PLEDGE AGREEMENT
PLEDGE AGREEMENT made the 18th day of November, 1997 (the "Agreement")
among EIF Holdings, Inc. (hereinafter referred to as "Pledgor"), Deere Park
Capital Management, Inc., as nominee for EIFH Joint Venture, L.L.C. and certain
Reg. D Hedge Funds (hereinafter referred to as "Pledgee") and Deere Park
Equities, L.L.C. (hereinafter referred to as "Custodian").
WHEREAS, pursuant to a Stock Purchase Agreement, dated September 30,
1997 (the "Stock Purchase Agreement"), by and among Pledgor and the
stockholders of ▇.▇. Manta, Inc. (the "Company"), Pledgor has agreed to
purchase all of the issued and outstanding stock of the Company (the "Manta
Shares");
WHEREAS, in connection with the Stock Purchase Agreement, Pledgee has
loaned the sum of Six Million, Five Hundred Thousand Dollars ($6,500,000.00) to
Pledgor, as evidenced by a Promissory Note in such amount issued by Pledgor to
Pledgee on the date hereof (the "Note");
WHEREAS, the payment of the Note and certain other amounts due
thereunder, as referenced in the Note (with such amounts, together with the Note
referred to hereinafter collectively as the "Indebtedness") is intended to be
secured by the pledge to the Pledgee of the Manta Shares and certain shares held
in the name of the Pledgor during the period when the Indebtedness remains
unpaid.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. Pledgor hereby deposits with the Custodian (i) certificates for all
of the Manta Shares with stock powers duly endorsed in blank for transfer and
(ii) certificates representing One Million (1,000,000) shares of Pledgor, fully
registered and freely tradeable, free of any restrictions or covenants (the "EIF
Shares"), with stock powers duly endorsed in blank for transfer. The Manta
Shares and the EIF Shares shall be collectively called the "Shares". The
Custodian shall hold said certificates as custodian under the terms, provisions,
and conditions of this Agreement. The Shares and stock powers described in this
Paragraph 1 shall be collectively called the "Custodial Documents". The Shares
are collateral security during the term hereof for the benefit of Pledgee to
secure payment of the Indebtedness.
2. All voting rights incident to the Shares shall be vested in Pledgor
until the occurrence of an Event of Default as defined in Paragraph 4 below and
Pledgee has notified the Custodian to deliver the Shares pursuant to Paragraph 5
hereof.
3. Pledgor covenants and agrees that until the Indebtedness is
completely paid or otherwise satisfied, and except in the event Pledgee consents
otherwise in writing, Pledgor will take such action as may be necessary to
maintain and renew the Company's corporate existence.
4. Upon the expiration of fifteen (15) days after written notice from
Pledgee, the occurrence of any one or more of the following events shall be an
event of default ("Event of Default") hereunder if it remains uncured after the
expiration of such fifteen (15) day period:
(a) The failure of Pledgor to pay any sum when due and payable under
the Note;
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "Bankruptcy Law"), Pledgor shall (1) commence a voluntary
case or proceeding; (2) consent to the entry of an order for relief against it
in an involuntary case; (3) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (4) make an assignment for the benefit
of its creditors; or (5) admit in writing its inability to pay its debts as they
become due.
(c) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (1) is for relief against Pledgor in an
involuntary case; (2) appoints a trustee, receiver, assignee, liquidator or
similar official for Pledgor or any substantial part of any of Pledgor's
properties; or (3) orders the liquidation of Pledgor and the order or decree is
not dismissed within ninety (90) days.
(d) The occurrence of any other event of default of Pledgor,
as provided in the Note.
5. In the event that an Event of Default as provided in Paragraph 4 has
occurred and is continuing for fifteen (15) days after Pledgor's receipt of
written notice of such default, then promptly (and in no event more than five
(5) business days) after notice to the Custodian from or on behalf of Pledgee
(with proof that a copy of such notice has been received by Pledgor or by
certified mail, return receipt requested) of the occurrence of an Event of
Default which has continued for more than fifteen (15) days, the Custodian shall
deliver to Pledgor (a) the Shares, and (b) all stock transfer powers on deposit
with Custodian pursuant to Paragraph 1 hereof. In such event, Pledgee may
proceed to protect or enforce the following rights in any order, which rights
shall be cumulative and not exclusive:
(a) Pledgee may effect the transfer of the Shares into its own
name or that of a nominee of Pledgee; all voting rights pertaining to the Shares
may be immediately exercised by Pledgee, without any additional acts on the part
of Pledgee. This Agreement shall in such event constitute a proxy coupled with
an interest which shall be irrevocable by the Pledgor.
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(b) Pledgee may proceed to protect and enforce its rights by a
suit or suits in equity or at law, to enforce any covenant or agreement herein,
or to enjoin any violation of any term, provision or condition hereof, or in
execution or aid of any power herein granted, or to ▇▇▇ for and recover judgment
for the whole amount due Pledgee by any action or actions or suit or suits in
law or equity as the Pledgee may deem advisable.
