EXHIBIT 10.11
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (as from time to time amended,
supplemented, restated, or otherwise modified, "Agreement") is entered into
effective May 15, 1999 ("Effective Date") by and among Onsale, Inc., a Delaware
corporation ("Lender"), on the one hand, and, on the other hand, ▇▇▇▇ ▇▇▇▇, an
individual and ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇, his spouse (collectively, "Borrower"). This
Agreement, the Note (defined in Section 1.2), the Second Mortgage (defined in
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Section 1.3), the Pledge Agreement (defined in Section 1.4) and any other
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documents entered into pursuant to this Agreement or in connection with this
Loan (defined in Section 1.1) are hereinafter sometimes collectively referred to
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as the "Loan Documents."
WHEREAS, Lender desires to loan a certain sum to Borrower and Borrower
wishes to borrow a certain sum from Lender in order that Borrower may purchase a
primary residence in northern California;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and covenants set forth in this Agreement, Lender
and Borrower hereby agree as follows:
1. AMOUNT AND TERMS OF LOAN.
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1.1 Loan. Subject to the terms and conditions of this Agreement, and
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in reliance on the representations, warranties and covenants of Borrower in this
Agreement, Lender shall loan Borrower the principal amount of Eighty-Eight
Thousand Dollars ($88,000) ("Loan") for the purchase of a primary residence in
Northern California ("Northern California Residence").
1.2 Note; Interest. Borrower's indebtedness to Lender under the Loan
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Documents will be evidenced by a Secured Promissory Note executed by Borrower
substantially in the form attached as Exhibit A (the "Note"). The Note will
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provide that interest on the unpaid principal of this Loan will accrue at a rate
equal to four and eighty-one hundredths percent (4.81%) per annum. Accrued
interest is payable on the date that is three months after the date of the Note
and every three months thereafter until this Loan has been repaid in full.
Interest will continue to accrue until the date on which all amounts owing under
the Loan Documents have been repaid in full.
1.3 Security. Borrower's indebtedness to Lender under the Loan
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Documents will be secured by a second mortgage in such form as is customarily
utilized in the Province of British Columbia, Canada (the "Second Mortgage") on
property owned by Borrower and located at ▇▇▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇ ("Property"). The Second Mortgage will be executed by Borrower in
favor of Lender.
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1.4 Additional Security. Borrower's indebtedness to Lender under the
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Loan Documents will also be secured by Borrower's pledge of certain shares of
Lender equity securities (the "Pledged Shares") in accordance with the terms of
a pledge agreement, dated May 15, 1999, substantially in the form attached as
Exhibit B (the "Pledge Agreement"). Borrower shall immediately transfer to
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Lender upon issuance all Lender equity securities that Borrower acquires
pursuant to: (a) Borrower's exercise of options to purchase Lender equity
securities under Lender's 1995 Equity Incentive Plan or any subsequent or
similar stock option plan of Lender, or (b) any employee stock purchase
agreement or other similar plan of Lender.
1.5 Maturity of Loan. The unpaid principal amount of this Loan and
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all unpaid interest accrued thereon, will be immediately due and payable to
Lender in full on the date (the "Maturity Date") that is the earlier to occur
of: (a) twelve (12) months after the date of the Note, or (b) the date on which
the unpaid principal amount and interest due under this Loan becomes due and
payable in full under Section 5.1. The Lender agrees to release the Borrower
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from any and all obligations in the Loan Documents upon full payment of the Loan
and Interest.
1.6 Prepayment. Borrower may prepay the unpaid principal and
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interest due under this Loan at any time, without penalty, in whole or in part
in amounts of at least Ten Thousand Dollars ($10,000). Each prepayment will be
applied as follows: (a) first to the payment of accrued interest, and (b)
second, to the extent that the amount of such prepayment exceeds the amount of
all such accrued interest, to the payment of principal on this Loan. Until this
Loan is paid in full, Borrower shall immediately apply: (a) if no default event
has occurred under the Loan Documents and is continuing, fifty percent (50%) of
the net before tax proceeds from any sale by Borrower of the Pledged Shares, or
(b) if a default event has occurred and is continuing, one hundred percent
(100%) of the net before tax proceeds from any sale by Borrower of the Pledged
Shares, to pay down this Loan in accordance with this Agreement.
