PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 28th day of September,
2000, by GOURMET GROUP, INC., a Nevada corporation (hereinafter called
"Pledgor", whether one or more), in favor of KBK FINANCIAL, INC. ("Secured
Party"). Pledgor hereby agrees with Secured Party as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
meanings indicated below:
(a) "ADDITIONAL PROPERTY" shall mean the following property which Pledgor
becomes entitled to receive or shall receive in connection with any
other Collateral: (i) any stock certificate, including without
limitation, any certificate representing a stock dividend or any
certificate in connection with any recapitalization, reclassification,
merger, consolidation, conversion, sale of assets, combination of
shares, stock split or spin-off; (ii) any option, warrant,
subscription or right, whether as an addition to or in substitution of
any other Collateral; (iii) any dividends or distributions of any kind
whatsoever, whether distributable in cash, stock or other property;
(iv) any interest premium or principal payments; and (v) any
conversion or redemption proceeds
(b) "BORROWER" shall mean Our Foods Products Group, Inc. (formerly known
as Xxxxxx Food Products Group, Inc.).
(c) "CODE" shall mean the Uniform Commercial Code as in effect in the
State of Texas on the date of this Agreement or as it may hereafter be
amended from time to time.
(d) "COLLATERAL" shall mean all property specifically described on
SCHEDULE "A" attached hereto and made a part hereof. The term
Collateral, as used herein, shall also include (i) all certificates,
instruments and/or other documents evidencing the foregoing, (ii) all
renewals, replacements and substitutions of all of the foregoing,
(iii) all Additional Property, and (iv) all PRODUCTS and PROCEEDS of
all of the foregoing. The designation of proceeds does not authorize
Pledgor to sell, transfer or otherwise convey any of the foregoing
property. The delivery at any time by Pledgor to Secured Party of any
property as a pledge to secure payment or performance of any
indebtedness or obligation whatsoever shall also constitute a pledge
of such property as Collateral hereunder.
(e) "FINANCING DOCUMENTS" shall mean all instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness.
(f) "INDEBTEDNESS" shall mean (i) indebtedness, obligations and
liabilities owing by Borrower to Secured Party under the Note and
Purchase Agreement and all other indebtedness, obligations and
liabilities of Pledgor and Borrower (or either of them) to Secured
Party of any kind or character, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several or joint and several, and
regardless of whether such indebtedness, obligations and liabilities
may, prior to their acquisition by Secured Party, be or have been
payable to or in favor of a third party and subsequently acquired by
Secured Party (it being contemplated that Secured Party may make such
acquisitions from third parties), including without limitation all
indebtedness, obligations and liabilities of Pledgor and Borrower (or
either of them) to Secured Party now existing or hereafter arising by
note, draft, acceptance, guaranty, endorsement, letter of credit,
assignment, purchase, overdraft, discount, indemnity agreement or
otherwise, (ii) all obligations of Pledgor and Borrower (or either of
them) to Secured Party under any documents evidencing, securing,
governing and/or pertaining to all or any part of the indebtedness,
obligations and liabilities described in (i) above, (iii) all costs
and expenses incurred by Secured Party in connection with the
collection and administration of all or any part of the indebtedness,
obligations and liabilities described in (i) and (ii) above or the
protection or preservation of, or realization upon, the collateral
securing all or any part of such indebtedness, obligations and
liabilities, including without limitation all reasonable attorneys'
fees, and (iv) all renewals, extensions, modifications and
rearrangements of the indebtedness, obligations and liabilities
described in (i), (ii) and (iii) above.
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(g) "NOTE" means that certain promissory note of even date herewith
payable by Borrower to the order of Secured Party in the stated
principal amount of $1,750,000, as may be renewed, extended, amended
and modified.
All words and phrases used herein which are expressly defined in Section
1.201, Chapter 8 or Chapter 9 of the Code shall have the meaning provided
for therein. Other words and phrases defined elsewhere in the Code shall
have the meaning specified therein except to the extent such meaning is
inconsistent with a definition in Section 1.201, Chapter 8 or Chapter 9 of
the Code.
