PLEDGE AND
SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is entered into
as of September 30, 1997, by and between Smart Choice Automotive Group, Inc.,
a Florida Corporation ("Pledgor"), and Xxxxxxxx Inc., an Arkansas Corporation
("Creditor").
1. DEFINITIONS.
1.1 "Collateral" - all of the capital stock and other securities
issued by Xxxxxx Industries, Inc. (herein sometimes called "Xxxxxx" and
sometimes called "Borrower") now owned or hereafter acquired by Pledgor and
all books and records relating to any of the above and all products and
proceeds of the foregoing in whatever form and wherever located, including,
without limitation, all insurance proceeds, all claims against third
parties for loss or destruction of or damage to any of the foregoing, and
all income from interest or dividends thereon and all proceeds of proceeds;
1.2 "Creditor" - See preamble;
1.3 "Pledgor" - See preamble;
1.4 "Obligations" - all present and future indebtedness and other
obligations owing to Creditor, pursuant to (a) that certain Promissory Note
(the "Note") of even date herewith by Xxxxxx to the order of Creditor in
the face principal amount of One Million Five Hundred Thousand Dollars
($1,500,000), (b) this Agreement, (c) that certain Guaranty Agreement of
even date herewith from Pledgor to Creditor (the "Guaranty"), (d) that
certain Security Agreement of even date herewith from Xxxxxx to Creditor
(the "Xxxxxx Security Agreement"), or (e) any of them, and all present and
future indebtedness and other obligations owing by Pledgor to Creditor or
guaranteed to Creditor by Pledgor in connection with the Note, whether or
not for the payment of money, whether or not evidenced by any note or other
instrument, whether direct or indirect, absolute or contingent, due or to
become due, joint or several, primary or secondary, liquidated or
unliquidated, secured or unsecured, whether arising before, during, or
after the commencement of any case with respect to Borrower or Pledgor
under the United States Bankruptcy Code or any similar statute, including
interest, fees, charges, expenses, and attorneys' fees chargeable to
Pledgor or incurred by Creditor in connection with this Agreement and/or
the transaction(s) related thereto.
2. GRANT OF SECURITY INTEREST. 2.1 To secure the payment and performance in
full of all of the Obligations, Pledgor hereby grants to Creditor a continuing
security interest in and lien upon, and a right of set off against, and Pledgor
hereby assigns and pledges to Creditor, all of the Collateral. Pledgor hereby
agrees to give possession of the Collateral to Creditor at the time of execution
of this Agreement; and, with respect to any portion of the Collateral that
subsequently comes into Pledgor's possession, immediately upon Pledgor's
obtaining possession thereof, Pledgor shall deliver possession thereof to
Creditor. 2.2 Following a written notice from Creditor to Pledgor, Creditor may,
in its discretion and without liability, take any one or more of the following
actions:
(a) Transfer to or register in its name or the name of its nominee
any of the Collateral, with or without indication of its security
interest, and whether or not so transferred or registered,
receive the profits, income, dividends, and other distributions
thereon and hold them or apply them to the Obligations in any
order of priority;
(b) Exercise or cause to be exercised all voting and corporate or
partnership powers with respect to any of the Collateral,
including all rights of conversion, exchange, subscription or any
other rights, privileges or options pertaining to the Collateral,
as if the absolute owner thereof;
(c) Insure any of the Collateral (but Holder shall have no duty to
insure the Collateral);
(d) Exchange any of the Collateral for other property upon a
reorganization, recapitalization or other readjustment, and in
connection therewith, deposit any of the Collateral with any
committee or depository upon such terms as Holder may determine.
Pledgor hereby constitutes and appoints Creditor its attorney-in-fact,
at Pledgor's cost and expense to take any actions and to execute and deliver any
instruments or documents on behalf of Pledgor to effect any of the foregoing
actions, and such appointment as attorney-in-fact, being coupled with an
interest shall be irrevocable and shall continue until all of the Obligations
shall have been paid and satisfied in full.
3. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants that it is
the sole owner of the Collateral, free and clear of all liens and encumbrances,
except for the lien and security interest created by this Agreement. Pledgor
represents and warrants that the Collateral comprises all of the issued and
outstanding capital stock and other securities of Xxxxxx and that there exist no
warrants, rights, convertible securities or other obligations of Xxxxxx or
Pledgor that could, now or in the future, give the holder thereof the right to
receive any capital stock or other securities of Xxxxxx.
