by the Company to the payment of the Secured Obligations in
the order set
forth in the Note, and, to the extent of non-cash proceeds, held by the
Company as additional
Collateral pursuant to the provisions of this Agreement. In the event any of
such property is
received by Executive in violation of the foregoing, then Executive shall
hold all of the same in
trust and as a fiduciary for the Company and promptly deliver the same to the
Company to be
held by the Company pursuant to and in accordance with the provisions of this
Agreement.
8. Event of Default. The following shall each constitute an "Event of
Default" hereunder:
8.1 If Executive shall fail to make any payment of principal or interest
as required under the
Note; or
8.2 Executive shall breach, violate or fail to perform or observe any
covenant, obligation,
agreement, condition or other provision contained in this Agreement; or
8.3 If any representation or warranty made by Executive in this Agreement
shall be untrue or
incorrect in any material aspect; or
8.4 Executive shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary,
or shall make an assignment for the benefit of creditors, or any petition for
an order for relief
shall be filed by or against Executive under the federal Bankruptcy Code or
any similar state
insolvency statute, or Executive shall make any offer of settlement,
extension or compromise to
his unsecured creditors generally; or
8.5 Executive shall challenge or contest in any action, suit or
proceeding the validity or
enforceability of the Note or this Agreement, or the validity, legality or
enforceability of any of
the Secured Obligations or the perfection or priority of any lien granted to
the Company; or
8.6 Executive shall sell, assign or otherwise transfer, or attempt to
sell, assign or otherwise
transfer, all or any portion of the Pledged Shares without the Company's
prior written consent, or
create or permit to exist any pledge, hypothecation or encumbrance on all or
any portion of the
Pledged Shares, except for the pledge made hereby, or the making of any levy,
seizure or
attachment thereof or thereon.
9. Remedies.
9.1 Upon the occurrence of any Event of Default, the Company may, at its
option exercise the
rights with respect to the Collateral contemplated in Section 7 of this
Agreement, and, in addition
to exercising all other rights or remedies hereunder or under applicable law
or equity, proceed to
exercise with respect to the Collateral all rights, options and remedies of a
secured party upon
default as provided under the Uniform Commercial Code as then adopted in the
State of
Washington.
9.2 The rights of the Company upon the occurrence of any Event of Default
shall include,
without limitation, the following:
(a) The right to the immediate possession of the Collateral not then in
the Company's
possession without requirement of notice or demand or of any legal process.
(b) The right to have transferred to or registered in the name of the
Company, or its nominee
or nominees, all or any portion of the Collateral and thereafter to exercise
all rights with respect
thereto as the absolute owner thereof, without notice or liability to
Executive, except to account
for property actually received by the Company.
(c) The right to sell or otherwise dispose of the Collateral (including,
without limitation,
delivering the Pledged Shares, together with any stock powers and/or other
documents of
conveyance executed incident thereto and/or pursuant to this Agreement) or
any part thereof at
one or more public or private sales, in one or more lots or parcels,
regardless of whether the
Collateral is present at the place of sale, for cash or credit or for future
delivery, and on such
terms and conditions and in such manner as the Company may determine in its
sole and absolute
discretion, with the Company having the right to bid upon and be the
purchaser of any or all of
the Collateral so sold at any public sale. To the extent permitted by
applicable law, each such
public or private sale may be held without demand or advertisement or notice
of intention to sell
or of the time or place of sale, except as otherwise expressly provided
herein, and without prior
judicial hearing or other notice or demand of any kind, except as otherwise
expressly provided
herein, all of which are hereby expressly and unconditionally waived by
Executive. Any public
or private sale held pursuant to this Section 9.2(c) shall be held in a
commercially reasonable
manner. Executive agrees that it shall be reasonable for the Company to sell
the Collateral on
credit for present or future delivery without any assumption of any credit
risk.
(d) The right to, in the Company's name, or in the name of the
undersigned, demand, ▇▇▇ for,
collect and receive money, securities and other property which may at any
time be payable or
receivable on account of or in exchange for any Collateral, or make any
compromise or
settlement that the Company considers desirable with respect thereto or renew
or extend the time
of payment or otherwise modify the terms of any obligation included in the
Collateral; provided,
however, it is expressly agreed that the Company shall not be obligated to
take any step to
preserve rights against prior parties on any of the Collateral, and that
reasonable care of the
Collateral shall not include the taking of any such step.
(e) The right to recover the reasonable expenses of the Company in
preparing for sale and
selling the Collateral and other like expenses, together with court costs and
reasonable attorneys'
fees incurred by the Company.