1.7 At Will Employment. Borrower is an "at will" employee of Lender,
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and nothing in this Agreement or any exhibit shall be construed as a promise of
continued employment.
2. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents
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and warrants to Lender that:
2.1 Use of Loan Proceeds. Borrower will apply the entire Loan
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proceeds towards the purchase of the Northern California Residence no later than
June 1, 1999.
2.2 Nature of Purchase. Borrower's purchase of the Northern
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California Residence will be an arm's length transaction.
2.3 Title to Property. The Property is free and clear of all
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mortgages, deeds of trust, liens, encumbrances and security interests, except
for: (a) if Borrower has a first lender for the Property, the mortgage filed by
such first lender; (b) statutory liens for the payment of current taxes that are
not yet delinquent; and (c) subject to approval by Lender, encumbrances
identified in Exhibit C attached hereto.
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2.4 Balloon Payment. Borrower acknowledges that the unpaid principal
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amount of this Loan and all unpaid interest accrued thereon will be immediately
due and payable to Lender in full as one balloon payment on the Maturity Date.
3. COVENANTS OF BORROWER.
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3.1 Insurance Covering Collateral. Borrower shall maintain all risk
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property damage insurance policies covering the Property in an amount at least
equal to the value of the dwelling on the Property.
3.2 Further Assurances. In addition to the obligations and documents
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that this Agreement expressly requires Borrower to execute, deliver and perform,
Borrower will execute, deliver and perform any and all further acts or documents
which Lender may reasonably require in order to carry out the purposes of this
Agreement or any of the other Loan Documents.
4. CONDITIONS PRECEDENT TO OBLIGATIONS OF LENDER. The obligation of
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Lender to make this Loan is subject to the satisfaction (or written waiver by
Lender) of each and all of the following conditions precedent:
4.1 Representations True. All representations and warranties of
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Borrower contained in this Agreement and in all other Loan Documents will be
true, correct and complete in all respects.
4.2 Note, Second Deed of Trust and Stock Pledge Agreement. Lender
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will have received from Borrower the Note, the Second Deed of Trust and the
Stock Pledge Agreement, each duly executed by Borrower.
4.3 Loan Effective Date. The Effective Date of this Loan must be
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earlier than May 31, 1999.
5. DEFAULT BY BORROWER.
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5.1 Acceleration. The unpaid principal and interest due under this
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Loan will become immediately due and payable, without the need for any further
action on the part of Lender or any other holder of the Note: (a) upon
Borrower's sale, gift, assignment or other transfer of the Property, except for
transfers which, by law, cannot be restricted by a due-on-sale clause, (b) upon
Borrower's sale, gift, assignment or other transfer of the Northern California
Residence, except for transfers which, by law, cannot be restricted by a due-on-
sale clause, (c) upon termination of Borrower's employment with Lender for any
reason other than termination without cause by Lender or (d) upon Borrower's
failure to apply the appropriate proceeds of any sale of Pledged Shares to pay
down this Loan in accordance with Section 1.6. In the event that Lender
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terminates Borrower's employment with Lender without cause, the unpaid principal
and interest due under this Loan will become immediately due and payable,
without the need for any further action on the part of Lender or any other
holder of the Note, on the date that is one hundred eighty (180) days after the
date of termination of Borrower's employment with Lender. In any case, this
Loan shall become due and payable in full no later than twelve (12) months after
the date of the Note.
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5.2 Default. Borrower will be deemed to be in default of this Loan
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if: (a) Borrower fails to pay Lender (or, in the event another party holds the
Note, such holder) the full amount of unpaid principal and interest due under
this Loan on or before the Maturity Date, and (b) Borrower does not cure this
failure to pay within five (5) calendar days after Lender gives Borrower written
notice of such failure to pay.
5.3 Remedies Upon Default. Upon Borrower's default of this Loan,
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Lender may pursue its rights under the Note, the Second Mortgage and the Stock
Pledge Agreement. The rights and remedies of Lender herein provided will be
cumulative and not exclusive of any other rights or remedies provided by law or
otherwise.
6. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
6.1 Choice of Law and Venue.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE VALIDITY
OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR ANY REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA OR, AT THE SOLE OPTION
OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. EACH OF BORROWER AND LENDER WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 6.