4. COVENANTS. Pledgor covenants that:
4.1 Pledgor shall give Creditor written notice immediately upon
forming an intention to change its name or form of business organization or
place of business.
4.2 Pledgor shall not directly or indirectly: (a) sell, lease,
transfer, assign, further encumber, abandon, or otherwise dispose of any
part of the Collateral or any material portion of its other assets without
the prior written consent of Creditor; (b) consolidate with or merge with
or into any other entity, or permit any other entity to consolidate with or
merge with or into Pledgor, without giving at least thirty (30) days prior
written notice to Creditor; (c) form or acquire any interest in any firm,
corporation, or other entity, without giving at least thirty (30) days
prior written notice to Creditor; or (d) incur any debt except in the
normal and ordinary course of business consistent with past practices
without the prior written consent of Creditor. 4.3 Pledgor shall pay, on
Creditor's demand, whether incurred before or after the commencement of any
case with respect to Borrower or Pledgor under the United States Bankruptcy
Code or any similar statute, all costs and expenses of filing or recording
any instruments, documents or pleadings relating to the Obligations or any
of them or to the Collateral (including but not limited to Uniform
Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes, and mortgage recording taxes and fees, if
applicable, and reasonable attorneys' fees).
4.4 Pledgor hereby authorizes Creditor as attorney-in-fact for Pledgor
and on Pledgor's behalf to sign and to file any financing statements or
amendments with respect to the Collateral, and to file as financing
statements any carbon, photographic, or other reproductions of this
Agreement or any financing statements signed by Pledgor.
4.5 Pledgor shall fully and promptly comply with any and all requests
made by Creditor for information relating to the business, operations,
finances, results of operation, marketing, contracts, products, prospects,
assets, liabilities, contingencies, income, expenses, taxes and any and all
matters relating to the business or prospects of Xxxxxx, Pledgor or any of
their affiliate companies.
5. EVENTS OF DEFAULT. Creditor shall be in default under this Agreement
upon the occurrence of any of the events, circumstances or conditions ("Events
of Default") set forth in Section 6 of the Note.
6. REMEDIES ON DEFAULT. Creditor shall have all of the rights and
remedies upon the occurrence of any of the Events of Default as set forth in
Section 7 of the Note, and all of the rights and remedies provided by law for
secured parties and all of the rights and remedies set forth in this Section 6.
Creditor shall also have the right, following occurrence of an Event of Default,
to receive and collect any and all dividends, proceeds and other distributions
made in respect of the Collateral or any portion thereof and to hold such
dividends, proceeds and other distributions as additional Collateral hereunder
or apply any or all of them toward satisfaction of the Obligations and to
exercise any and all voting rights with respect to the Collateral and any and
all rights to give or withhold consents, waivers or ratifications with respect
to the Collateral.
The Borrower and Pledgor shall be liable for the entire amount of all
Obligations, regardless of whether Creditor exercises or declines to exercise
any rights or remedies of Creditor against the Collateral (or any portion
thereof), and if Creditor elects to exercise any of its rights or remedies
against the Collateral, Borrower shall be and remain liable for the entire
amount and complete satisfaction of all Obligations of Borrower to the full
extent that proceeds realized by Creditor upon disposition of such Collateral
are insufficient to satisfy all of the Obligations in full.
(a) ASSEMBLY OF COLLATERAL. Creditor may require Pledgor to assemble
all or any part of the Collateral and make it available to
Creditor at a place to be designated by Creditor which is
reasonably convenient to both parties.
(b) NOTICE OF SALE. Any notice of sale, disposition or other intended
action by Creditor, given or sent at least ten (10) days prior to
such action to the last known address of Pledgor as shown on
Creditor's records, shall constitute reasonable notice. Creditor
shall have no obligation to give notice of any sale, disposition
or other intended action, except as required by applicable law.