2. SECURITY INTEREST. As security for the Indebtedness, Pledgor, for value
received, hereby grants to Secured Party a continuing security interest in
the Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also include the Additional Property;
provided, however, that until the occurrence of an Event of Default (as
hereinafter defined), Pledgor shall be entitled to all cash dividends and
all interest paid on the Collateral (except interest paid on any
certificate of deposit pledged hereunder) free of the security interest
created under this Agreement. All Additional Property received by Pledgor
shall be received in trust for the benefit of Secured Party. All Additional
Property and all certificates or other written instruments or documents
evidencing and/or representing the Additional Property that is received by
Pledgor, together with such instruments of transfer as Secured Party may
request, shall immediately be delivered to or deposited with Secured Party
and held by Secured Party as Collateral under the terms of this Agreement.
If the Additional Property received by Pledgor shall be shares of stock or
other securities, such shares of stock or other securities shall be duly
endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a member or member organization in good standing
of an authorized Securities Transfer Agents Medallion Program, all in form
and substance satisfactory to Secured Party. Secured Party shall be deemed
to have possession of any Collateral in transit to Secured Party or its
agent.
4. VOTING RIGHTS. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities
pledged as Collateral may be exercised by Pledgor; provided, however, that
Pledgor will not exercise, or cause to be exercised, any such voting
rights, without the prior written consent of Secured Party, if the direct
or indirect effect of such vote will result in an Event of Default
hereunder.
5. MAINTENANCE OF COLLATERAL. Other than the exercise of reasonable care to
assure the safe custody of any Collateral in Secured Party's possession
from time to time, Secured Party does not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation,
duty or responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or similar
matters relating to the Collateral or informing Pledgor with respect to any
such matters; (b) fix, preserve or exercise any right, privilege or option
(whether conversion, redemption or otherwise) with respect to the
Collateral unless (i) Pledgor makes written demand to Secured Party to do
so, (ii) such written demand is received by Secured Party in sufficient
time to permit Secured Party to take the action demanded in the ordinary
course of its business, and (iii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; (c) collect any amounts
payable in respect of the Collateral (Secured Party being liable to account
to Pledgor only for what Secured Party may actually receive or collect
thereon); (d) sell all or any portion of the Collateral to avoid market
loss; (e) sell all or any portion of the Collateral unless and until (i)
Pledgor makes written demand upon Secured Party to sell the Collateral, and
(ii) Pledgor provides additional collateral, acceptable to Secured Party in
its sole discretion; or (f) hold the Collateral for or on behalf of any
party other than Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants the
following to Secured Party:
(a) DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and all of the other Financing Documents by Pledgor have
been duly authorized by all necessary corporate action of Pledgor, to
the extent Pledgor is a corporation, or by all necessary partnership
action, to the extent Pledgor is a partnership.
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(b) ENFORCEABILITY. This Agreement and the other Financing Documents
constitute legal, valid and binding obligations of Pledgor,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by
equitable principles.
(c) OWNERSHIP AND LIENS. Pledgor has good and marketable title to the
Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement. No dispute, right of setoff, counterclaim
or defense exists with respect to all or any part of the Collateral.
Pledgor has not executed any other security agreement currently
affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may have been
executed or filed in favor of Secured Party.
(d) NO CONFLICTS OR CONSENTS. Neither the ownership, the intended use of
the Collateral by Pledgor, the grant of the security interest by
Pledgor to Secured Party herein nor the exercise by Secured Party of
its rights or remedies hereunder, will (i) conflict with any provision
of (A) any domestic or foreign law, statute, rule or regulation, (B)
the articles or certificate of incorporation, charter, bylaws or
partnership agreement, as the case may be, of Pledgor, or (C) any
agreement, judgment, license, order or permit applicable to or binding
upon Pledgor or otherwise affecting the Collateral, or (ii) result in
or require the creation of any lien, charge or encumbrance upon any
assets or properties of Pledgor or of any person except as may be
expressly contemplated in the Financing Documents. Except as expressly
contemplated in the Financing Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any court,
governmental authority or third party is required in connection with
the grant by Pledgor of the security interest herein or the exercise
by Secured Party of its rights and remedies hereunder.