(c) Pledgee may, by written notice to Pledgor, designate a
time not earlier than twenty (20) days after the giving of such notice to
Pledgor and at a place in the State of Illinois, for the sale of the Shares; and
Pledgee may (acting in a commercially reasonable manner) at such time and place
sell the Shares at public or private sale, as a unit or in smaller blocks, for
such price and upon such terms and conditions as Pledgee may reasonably
determine. After first deducting the costs of sale, Pledgee shall apply any
balance of the sale proceeds to the payment of the Obligations. Pledgor shall,
in any event, remain liable for any deficiency after such sale. In exercising
its rights hereunder this Paragraph 5, to the extent that it is determined that
the value of the Shares exceeds the then outstanding Obligations, Pledgee shall
be responsible to Pledgor for such excess value.
(d) If Pledgor shall, as a result of its ownership of the
Shares, become entitled to receive or shall receive any stock certificate or
other certificate or instrument, option or rights, in substitution of, as a
conversion of, or in exchange for any of the Shares or otherwise in respect
thereof, Pledgor shall accept the same as Pledgee's agent, hold the same in
trust for Pledgee and deliver the same forthwith to Pledgee in the exact form
received, together with a duly executed undated stock power or other transfer
document covering such certificate or instrument, to be held by Pledgee
hereunder as additional collateral security for the Obligations.
(e) The Custodian shall have no responsibility to determine
whether a default has occurred, it being Pledgee's obligation to notify
Custodian and Pledgor that an Event of Default has occurred. Custodian may rely
upon Pledgee's representation that an Event of Default has occurred.
6. In addition to and not in limitation of the foregoing, Pledgee shall
have all rights of a secured party under the Uniform Commercial Code of the
State of Illinois (the "UCC"). Pledgor retains its rights under the UCC, to the
extent such rights are not in conflict with the terms of this Agreement.
7. Each of the parties hereto agrees to waive any and all restrictions
on transfer set forth in the Company's Articles of Incorporation in connection
with the pledge of the Shares pursuant to this Agreement.
8. In acting as Custodian hereunder, Custodian: (a) shall have no
duties or obligations other than those specifically set forth herein, said
duties being purely ministerial in nature; (b) shall be regarded as making no
representations and having no responsibilities as to the validity, sufficiency,
value or genuineness of this Agreement or the security created thereby or any
Custodial Documents or other items deposited with it hereunder; and (c) may rely
on and shall be protected in acting upon or refraining from acting upon any
certificate, written instruction, instrument, opinion, notice, letter or any
other document delivered to it and reasonably believed by it to be genuine and
to have been signed by the proper party or parties.
Neither Custodian nor any of its directors, officers or employees shall
be liable to anyone for any action taken or omitted to be taken by it or any of
its directors, officers or employees hereunder except in the case of negligence
or willful misconduct.
Custodian may at any time resign as custodian hereunder by giving not
less than thirty (30) days' prior written notice of resignation to Pledgor and
Pledgee. Prior to the effective date of resignation as specified in such notice,
Pledgee will issue to Custodian a written instruction, authorizing redelivery to
such person or persons as Pledgee and Pledgor shall designate, of all of the
Custodial Documents then held by Custodian.
9. Custodian shall be prohibited from holding the Shares to secure any
obligation between Pledgor and the Custodian.
10. If and when Pledgor shall pay, satisfy, or otherwise discharge the
whole amount of the Indebtedness, and such payment, satisfaction or discharge
has been confirmed in writing by Pledgee, then Pledgor will promptly notify the
Custodian that this Agreement has become null and void, and upon such notice to
Custodian from Pledgor that this Agreement has so become null and void, the
Custodian shall forthwith deliver to Pledgor the Shares and said stock transfer
powers.
11. No course of dealing between Pledgee and Pledgor shall operate as a
waiver of any right, except to the extent expressly waived in writing by
Pledgee. No waiver of any provision hereof or right hereunder by any party in
any particular instance shall constitute a waiver of any provision hereof or
right hereunder in connection with any other instance.
12. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the notice recipient, with copies
to such party's counsel, as set forth below:
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If to the Pledgee:
Deere Park Capital Management, Inc. Copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Associates, P.C.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Pledgor: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
President & CEO ▇▇▇▇▇▇, Millimet &
EIF Holdings, Inc. Branch, Professional
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax ▇▇▇-▇▇▇-▇▇▇▇
If to Custodian:Deere Park Equities, L.L.C. Copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Associates, P.C.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address and/or the notice recipient to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
13. The rights created by this Agreement shall inure to the benefit of,
and the obligations created hereby shall be binding upon, the respective
successors and assigns of the parties hereto.
14. This Agreement and any rights or obligations hereunder may not be
assigned by either Pledgee or Pledgor.
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EXECUTED in one or more counterparts, each of which shall constitute an
original hereof, to be governed by the laws of the State of Illinois on the date
first above written.
PLEDGOR: PLEDGEE:
EIF HOLDINGS, INC. DEERE PARK CAPITAL MANAGEMENT, INC.,
as nominee for EIFH Joint Venture, L.L.C.
and certain Reg. D. Hedge Funds
By: _____________________________ By:
Name: Name:
Title: Title:
CUSTODIAN:
DEERE PARK EQUITIES, L.L.C.
By:
Name:
Title:
g:\common\corp\agreemnt\pledge.eif
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