(f) The right to proceed by appropriate legal process at law or in equity
to enforce any
provision of this Agreement or in aid of the execution of any power of sale,
or for foreclosure of
the security interest of the Company in the Collateral, or for the sale of
the Collateral under the
judgment or decree of any court.
(g) In furtherance of the rights and remedies of the Company upon the
occurrence and during
the continuance of an Event of Default, Executive hereby constitutes any
officer of the
Company as its proxy and attorney-in-fact to complete, execute and file with
the Securities and
Exchange Commission one or more notices of proposed sale of securities
pursuant to Rule 144
or Rule 144A under the Securities Act of 1933, and this appointment shall be
deemed coupled
with an interest and is and shall be irrevocable until all of the Secured
Obligations have been
paid in full to the Company.
9.3 All proceeds derived from the enforcement by the Company of any one
or more of the
rights and remedies set forth in this Section 9, after deducting therefrom
all costs and expenses
(including reasonable attorney fees) paid or incurred by the Company in
enforcing such rights
and remedies, shall be applied by the Company to the payment of the Secured
Obligations in the
order set forth in the Note. In the event said proceeds exceed the
aggregate amount of Secured
Obligations, the Company shall promptly remit the balance to the Executive.
10. Exercise of Remedies. The rights and remedies of the Company shall
be deemed to be
cumulative, and the exercise of any right or remedy shall not be deemed to be
an election of that
right or remedy to the exclusion of any other right or remedy.
11. Waiver. Executive hereby waives any claim arising by reason of (a)
the fact that the price
or prices for which the Collateral or any part thereof is sold at any private
sale or sales are less
than the price which would have been obtained at a public sale or sales or
are less than the
amount of the Secured Obligations provided that any such private sale shall
be conducted in a
commercially reasonable manner; (b) any reasonable delay by the Company in
selling the
Collateral following the occurrence of an Event of Default, including,
without limitation, any
delays in selling the Collateral resulting from the compliance by the Company
with applicable
federal and state securities laws, even if the price of the Collateral
thereafter declines; or (c) the
immediate sale of the Collateral upon the occurrence of an Event of Default,
even if the price of
the Collateral should thereafter increase.
12. Payment of Costs, Attorneys' Fees and Expenses. Executive shall pay
all reasonable costs,
attorneys' fees and other expenses of whatever kind incurred by the Company
in connection with
(a) enforcing this Agreement, (b) obtaining possession of the Collateral, (c)
the protection and
preservation of the Collateral, and (d) any litigation involving the
Collateral, any benefit
accruing by virtue of the provisions hereof or the rights of the Company
hereunder,
13. Irrevocable Attorney-in-Fact. Executive hereby irrevocably appoints
the Company and/or
any officer thereof as Executive's attorney-in-fact to, if Executive fails to
do so upon the
Company's written demand, (a) do all acts and things which the Company may
deem necessary
or appropriate in its reasonable discretion to perfect and to continue the
perfected status of the
security interest in the Collateral created in favor of the Company pursuant
to this Agreement
and to protect the Collateral, and (b) to perform such other acts in
connection with the Collateral
as the Company determines in its reasonable discretion to be necessary or
appropriate to
effectuate the purposes and provisions of this Agreement.
14. Return of Collateral. The Company may at any time deliver the
Collateral that it holds, or
any part thereof, to Executive. The receipt by Executive of the Collateral
or any part thereof,
shall be a complete and full discharge of the Company with respect to such
Collateral, and the
Company shall be discharged from any liability or responsibility with respect
thereto.
15. Waiver of Hearing. To the extent permitted by applicable law,
Executive hereby
irrevocably and expressly waives (a) any constitutional or other right to a
judicial hearing prior
to the time the Company takes possession of and/or disposes of the Collateral
or any part thereof
as provided in Section 9 hereof, and (b) all rights to redeem or reclaim the
Collateral or any part
thereof, whether sold at public or private sale.
16. General Waivers. Any forbearance or failure or delay by the Company
in exercising any
right, power or remedy shall not preclude the further exercise thereof, and
every right, power and
remedy of the Company shall continue in full force and effect until such
right, power or remedy
is specifically waived in a writing executed by the Company. Executive
hereby irrevocably and
expressly waives (a) any right to require the Company to proceed against any
person or to
exhaust any other security for the Secured Obligations or to pursue any
remedy in its power prior
to enforcing its security interest in the Collateral and its other rights
hereunder, and (b) any right
to require the Company to enforce its security interest in all of the
Collateral contemporaneously
in time. It is understood and agreed by Executive that the Company has the
right, in its sole and
absolute discretion, to enforce or forbear from enforcing its security
interest in the Collateral or
any part thereof as the Company elects in its sole and absolute discretion.