(e) SECURITY INTEREST. Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to
Secured Party in the manner provided herein, free and clear of any
lien, security interest or other charge or encumbrance. This Agreement
creates a legal, valid and binding security interest in favor of
Secured Party in the Collateral.
(f) LOCATION. Pledgor's residence or chief executive office, as the case
may be, and the office where the records concerning the Collateral are
kept is located at its address set forth on the signature page hereof.
(g) SOLVENCY OF PLEDGOR. As of the date hereof, and after giving effect to
this Agreement and the completion of all other transactions
contemplated by Pledgor at the time of the execution of this
Agreement, (i) Pledgor is and will be solvent, (ii) the fair saleable
value of Pledgor's assets exceeds and will continue to exceed
Pledgor's liabilities (both fixed and contingent), (iii) Pledgor is
paying and will continue to be able to pay its debts as they mature,
and (iv) if Pledgor is not an individual, Pledgor has and will have
sufficient capital to carry on Pledgor's businesses and all businesses
in which Pledgor is about to engage.
(h) SECURITIES. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All
securities pledged as Collateral have been duly authorized and validly
issued, are fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any party or of any agreement by
which Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of any
securities pledged as Collateral, except as has been disclosed to
Secured Party in writing. To the best of Pledgor's knowledge, no
issuer of such securities (other than securities of a class which are
publicly traded) has any outstanding stock rights, rights to
subscribe, options, warrants or convertible securities outstanding or
any other rights outstanding entitling any party to have issued to
such party capital stock of such issuer, except as has been disclosed
to Secured Party in writing.
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7. AFFIRMATIVE COVENANTS. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective unless Secured Party shall otherwise consent in writing.
(a) OWNERSHIP AND LIENS. Pledgor will maintain good and marketable title
to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement and the security interests and other
encumbrances expressly permitted by the other Financing Documents.
Pledgor will not permit any dispute, right of setoff, counterclaim or
defense to exist with respect to all or any part of the Collateral.
Pledgor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except as
may exist or as may have been filed in favor of Secured Party. Pledgor
will defend at its expense Secured Party's right, title and security
interest in and to the Collateral against the claims of any third
party.
(b) INSPECTION OF BOOKS AND RECORDS. Pledgor will keep adequate records
concerning the Collateral and will permit Secured Party and all
representatives and agents appointed by Secured Party to inspect
Pledgor's books and records of or relating to the Collateral at any
time during normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and record any
such information.
(c) ADVERSE CLAIM. Pledgor covenants and agrees to promptly notify Secured
Party of any claim, action or proceeding affecting title to the
Collateral, or any part thereof, or the security interest created
hereunder and, at Pledgor's expense, defend Secured Party's security
interest in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to Secured Party
a copy of all written notices received by Pledgor with respect to the
Collateral, including without limitation, notices received from the
issuer of any securities pledged hereunder as Collateral.
(d) DELIVERY OF INSTRUMENTS AND/OR CERTIFICATES. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Secured Party any
certificates, documents or instruments representing or evidencing the
Collateral, with Pledgor's endorsement thereon and/or accompanied by
proper instruments of transfer and assignment duly executed in blank
with, if requested by Secured Party, signatures guaranteed by a member
or member organization in good standing of an authorized Securities
Transfer Agents Medallion Program, all in form and substance
satisfactory to Secured Party.
(e) FURTHER ASSURANCES. Pledgor will contemporaneously with the execution
hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that Secured Party may
request in order (i) to perfect and protect the security interest
created or purported to be created hereby and the first priority of
such security interest, (ii) to enable Secured Party to exercise and
enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation: (A) executing and filing any
financing or continuation statements, or any amendments thereto; (B)
obtaining written confirmation from the issuer of any securities
pledged as Collateral of the pledge of such securities, in form and
substance satisfactory to Secured Party; (C) cooperating with Secured
Party in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as
Collateral to any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and
substance satisfactory to Secured Party; and (E) obtaining written
confirmation of the pledge of any securities constituting Collateral
from any securities or financial intermediary, clearing corporation or
other party required by Secured Party, in form and substance
satisfactory to Secured Party. If all or any part of the Collateral is
securities issued by an agency or department of the United States,
Pledgor covenants and agrees, at Secured Party's request, to cooperate
in registering such securities in Secured Party's name or with Secured
Party's account maintained with a Federal Reserve Bank. When
applicable law provides more than one method of perfection of Secured
Party's security interest in the Collateral, Secured Party may choose
the method(s) to be used.