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6.2 Jury Trial Waiver.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
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COMMON LAW OR STATUTORY CLAIMS. EACH OF BORROWER AND LENDER REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
7. MISCELLANEOUS.
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7.1 Entire Agreement. The Loan Documents constitute the entire
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agreement and understanding among the parties with respect to the subject matter
thereof and supersede any prior understandings or agreements of the parties with
respect to such subject matter.
7.2 Successors and Assigns. The terms and conditions of this
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Agreement will inure to the benefit of and be binding upon the respective
successors and assigns of the parties, including any subsequent holders of the
Note; provided, however, that Borrower may not assign or delegate any of its
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rights or obligations hereunder or under any other Loan Document or any interest
herein or therein without Lender's prior written consent.
7.3 No Third Party Beneficiaries. Nothing in this Agreement,
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express or implied, is intended to confer upon any third party any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.4 Construction. This Agreement and its exhibits are the result of
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negotiations between the parties and have been reviewed by each party hereto.
Accordingly, this Agreement will be deemed to be the product of the parties
hereto and no ambiguity will be construed in favor of or against any party.
7.5 Modification; Waiver. This Agreement may be modified or amended
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only by a writing signed by both parties hereto. No waiver or consent with
respect to this Agreement will be binding unless it is set forth in writing and
signed by the party against whom such waiver is asserted. No course of dealing
between Borrower and Lender will operate as a waiver or modification of any
party's rights under this Agreement or any other Loan Document. No delay or
failure on the part of either party in exercising any right or remedy under this
Agreement or any other Loan Document will operate as a waiver of such right or
any other right. A waiver given on one occasion will not be construed as a bar
to, or as a waiver of, any right or remedy on any future occasion.
7.6 Severability. The invalidity or unenforceability of any term or
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provision of this Agreement will not affect the validity or enforceability of
any other term or provision.
7.7 Attorneys' Fees. If either party hereto commences or maintains
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any action at law or in equity (including counterclaims or cross-complaints)
against the other party hereto by reason of the breach or default or claimed
breach or default of any term or provision of this Agreement or any other Loan
Document, then the prevailing party in said action will be entitled to recover
its reasonable attorneys' fees and court costs incurred therein. This provision
does not limit Lender's ability to recover additional expenses under the Note.
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7.8 Counterparts. This Agreement may be executed in one or two
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counterparts, each of which will be deemed an original, but together will
constitute one and the same instrument.
7.9 Section Titles. The Section titles contained in this Agreement
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are and will be without substantive meaning or content of any kind and are not
part of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the Effective Date.
BORROWER: LENDER:
OnSale, Inc.
/s/ ▇▇▇▇ ▇▇▇▇ * By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇, an individual ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice
President and Chief Financial Officer
/s/ ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇ *
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▇▇▇▇▇▇ ▇▇▇-▇▇▇▇, an individual
* Signed without legal counsel.
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EXHIBIT A
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SECURED PROMISSORY NOTE
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Menlo Park, California
$88,000.00 May 15, 1999
For value received, ▇▇▇▇ ▇▇▇▇, an individual, and ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇, his
spouse (collectively, "Borrower") hereby promise to pay to the order of OnSale,
Inc., a Delaware corporation (the "Company") on or before August 15, 2000, at
the Company's principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇, or at such other place as the Company may direct, the principal sum of
Eighty-Eight Thousand Dollars ($88,000), together with interest at the rate of
four and eighty-one hundredths percent (4.81%), provided, however, that the rate
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at which interest will accrue on unpaid principal under this secured promissory
note (as may be amended, restated, supplemented, or otherwise modified from time
to time, this "Note") will not exceed the highest rate permitted by applicable
law. Accrued interest is payable on the date that is three months after the
date of this Note and every three months thereafter until this Note has been
repaid in full. Interest will continue to accrue until the date on which all
amounts owing on this Note have been repaid in full.
This Note is issued pursuant to and governed by the terms of that
certain Loan and Security Agreement, dated May 15, 1999, between the Company and
Borrower (the "Loan Agreement"). Terms not defined herein shall have the
meanings assigned to them in the Loan Agreement.
1. Security. Payment of this Note is secured by: (a) the Second
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Mortgage on the Property, and (b) Borrower's pledge of the Pledged Shares in
accordance with the terms of the Pledge Agreement.
2. Acceleration. The unpaid principal and interest due under this
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Note will become immediately due and payable in accordance with the terms of the
Loan Agreement. In any case, this Note shall become due and payable in full no
later than twelve (12) months after the date of this Note.