Following occurrence of any Event of Default and reasonable
notice to Pledgor, if required by applicable law, Creditor shall
have the right to sell or otherwise dispose of the Collateral by
public or private sale and in any manner that Creditor reasonably
deems commercially reasonable
(c) APPLICATION OF PROCEEDS. Any cash held by Creditor as Collateral
and all cash proceeds received by Creditor from any sale of,
collection from, receipt of dividends, proceeds or distributions
upon, or other realization upon all or any part of the Collateral
under the provisions of the Uniform Commercial Code or this
Agreement shall be applied to the following in such order as
Creditor may elect:
(1) To the repayment of the reasonable costs and expenses
(including reasonable attorneys fees, paralegal fees,
and other legal expenses) incurred by Creditor in
connection with the administration of the Note or
this Agreement, the custody, preservation, use,
operation of, sale or collection from, or other
realization upon, any collateral securing the
Obligations or any of them, the exercise or
enforcement of any of the rights of Creditor
hereunder or under any of the other Loan Documents
(as defined in the Note), or the failure of Pledgor
to perform or observe any of the provisions of this
Agreement or the Note;
(2) To the payment or other satisfaction of any liens and
other encumbrances upon any of the collateral
securing the Obligations or any of them, at the sole
option of Creditor;
(3) To the reimbursement of Creditor for the amount of
any obligations of Borrower or Pledgor paid or
discharged by Creditor pursuant to the provisions of
this Agreement or any of the other Loan Documents and
of any expenses of Creditor payable by Pledgor
hereunder;
(4) To the satisfaction of the Obligations in such order
as Creditor shall elect;
(5) To the payment of any other amounts required or
permitted by applicable law, including, without
limitation, ss.4-9-504(1)(c) of the Arkansas Uniform
Commercial Code or any similar successor statutory
provision.
In the event that the proceeds of any such sale, collection, or
disposition, are insufficient to pay all of the amounts to which Creditor
is legally entitled, Borrower and Pledgor shall be liable for the
deficiency, together with interest thereon at such rates as shall be fixed
by the instruments evidencing the Obligations, together with the costs of
collection and the reasonable fees of any attorneys employed by Creditor to
collect such deficiency. If surplus proceeds are realized upon Creditor's
disposition of the Collateral, they shall be paid to Borrower or Pledgor or
to whomsoever shall be lawfully entitled to receive the same, or as a court
of competent jurisdiction shall direct.
7. WAIVERS BY PLEDGOR. Pledgor hereby irrevocably waives:
7.1 any bond and any surety or security relating thereto by any
statute, court rule, or otherwise as an incident to Creditor's possession
of the Collateral; and
7.2 any requirement that Creditor retain possession of and not dispose
of any such Collateral until after trial or final judgment.
8. MISCELLANEOUS.
8.1 Notices. Any notice given, or required to be given, by any party
under this Agreement shall be deemed to be validly given if in writing and
delivered personally or by a nationally recognized overnight courier
service, or upon receipt if by facsimile transmission, or if sent by mail,
on the first to occur of the date actually received or three (3) days after
deposit in the certified U.S. mail, postage prepaid and return receipt
requested, addressed to the other party at the following addresses:
Pledgor: Smart Choice Automotive Group, Inc.
0000 X. Xxxxxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
Attention: Mr. Xxxx Xxxxx
with copy to: Greenburg, Traurig, Hoffman, Lipoff,
Xxxxx & Xxxxxxx, P.A.
000 X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile No: (000) 000-0000
Creditor: Xxxxxxxx Inc.
Corporate Finance Department
000 X. Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
with a copy to: Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx,
Associate General Counsel
Telephone No. 000-000-0000
Facsimile No. 000-000-0000
8.2 Costs and Expenses - General. Pledgor agrees to reimburse Creditor
for all reasonable costs and expenses, including attorneys' fees, which
Creditor has incurred or may incur in (a) negotiating, preparing,
administering, or enforcing this Agreement and any documents prepared in
connection herewith; (b) protecting, preserving, or enforcing any lien,
security interest, or other right granted by Pledgor to Creditor, or
arising under applicable law, whether or not suit is brought; and (c)
connection with any federal or state insolvency proceeding commenced by or
against Borrower or Pledgor, including those (i) arising out of the
automatic stay, (ii) seeking dismissal or conversion of the bankruptcy
proceeding or (iii) opposing confirmation of Borrower's or Pledgor's plan
thereunder. All such costs and expenses which have been incurred on or
prior to the execution hereof shall be paid contemporaneously with the
execution hereof. Any such costs and expenses incurred subsequent to the
execution hereof shall become part of the Obligations when incurred and may
be added to the outstanding principal amount due hereunder.