8. NEGATIVE COVENANTS. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.
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(a) TRANSFER OR ENCUMBRANCE. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of
the Collateral, (ii) xxxxx x xxxx or security interest in or execute,
file or record any financing statement or other security instrument
with respect to the Collateral to any party other than Secured Party,
or (iii) deliver actual or constructive possession of any certificate,
instrument or document evidencing and/or representing any of the
Collateral to any party other than Secured Party.
(b) IMPAIRMENT OF SECURITY INTEREST. Pledgor will not take or fail to take
any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) DILUTION OF OWNERSHIP. As to any securities pledged as Collateral
(other than securities of a class which are publicly traded), Pledgor
will not consent to or approve of the issuance of (i) any additional
shares of any class of securities of such issuer (unless immediately
upon issuance additional securities are pledged and delivered to
Secured Party pursuant to the terms hereof to the extent necessary to
give Secured Party a security interest after such issuance in at least
the same percentage of such issuer's outstanding securities as Secured
Party had before such issuance), (ii) any instrument convertible
voluntarily by the holder thereof or automatically upon the occurrence
or non-occurrence of any event or condition into, or exchangeable for,
any such securities, or (iii) any warrants, options, contracts or
other commitments entitling any third party to purchase or otherwise
acquire any such securities.
(d) RESTRICTIONS ON SECURITIES. Pledgor will not enter into any agreement
creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as
Collateral, except as consented to in writing by Secured Party;
provided, that Secured Party has been provided copies of, and has
consented to, the Shareholders Agreement (herein so called) and the
Restricted Stock Agreement (herein so called) each dated as of May 15,
1998 to which Borrower and Pledgor are parties. Pledgor will not
modify or amend the Shareholders Agreement or the Restricted Stock
Agreement, except as consented to in writing by Secured Party.
9. RIGHTS OF SECURED PARTY. Secured Party shall have the rights contained in
this Section at all times during the period of time this Agreement is
effective.
(a) POWER OF ATTORNEY. Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact, such power of attorney being coupled
with an interest, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, to take any action
and to execute any instrument which Secured Party may from time to
time in Secured Party's discretion deem necessary or appropriate to
accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any securities,
instruments, documents or certificates pledged as Collateral in the
name of Secured Party or its nominee; (ii) use any interest, premium
or principal payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to reduce any of
the Indebtedness; (iii) exchange any of the securities pledged as
Collateral for any other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, and, in connection therewith, to deposit and deliver any and
all of such securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as
Secured Party may deem necessary or appropriate; (iv) exercise or
comply with any conversion, exchange, redemption, subscription or any
other right, privilege or option pertaining to any securities pledged
as Collateral; provided, however, except as provided herein, Secured
Party shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion, redemption or otherwise) and
shall not be responsible for any delay or failure to do so; and (v)
file any claims or take any action or institute any proceedings which
Secured Party may deem necessary or appropriate for the collection
and/or preservation of the Collateral or otherwise to enforce the
rights of Secured Party with respect to the Collateral.
(b) PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Party may itself
perform, or cause performance of, such agreement or obligation, and
the expenses of Secured Party incurred in connection therewith shall
be a part of the Indebtedness, secured by the Collateral and payable
by Pledgor on demand.
Notwithstanding any other provision herein to the contrary, Secured Party
does not have any duty to exercise or continue to exercise any of the
foregoing rights and shall not be responsible for any failure to do so or
for any delay in doing so.