17. Notice.
17.1 Any sale of any Collateral may be made without demand of performance
and any
requirement of the Uniform Commercial Code of reasonable notice of the
intended sale or other
disposition of the Collateral shall be met, if such notice is given to
Executive at least ten (10)
Business Days, as hereinafter defined, before the time of sale, disposition
or other event or thing
giving rise to the requirement of notice.
17.2 All notices and other communications under this Agreement shall be
in writing and shall
be personally delivered or sent by registered or certified United States
mail, return receipt
requested, postage prepaid, addressed as follows (or to such other address as
to which any party
shall have given the other party written notice):
If to the Executive ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
If to the Company: ▇▇▇▇ Shipyards Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, P.C.
▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
All notices and other communications hereunder shall be deemed given upon the
earlier of (a)
actual delivery in person, or (b) two (2) Business Days after having been
deposited in the United
States mails, in accordance with the foregoing, as applicable. As used
herein, the term "Business
Day" means each day of the week other than Saturdays, Sundays and other days
on which any
federal bank is closed to the public.
18. Further Assurances. Executive shall execute all such other documents
or instruments, and
take such other actions, as the Company may reasonably request to more fully
create and
maintain, or to verify, ratify or perfect, the security interest in the
Collateral hereby created in
favor of the Company pursuant to this Agreement.
19. No Implied Waiver. All options and rights of the Company hereunder
are continuing, and
the failure of the Company to exercise any such option or right of election
in any instance shall
not be construed as waiving the right to exercise such option or right at any
subsequent time or
be construed as waiving the right to exercise any other option or right
hereunder or at law or in
equity. No exercise by the Company of any of the options, rights or powers
provided herein and
no delay or omission in the exercise of such options, rights or powers
provided herein shall be
construed to exhaust the same or be construed as a waiver thereof, and each
such option, right
and power may be exercised at any time and from time to time.
20. Entire Agreement; Amendment; Severability. This Agreement and the
Note contains the
entire agreement between the parties respecting the matters herein set forth
and supersedes all
prior agreements, whether written or oral, between the parties respecting
such matters; and
Executive and the Company acknowledge that there are no contemporaneous oral
agreements
with respect to the subject matter hereof. This Agreement may not be
changed, modified or
amended, except by a writing executed by all parties hereto; and no
obligation of the Executive
can be released or waived by the Company or any agent of the Company, except
by a writing
duly executed by the Company. If any provision of this Agreement is found or
declared to be
invalid or unenforceable by any court or other competent authority having
jurisdiction, such
finding or declaration shall not invalidate any other provision hereof, and
this Agreement shall
thereafter continue in full force and effect except that such invalid or
unenforceable provision
shall be interpreted and reformed in a reasonable manner by said court or
competent authority
having jurisdiction or shall be deemed deleted to the same extent as if it
had never existed, as
said court or other competent authority having jurisdiction may determine.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with
the laws of the State of Washington, except to the extent that the
applicability of any of such
laws may now or hereafter be preempted by Federal law, in which case such
Federal law shall so
govern and be controlling.
22. Successors and Assigns. This Agreement shall bind Executive and his
heirs, successors,
legal representatives and assigns and shall inure to the benefit of the
Company and its successors
and assigns, including, without limitation, each subsequent holder of the
Note.
23. Captions. The various section headings used in this Agreement are
inserted for
convenience of reference only and shall be ignored in interpreting or
construing the provisions
hereof.
24. Recitals. The recitals to this Agreement are material provisions
hereof, and are
incorporated herein by this reference.
25. Time of the Essence. Time shall be of the essence in the performance
of all of Executive's
covenants, obligations and agreements under this Agreement.
26. Counterpart Facsimile Execution. For purposes of this Agreement, a
document (or
signature page thereto) signed and transmitted by facsimile machine or
telecopier is to be treated
as an original document. The signature of any party thereon, for purposes
hereof, is to be
considered as an original signature, and the document transmitted is to be
considered to have the
same binding effect as an original signature on an original document. At the
request of any party
hereto, any facsimile or telecopy document is to be re-executed in original
form by the parties
who executed the facsimile or telecopy document. No party hereto may raise
the use of a
facsimile machine or telecopier or the fact that any signature was
transmitted through the use of a
facsimile or telecopier machine as a defense to the enforcement of this
Agreement or any
amendment or other document executed in compliance with this Section.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the ___
day of
September, 1999, to be effective as of the day and year first above written.
"Executive" "Company"
_______________________________ ▇▇▇▇ SHIPYARDS CORPORATION
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By:_________________________________
Name: ______________________________
Title: _____________________________