8.3 Costs and Expenses - Enforcement of Judgments. Pledgor agrees to
reimburse Creditor for all costs and expenses, including reasonable
attorneys' fees, which Creditor incurs in enforcing any judgment rendered
in connection with this Agreement. This provision is severable from all
other provisions hereof and shall survive, and not be deemed merged into,
any such judgment.
8.4 Severability of Provisions. In the event that any one or more of
the provisions contained in this Agreement is held to be invalid, illegal,
or unenforceable in any respect, then such provisions shall be ineffective
only to the extent of such prohibition or invalidity, and the validity,
legality, and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
8.5 Amendment and Waiver. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged, or terminated orally, but only
by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge, or termination is sought.
8.6 No Waiver. No failure to exercise and no delay in exercising any
right, power, or remedy hereunder shall impair any right, power, or remedy
which Creditor may have, nor shall any such delay be construed to be a
waiver of any of such rights, powers, or remedies, or any acquiescence in
any breach or default hereunder; nor shall any waiver of any breach or
default of Pledgor hereunder be deemed a waiver of any default or breach
subsequently occurring. All rights and remedies granted to Creditor
hereunder shall remain in full force and effect notwithstanding any single
or partial exercise of, or any discontinuance of action begun to enforce
any such right or remedy. The rights and remedies specified herein are
cumulative and not exclusive of each other or of any rights or remedies
which Creditor would otherwise have. Any waiver, permit, consent, or
approval by Creditor of any breach or default hereunder must be in writing
and shall be effective only to the extent set forth in such writing and
only as to that specific instance.
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Pledgor, Creditor, and their respective successors
and assigns.
8.8 Waiver of Statute of Limitations. Pledgor waives the pleading of
any statute of limitations with respect to any and all actions in
connection herewith.
8.9 Waiver Of Trial By Jury. In recognition of the higher costs and
delay which may result from a jury trial, the parties hereto waive any
right to trial by jury of any claim, demand, action, or cause of action (1)
arising hereunder, or (2) in any way connected with or related or
incidental to the dealings of the parties hereto or any of them with
respect hereto, in each case whether now existing or hereafter arising, and
whether sounding in contract or tort or otherwise; and each party hereby
agrees and consents that any such claim, demand, action, or cause of action
shall be decided by court trial without a jury, and that any party hereto
may file an original counterpart or a copy of this section with any court
as written evidence of the consent of the parties hereto to the waiver of
their right to trial by jury.
8.10 Voting and Cash Dividends Prior to Default. Prior to Creditor
giving notice under paragraph 2.2 of this Agreement, Pledgor shall be
entitled to (a) exercise any voting rights with respect to the Collateral
and to give consents, waivers and ratifications in respect thereof,
provided that no vote shall be cast or consent, waiver or ratification
given which would constitute or create a material violation of any of the
terms of the Note or the Security Agreement, and (b) receive or retain for
its own use cash dividends on the Collateral paid out.
8.11 Release of Pledged Collateral. Upon payment or other satisfaction
in full of the Obligations as provided for herein and in the Note, the
Guaranty and the Security Agreement, this Agreement shall terminate and
Creditor shall promptly deliver to Pledgor, at Pledgor's expense, such of
the Collateral as shall not have been sold or otherwise applied pursuant to
this Agreement.
8.12 This Agreement may be executed in any number of counterparts, and
this Agreement shall be a valid and binding agreement of the parties, if it
has been executed by all parties in one or more counterparts which are
identical except for the signatures affixed thereto. A facsimile
transmission to any party to this Agreement of the signature to this
Agreement by or on behalf of any party hereto shall be as effective to bind
such signatory party as the delivery of an original of this Agreement
manually signed by or on behalf of the such signatory party.
8.13 Governing Law. The validity, construction, and performance of
this Agreement shall be governed by the laws, without regard to the laws as
to choice or conflict of laws, of the State of Arkansas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
PLEDGOR: Smart Choice Automotive Group, Inc.
By: /s/ Xxxxx Xxxx Xxxxxxxxxx
Title: Assistant Vice President
BORROWER: XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx Xxxx Xxxxxxxxxx, Jr.
Title: Vice President
CREDITOR: Xxxxxxxx Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: President