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10. EVENTS OF DEFAULT. Each of the following constitutes an "EVENT OF DEFAULT"
under this Agreement:
(a) FAILURE TO PAY INDEBTEDNESS. Borrower or Pledgor shall fail to pay as
and when due any Indebtedness.
(b) NON-PERFORMANCE OF COVENANTS. Borrower or Pledgor shall breach any
covenant or agreement made herein, in any of the Financing Documents
or in any other agreement now or hereafter entered into between
Borrower or Pledgor and Secured Party.
(c) FALSE REPRESENTATION. Any warranty or representation made herein or in
any of the Financing Documents shall be false or misleading in any
material respect when made.
(d) DEFAULT UNDER OTHER FINANCING DOCUMENTS. The occurrence of an event of
default under any of the Financing Documents or any other agreement
now or hereafter entered into between Borrower or Pledgor and Secured
Party.
(e) UNTRUE FINANCIAL REPORT. Any report, certificate, schedule, financial
statement, profit and loss statement or other statement furnished by
Borrower or Pledgor, to Secured Party is not true and correct in any
material respect.
(f) DEFAULT TO THIRD PARTY. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower or
Pledgor to any third party under any agreement or undertaking.
(g) BANKRUPTCY. The filing of a voluntary or involuntary case by or
against Borrower or Pledgor under the United States Bankruptcy Code or
other present or future federal or state insolvency, bankruptcy or
similar laws (collectively, "Applicable Bankruptcy Law"), and in the
event of an involuntary case, the failure of such case to be
discharged within sixty (60) days of commencement or the appointment
of a receiver, trustee, conservator or custodian for a substantial
portion of the assets of Borrower or Pledgor.
(h) INSOLVENCY. Borrower or Pledgor shall become insolvent, make a
transfer in fraud of creditors or make an assignment for the benefit
of creditors.
(i) INVOLUNTARY LIEN. The filing or commencement of any involuntary lien,
garnishment, attachment or the like shall be issued against or with
respect to the Collateral.
(j) MATERIAL ADVERSE CHANGE. A material adverse change shall have occurred
in the financial condition, business prospects or operations of
Borrower or Pledgor or any of its subsidiaries.
(k) TAX LIEN. Borrower or Pledgor shall have a federal or state tax lien
filed against any of its properties.
(l) EXECUTION ON COLLATERAL. The Collateral or any portion thereof is
taken on execution or other process of law.
(m) JUDGMENT. The entry against Borrower or Pledgor of a final and
nonappealable judgment for the payment of money in excess of $25,000
(not covered by insurance satisfactory to Secured Party in its
reasonable discretion).
(n) DILUTION OF OWNERSHIP. The issuer of any securities (other than
securities of a class which are publicly traded) constituting
Collateral hereafter issues any shares of any class of capital stock
(unless immediately upon issuance, additional securities are pledged
and delivered to Secured Party pursuant to the terms hereof to the
extent necessary to give Secured Party a security interest after such
issuance in at least the same percentage of such issuer's outstanding
securities as Secured Party had before such issuance) or any options,
warrants or other rights to purchase any such capital stock.
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(o) BANKRUPTCY OF ISSUER. (i) The issuer of any securities constituting
Collateral files a petition for relief under any Applicable Bankruptcy
Law, (ii) an involuntary petition for relief is filed against any such
issuer under any Applicable Bankruptcy Law and such case is not
dismissed within sixty (60) days of commencement, or (iii) an order
for relief naming any such issuer is entered under any Applicable
Bankruptcy Law.
11. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have occurred,
and without limiting any other rights and remedies provided herein, under
any of the other Financing Documents or otherwise available to Secured
Party, Secured Party may exercise one or more of the rights and remedies
provided in this Section.