3. Default. Borrower will be deemed to be in default under this
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Note as provided in the Loan Agreement.
4. Prepayment. Borrower may prepay the unpaid principal and interest
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due as provided in the Loan Agreement.
5. Assignment. This Note is freely transferable and assignable by
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the Company. Any reference to the Company herein will be deemed to refer to any
subsequent transferee of this Note at such time as such transferee holds this
Note.
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6. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
6.1 Choice of Law and Venue.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE VALIDITY
OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR ANY REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA OR, AT THE SOLE OPTION
OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE
PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
CONTROVERSY. EACH OF BORROWER AND LENDER WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 6.
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6.2 Jury Trial Waiver.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH OF BORROWER AND LENDER REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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7. Waivers. Borrower hereby waives presentment, notice of non-
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payment, notice of dishonor, protest, demand and diligence.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and
year first above written.
BORROWER:
/s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇-▇▇▇▇
ACCEPTED AND ACKNOWLEDGED:
THE COMPANY
OnSale, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice
President and Chief Financial
Officer
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EXHIBIT B
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PLEDGE AGREEMENT
This Pledge Agreement as the same may be amended, modified or supplemented
from time to time ("Pledge Agreement") dated as of May 15, 1999, is made by
and between, on the one hand, ▇▇▇▇ ▇▇▇▇, an individual, and ▇▇▇▇▇ ▇▇▇-▇▇▇▇, his
spouse (collectively referred to hereinafter as "Pledgor"), and, on the other
hand, Onsale, Inc., a Delaware corporation ("Pledgee").
R E C I T A L S
- - - - - - - -
A. Pursuant to that certain Loan and Security Agreement dated as of May
15, 1999 (as the same may from time to time be amended, modified or
supplemented, the "Loan Agreement"), by and between Pledgor and Pledgee, Pledgee
has agreed to make certain advances of money and to extend certain financial
accommodations to Pledgor in the amounts and manner set forth in the Loan
Agreement (collectively, the "Loan").
B. Pledgee is willing to make the Loan to Pledgor, but only upon the
condition, among others, that Pledgor shall have executed this Pledge Agreement
and delivered same to Pledgee and shall have delivered to Pledgee the Pledged
Collateral (each as defined below), in order to secure the obligations of
Pledgor under the Loan Documents.
Agreement
Now, Therefore, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor and Pledgee hereby agree as follows:
Section 1. Definitions. All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.
"Pledged Collateral" shall have the meaning set forth in Section 2.
"Obligations" mean all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Pledgor to the
Pledgee whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising.
Section 2. Pledge. As security for the full, prompt and complete payment
and performance when due (whether by stated maturity, by acceleration or
otherwise) of the Obligations, together with, without limitation, the prompt
payment of all expenses, including, without limitation, reasonably attorneys'
fees and legal expenses, incidental to the collection of the Obligations and the
enforcement or protection of Pledgee's lien in and to the collateral pledged
hereunder, Pledgor hereby pledges and grants to Pledgee a
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security interest in all of the following (collectively, the "Pledged
Collateral"): the shares listed on Schedule 1 hereto (the "Pledged Shares")
owned or held by Pledgor and the certificates representing the Pledged Shares,
and all dividends, cash instruments, and other property or proceeds from time to
time received, receivable, or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares. The Obligations and all other obligations
and covenants to be performed by Pledgor under this Pledge Agreement shall
hereinafter from time to time be collectively referred to as the "Secured
Obligations."
Section 3. Delivery of Pledged Collateral. Pledgor shall deliver to
Pledgee all certificates or other instruments representing or evidencing any
Pledged Shares, accompanied by appropriate duly executed instruments of transfer
or assignment (including, without limitation, stock powers) in blank. Except as
specifically provided in Section 6, Pledgor shall receive all certificates,
cash, instruments, and other property or proceeds from time to time received,
receivable, or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares in trust for Pledgee and shall immediately upon receipt
deliver to Pledgee such certificates, cash, instruments, and other property and
proceeds, together with any necessary endorsement.