(a) REMEDIES. Secured Party may from time to time at its discretion,
without limitation and without notice except as expressly provided in
any of the Financing Documents:
(i) exercise in respect of the Collateral all the rights and remedies
of a secured party under the Code (whether or not the Code
applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise enforce,
in whole or in part, the security interest granted hereunder by
any available judicial procedure;
(iii)sell or otherwise dispose of, at its office, on the premises of
Pledgor or elsewhere, the Collateral, as a unit or in parcels, by
public or private proceedings, and by way of one or more
contracts (it being agreed that the sale or other disposition of
any part of the Collateral shall not exhaust Secured Party's
power of sale, but sales or other dispositions may be made from
time to time until all of the Collateral has been sold or
disposed of or until the Indebtedness has been paid and performed
in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public sale;
(v) buy the Collateral, or any portion thereof, at any private sale
if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed
standard price quotations;
(vi) apply for the appointment of a receiver for the Collateral, and
Pledgor hereby consents to any such appointment; and
(vii)at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured
Party is entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any notice
under the Uniform Commercial Code, as it exists in the state governing any
such notice, of the sale or other disposition of any Collateral, reasonable
notice shall be deemed given when such notice is deposited in a depository
receptacle under the care and custody of the United States Postal Service,
postage prepaid, at Pledgor's address set forth on the signature page
hereof, five (5) days prior to the date of any public sale, or after which
a private sale, of any of such Collateral is to be held. Secured Party
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Pledgor further acknowledges and
agrees that the redemption by Secured Party of any certificate of deposit
pledged as Collateral shall be deemed to be a commercially reasonable
disposition under Section 9.504(c) of the Code.
(b) PRIVATE SALE OF SECURITIES. Pledgor recognizes that Secured Party may
be unable to effect a public sale of all or any part of the securities
pledged as Collateral because of restrictions in applicable federal
and state securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such securities to
a restricted group of purchasers who will be obligated to agree, among
other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof.
Pledgor acknowledges that each any such private sale may be at prices
and other terms less favorable then what might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that each such
private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to
delay the sale of any such securities for the period of time necessary
to permit the issuer to register such securities for public sale under
any federal or state securities
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laws. Pledgor further acknowledges and agrees that any offer to sell
such securities which has been made privately in the manner described
above to not less than five (5) BONA FIDE offerees shall be deemed to
involve a "public sale" for the purposes of Section 9.504(c) of the
Code, notwithstanding that such sale may not constitute a "public
offering" under any federal or state securities laws and that Secured
Party may, in such event, bid for the purchase of such securities.
(c) APPLICATION OF PROCEEDS. If any Event of Default shall have occurred,
Secured Party may at its discretion apply or use any cash held by
Secured Party as Collateral, and any cash proceeds received by Secured
Party in respect of any sale or other disposition of, collection from,
or other realization upon, all or any part of the Collateral as
follows in such order and manner as Secured Party may elect:
(i) to the repayment or reimbursement of the reasonable costs and
expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred by Secured Party in connection with
(A) the administration of the Financing Documents, (B) the
custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, and
(C) the exercise or enforcement of any of the rights and remedies
of Secured Party hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable law
(including without limitation, Section 9.504(a)(3) of the Code or
any other applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled to
receive such cash or proceeds whether by direction of a court of
competent jurisdiction or otherwise.
(d) DEFICIENCY. In the event that the proceeds of any sale of, collection
from, or other realization upon, all or any part of the Collateral by
Secured Party are insufficient to pay all amounts to which Secured
Party is legally entitled, Borrower and any party who guaranteed or is
otherwise obligated to pay all or any portion of the Indebtedness
shall be liable for the deficiency, together with interest thereon as
provided in the Financing Documents. Nothing contained in this
Agreement, however, shall be construed as a guaranty by Pledgor of any
indebtedness, obligation, or liability of Borrower, and Secured
Party's sole recourse against Pledgor with respect to the Indebtedness
shall be to enforce its rights and remedies hereunder with respect to
the Collateral.
(e) NON-JUDICIAL REMEDIES. In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or
judicial hearing, Pledgor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with the usage
of trade, are responsive to commercial necessity and are the result of
a bargain at arm's length. Nothing herein is intended to prevent
Secured Party or Pledgor from resorting to judicial process at either
party's option.
(f) OTHER RECOURSE. Pledgor waives any right to require Secured Party to
proceed against any third party, exhaust any Collateral or other
security for the Indebtedness, or to have any third party joined with
Pledgor in any suit arising out of the Indebtedness or any of the
Financing Documents, or pursue any other remedy available to Secured
Party. Pledgor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or
extension of the Indebtedness. Pledgor further waives any defense
arising by reason of any disability or other defense of any third
party or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Pledgor shall have no right of subrogation and
Pledgor waives the right to enforce any remedy which Secured Party has
or may hereafter have against any third party, and waives any benefit
of and any right to participate in any other security whatsoever now
or hereafter held by Secured Party. Pledgor authorizes Secured Party,
and without notice or demand and without any reservation of rights
against Pledgor and without affecting Pledgor's liability hereunder or
on the Indebtedness, to (i) take or hold any other property of any
type from any third party as security for the Indebtedness, and
exchange, enforce, waive and release any or all of such other
8
property, (ii) apply such other property and direct the order or
manner of sale thereof as Secured Party may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle
or release any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the provisions of
any of the Financing Documents executed by any third party, and (v)
release or substitute any third party.
(g) VOTING RIGHTS. Upon the occurrence of an Event of Default, Pledgor
will not exercise any voting rights with respect to securities pledged
as Collateral. Pledgor hereby irrevocably appoints Secured Party as
Pledgor's attorney-in-fact (such power of attorney being coupled with
an interest) and proxy to exercise any voting rights with respect to
Pledgor's securities pledged as Collateral upon the occurrence of an
Event of Default.
(h) DIVIDEND RIGHTS AND INTEREST PAYMENTS. Upon the occurrence of an Event
of Default:
(i) all rights of Pledgor to receive and retain the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 3 shall automatically
cease, and all such rights shall thereupon become vested with
Secured Party which shall thereafter have the sole right to
receive, hold and apply as Collateral such dividends and interest
payments; and
(ii) all dividend and interest payments which are received by Pledgor
contrary to the provisions of clause (i) of this Subsection shall
be received in trust for the benefit of Secured Party, shall be
segregated from other funds of Pledgor, and shall be forthwith
paid over to Secured Party in the exact form received (properly
endorsed or assigned if requested by Secured Party), to be held
by Secured Party as Collateral.
12. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement contains the entire agreement of
Secured Party and Pledgor with respect to the Collateral. If the
parties hereto are parties to any prior agreement, either written or
oral, relating to the Collateral, the terms of this Agreement shall
amend and supersede the terms of such prior agreements as to
transactions on or after the effective date of this Agreement, but all
security agreements, financing statements, guaranties, other contracts
and notices for the benefit of Secured Party shall continue in full
force and effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate release.
(b) AMENDMENT. No modification, consent or amendment of any provision of
this Agreement or any of the other Financing Documents shall be valid
or effective unless the same is in writing and signed by the party
against whom it is sought to be enforced.
(c) ACTIONS BY SECURED PARTY. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by
(i) any renewal, extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. The taking
of additional security by Secured Party shall not release or impair
the lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Pledgor hereunder.
(d) WAIVER BY SECURED PARTY. Secured Party may waive any Event of Default
without waiving any other prior or subsequent Event of Default.
Secured Party may remedy any default without waiving the Event of
Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver of any
9
provision hereof or consent to any departure by Pledgor therefrom
shall be effective unless the same shall be in writing and signed by
Secured Party and then such waiver or consent shall be effective only
in the specific instances, for the purpose for which given and to the
extent therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further notice or
demand in similar or other circumstances.
(e) COSTS AND EXPENSES. Pledgor will upon demand pay to Secured Party the
amount of any and all costs and expenses (including without
limitation, attorneys' fees and expenses), which Secured Party may
incur in connection with the exercise or enforcement of any of the
rights of Secured Party hereunder.