Section 4. Representations and Warranties. Pledgor hereby represents and
warrants to Pledgee as follows:
(a) Pledgor is, at the time of delivery of the Pledged Shares to
Pledgee hereunder and at all times which this Pledge Agreement is in effect
shall be, the sole holder of record and the sole beneficial owner of the Pledged
Collateral pledged to Pledgee by Pledgor under Section 2 of this Pledge
Agreement, free and clear of any lien thereon or affecting the title thereto,
except for the lien created by this Pledge Agreement.
(b) None of the Pledged Shares has been transferred in violation of
the securities registration, securities disclosure or similar laws of any
jurisdiction to which such transfer may be subject with respect to which such
transfer could have a material adverse effect.
(c) No consent, approval, authorization or other order of any
person and no consent or authorization of any governmental authority or
regulatory body is required to be made or obtained by Pledgor for the pledge by
Pledgor of the Pledged Collateral pursuant to this Pledge Agreement or for the
execution, delivery, or performance of this Pledge Agreement by Pledgor.
(d) This Pledge Agreement has been duly executed and delivered by
Pledgor and constitutes a legal, valid, and binding obligation of Pledgor
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or other similar laws affecting the rights of
creditors generally or by the application of general equity principles.
▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and represents to Pledgee that all
representations and warranties contained in this Pledge Agreement shall be true
and correct at the time of Pledgor's execution of this Pledge Agreement.
Section 5. Covenants of Pledgor. Pledgor covenants and agrees that until
the Loan has been paid and performed in full or otherwise terminated by Pledgee
in writing or until Pledgor's Secured Obligations under this Pledge Agreement
have been otherwise terminated pursuant to Section 8, below:
(a) Pledgor shall not sell, assign, transfer, pledge, or otherwise
encumber any of Pledgor's rights in or to the Pledged Collateral pledged by
Pledgor or any unpaid dividends or other distributions or payments with respect
thereto or ▇▇▇▇▇ ▇ ▇▇▇▇ therein except as otherwise permitted by this Pledge
Agreement.
(b) Pledgor shall, at Pledgor's own expense, promptly execute,
acknowledge, and deliver all such instruments and take all such action as
Pledgee from time to time may reasonably request in order to ensure to Pledgee
the benefits of the lien in and to the Pledged Collateral intended to be created
by this Pledge Agreement.
(c) Pledgor shall maintain, preserve and defend the title to the
Pledged Collateral and the lien of Pledgee thereon against the claim of any
other person.
Section 6. Pledgor's Rights. So long as no Event of Default shall have
occurred and be continuing:
(a) Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral or any part thereof for all
purposes not inconsistent with the provisions of this Pledge Agreement.
(b) Pledgor shall be entitled, from time to time, to collect and
receive for Pledgor's own use, and shall not be required to pledge pursuant to
Section 2 above, any cash dividends or distributions permitted pursuant to the
terms of the Loan Agreement to be paid in respect of the Pledged Shares;
provided, however, that until actually paid, all rights to any such permitted
dividends and distributions shall remain subject to the lien created by this
Pledge Agreement.
Section 7. Defaults and Remedies.
(a) Events of Default. It shall be an "Event of Default"
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hereunder upon the occurrence of any one or more of the following events:
(1) The occurrence of an Event of Default under or as defined
in the Loan Agreement; or
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(2) Pledgor fails or neglects to perform, keep or observe any
of the covenants contained in this Pledge Agreement and such failure is not
cured within twenty (20) days after notice from Pledgee of the same.
(b) Remedies. Upon the occurrence of an Event of Default and so
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long as the same shall be continuing:
(1) All of any portion of the Secured Obligations may, at the
option of Pledgee, and without demand, notice, or legal process of any kind, be
declared, and immediately shall become due and payable.
(2) Pledgee is hereby authorized and empowered to transfer and
register in its name or in the name of its nominee the whole or any part of the
Pledge Collateral, to exchange certificates or instruments representing or
evidencing Pledge Shares for certificates or instruments of smaller or larger
denominations, to exercise the voting rights with respect thereto, to collect
and receive all cash dividends and other distributions made thereon, to sell in
one or more sales after ten (10) days' prior written notice of the time and
place of any public sale or of the time after which a private sale is to take
place (which notice Pledgor agrees is commercially reasonable), but without any
other previous notice or advertisement, the whole or any part of the Pledge
Collateral and to otherwise act with respect to the Pledge Collateral as though
Pledgee were the outright owner thereof, Pledgor hereby irrevocably constitutes
and appoints Pledgee the proxy and attorney-in-fact of Pledgor, with full power
of substitution (which appointment is coupled with an interest) to take all such
actions permitted hereunder or otherwise permitted by law; provided, however,
Pledgee, shall not have any duty to exercise any such right or to preserve the
same and shall not be liable for any failure to do so or for any delay in doing
so.