(F) GOVERNING LAW; VENUE; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE BY THE PARTIES IN TARRANT COUNTY, TEXAS. PLEDGOR AND
SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH AGREE THAT TARRANT
COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY
DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS AGREEMENT, AND THAT
SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE
OR CLAIM. PLEDGOR AND SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN TARRANT COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH
DISPUTE OR CLAIM. PLEDGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(G) WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY (BY ITS ACCEPTANCE
HEREOF) EACH HEREBY IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
(h) SEVERABILITY. If any provision of this Agreement is held by a court of
competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall
not impair or invalidate the remainder of this Agreement and the
effect thereof shall be confined to the provision held to be illegal,
invalid or unenforceable.
(i) NO OBLIGATION. Nothing contained herein shall be construed as an
obligation on the part of Secured Party to
extend or continue to extend credit to Borrower or Pledgor.
(j) NOTICES. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be
in writing and given by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, (iii) United States mail, postage
prepaid, registered or certified mail, return receipt requested, or
(iv) telecopy (with receipt thereof confirmed by telecopier) sent to
the intended addressee at the address set forth on the signature page
hereof or to such different address as the addressee shall have
designated by written notice sent pursuant to the terms hereof and
shall be deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, in the case of mail, upon
deposit in a depository receptacle under the care and custody of the
United States Postal Service, or in the case of telecopy, upon
receipt. Either party shall have the right to change its address for
notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
10
(k) BINDING EFFECT AND ASSIGNMENT. This Agreement (i) creates a continuing
security interest in the Collateral, (ii) shall be binding on Pledgor
and the heirs, executors, administrators, personal representatives,
successors and assigns of Pledgor, and (iii) shall inure to the
benefit of Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may pledge,
assign or otherwise transfer the Indebtedness and its rights under
this Agreement and any of the other Financing Documents to any other
party. Pledgor's rights and obligations hereunder may not be assigned
or otherwise transferred without the prior written consent of Secured
Party.
(l) TERMINATION. It is contemplated by the parties hereto that from time
to time there may be no outstanding Indebtedness, but notwithstanding
such occurrences, this Agreement shall remain valid and shall be in
full force and effect as to subsequent outstanding Indebtedness. Upon
(i) the satisfaction in full of the Indebtedness, (ii) the termination
or expiration of any commitment of Secured Party to extend credit to
Pledgor and/or Borrower, (iii) written request for the termination
hereof delivered by Pledgor to Secured Party, and (iv) written release
delivered by Secured Party to Pledgor, this Agreement and the security
interests created hereby shall terminate. Upon termination of this
Agreement and Pledgor's written request, Secured Party will, at
Pledgor's sole cost and expense, return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and execute and deliver to
Pledgor such documents as Pledgor shall reasonably request to evidence
such termination.
(m) CUMULATIVE RIGHTS. All rights and remedies of Secured Party hereunder
are cumulative of each other and of every other right or remedy which
Secured Party may otherwise have at law or in equity or under any of
the other Financing Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies.
(n) GENDER AND NUMBER. Within this Agreement, words of any gender shall be
held and construed to include the other gender, and words in the
singular number shall be held and construed to include the plural and
words in the plural number shall be held and construed to include the
singular, unless in each instance the context requires otherwise.
(o) DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof.
EXECUTED as of the date first written above.
PLEDGOR:
GOURMET GROUP, INC.
By: /s/ Xxxxxxxxx Xxxxxxxx
-------------------------
Xxxxxxxxx Xxxxxxxx
President
Pledgor's Address:
0 Xxxxxxx Xxxxx
Xxxx, Xxxxx 00000
Telecopy No. 000-000-0000
Secured Party's Address:
KBK FINANCIAL, INC.
000 Xxxxxxxx Xxxxxx
0000 Xxxx Xxxxxx XX
Xxxx Xxxxx, Xxxxx 00000
ATTN: Legal Department
Telecopy No.(000) 000-0000
11
SCHEDULE "A"
TO
PLEDGE AGREEMENT
DATED September 28, 2000
EXECUTED BY SEAR GROUP, INC.
FOR THE BENEFIT OF
KBK FINANCIAL, INC.
[IF CERTIFICATED STOCK]
7,984,194 shares of common stock of Our Foods Products Group, Inc., a
Texas corporation, as evidenced by certificate no. 7 issued in
the name of Pledgor.