(3) In the event of any sales hereunder, Pledgee shall, after
deducting all costs or expenses of every kind (including, without limitation,
reasonable attorneys' fees, costs and other reasonable legal expenses), for
care, safekeeping, collection, sale, delivery, or otherwise, apply the residue
of the proceeds of the sales to the payment or reduction, either in whole or in
part, of the Secured Obligations in accordance with the agreements and
instruments governing and evidencing such Secured Obligations, return the
surplus, if any, to Pledgor.
(4) If, at any time when Pledgee shall determine to exercise
its right to sell the whole or any part of the Pledged Collateral hereunder,
such Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as
amended, Pledgee may, in its discretion (subject only to applicable requirements
of law), sell such Pledged Collateral or part thereof by private sale in such
manner and under such circumstances as Pledgee may deem necessary or advisable,
but subject to the other requirements of this Section 7 and shall not be
required to effect such registration or cause the same to be effected.
4
Section 8. Termination. Immediately following the complete payment,
performance or other satisfaction of all the Secured Obligations or at such time
as this Pledge Agreement and the Loan Documents are terminated or released by
Pledgee, Pledgee shall deliver to Pledgor the Pledged Collateral pledged by
Pledgor at the time subject to this Pledge Agreement and all instruments of
assignment executed in connection therewith, free and clear of the lien hereof,
and, except as otherwise provided herein, all of Pledgor' obligations hereunder
shall at such time terminate.
Section 9. Miscellaneous.
(a) Entire Agreement. This Pledge Agreement constitutes and
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contains the entire agreement of the parties with respect to the subject matter
hereof and supersedes any and all prior and contemporaneous agreements,
negotiations, correspondence, understandings and communications between the
parties, whether written or oral, respecting the subject matter hereof.
(b) Assignability. This Pledge Agreement shall be binding upon
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and inure to the benefit of Pledgor and Pledgee and their respective successors
and assigns, except that Pledgor shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Pledgee.
(c) Notices. Except as otherwise provided herein, any notice or
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other communication herein required or permitted to be given shall be in writing
and may be delivered in person, with receipt acknowledged, or sent by telex,
telecopy, computer transmission or by United States mail, registered or
certified, return receipt requested, postage prepaid.
(d) No Waiver; Amendments. No failure on the part of Pledgee to
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exercise, no delay in exercising and no course of dealing with respect to, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. This Pledge
Agreement may not be amended or modified except by written agreement between
Pledgor and Pledgee, and no consent or waiver hereunder shall be valid unless in
writing and signed by Pledgee.
(e) Severability. If any provision of this Pledge Agreement is
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held to be unenforceable for any reason, it shall be adjusted, if possible,
rather than voided in order to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Pledge Agreement shall be
deemed valid and enforceable to the full extent possible.
5
(f) Governing Law. This Pledge Agreement shall be governed by, and
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construed in accordance with, the laws of the State of California as applied to
contracts made and performed entirely within the State of California by
residents of such State.
In Witness Whereof, the parties hereto have caused this Pledge
Agreement to be duly executed as of the date first written above.
Pledgor: Pledgee:
Onsale, Inc.
/s/ ▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------ -----------------------------------
▇▇▇▇ ▇▇▇▇, an individual ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Chief
Financial Officer
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SCHEDULE 1
Attached to and forming a part of that certain Pledge Agreement ("Pledge
Agreement") dated as of May 15, 1999, executed by ▇▇▇▇ ▇▇▇▇, an individual, and
▇▇▇▇▇ ▇▇▇-▇▇▇▇, his spouse (collectively referred to hereinafter as "Pledgor"),
and, on the other hand, Onsale, Inc., a Delaware corporation ("Pledgee").
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Stock Issuer Class of Stock Stock Certificate Number of Shares
Numbers
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7
EXHIBIT C
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LIST OF PERMITTED ENCUMBRANCES ON THE PROPERTY
1. Mortgage No.BL401025 registered in favour of the
Hongkong Bank of Canada.