STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made and entered into as
of the 15th day of June, 1999, by and between GALAXY FOODS COMPANY, a Delaware
corporation (the "Secured Party"), and MORINI INVESTMENTS LIMITED PARTNERSHIP, a
Delaware limited partnership (the "Pledgor").
BACKGROUND
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1. As set forth in a Loan Agreement dated as of the date hereof (the "Loan
Agreement"), between Secured Party and Pledgor, Secured Party has agreed to loan
Xxxxxx X. Xxxxxx, the sum of Twelve Million Seven Hundred Seventy-Two Thousand
Two Hundred Dollars ($12,772,200) (the "Indebtedness"), with such Indebtedness
being evidenced by a Promissory Note dated as of the date hereof (the "Note").
2. Pledgor is beneficially owned and controlled by Xxxxxx X. Xxxxxx.
3. As security for repayment of the Indebtedness, Pledgor desires to grant
to Secured Party a continuing security interest in 2,571,429 shares of the
common stock of Secured Party, represented by stock certificate number ____,
registered in the name of Pledgor and duly endorsed in blank and delivered to
Secured Party herewith (the "Galaxy Shares" or the "Collateral").
AGREEMENT
NOW THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. RECITALS. The parties hereto acknowledge that the aforementioned
recitals are true and correct and agree that such recitals, together with the
definitions set forth therein
and in the preamble to this Agreement, are hereby incorporated into this
Agreement by this reference.
2. CREATION OF SECURITY INTEREST. Pledgor hereby affirms, acknowledges,
ratifies, grants and assigns in favor of Secured Party a first, prior, sole lien
and security interest (the "Security Interest") in all of the Galaxy Shares and
in all accessions, substitutions, replacements and proceeds thereof, including
without limitation, whether by law, merger or exchange, to secure the
outstanding principal balance of the Indebtedness. Pledgor hereby warrants and
represents to Secured Party that the Galaxy Shares are owned by Pledgor free and
clear of any liens, charges or encumbrances.
3. TRANSFER OF SECURITIES TO SECURED PARTY. Secured Party shall hold the
Collateral as security for the timely and complete performance by Pledgor of all
of its obligations to Secured Party under the Loan Agreement, the Note and this
Agreement, in accordance with the provisions of this Agreement.
4. PERFECTION OF SECURITY INTEREST. The security interest in the Collateral
shall be perfected pursuant to Sections 678.321(1) and 678.313(1)(a) of Florida
Statutes by their delivery to Secured Party and the continued possession by
Secured Party of same.
5. PROXY. Pledgor irrevocably constitutes and appoints Secured Party,
whether or not the Galaxy Shares have been transferred into the name of Secured
Party, as Pledgor's proxy, with full power to (a) attend meetings of
stockholders held after the date of this Agreement and, to the extent permitted,
vote the Galaxy Shares at those meetings in such manner as Secured Party shall,
in its sole and absolute discretion, deem appropriate, (b) consent, in the sole
and absolute discretion of Secured Party, to any action by or concerning Galaxy
for which consent of the stockholders of Galaxy is or may be necessary or
appropriate, and (c) do all things which Pledgor could do as a stockholder of
Galaxy,
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giving and granting unto Secured Party full power of substitution and
revocation. Notwithstanding the provisions contained in the preceding sentence
(hereinafter referred to as the "Proxy Rights"), Secured Party hereby agrees
that it will not perform, exercise, take or assert any of the Proxy Rights so
long as Pledgor is not in default of the Loan Agreement, the Note or this
Agreement, and that, in such situation, Pledgor may exercise all such Proxy
Rights on its own. Pledgor hereby revokes all proxies heretofore given to any
person or persons and agrees not to give any other proxies in derogation of this
proxy for so long as this Agreement is in force.
6. COMPLIANCE WITH LOAN AGREEMENT AND NOTES. Upon Pledgor's repayment of
(or the forgiveness of) all Indebtedness in accordance with the terms of the
Loan Agreement and the Note, Secured Party, at its sole cost and expense, shall
immediately redeliver and transfer the Galaxy Shares and all rights therein to
Pledgor, free and clear of all liens, security interests and encumbrances, and
this Agreement shall terminate.
7. ORDINARY CARE BY SECURED PARTY. Secured Party must use ordinary care in
the custody and preservation of the Collateral in its possession.
8. ENDORSEMENT ON STOCK CERTIFICATES: Until such date as this Agreement is
terminated, each certificate representing the Collateral now or hereafter issued
to Pledgor shall bear a statement in substantially the following form:
The transfer, encumbrance or other disposition (whether voluntary,
involuntary or by operation of law) of the shares of stock evidenced
by this certificate is restricted under the terms of a Stock Pledge
Agreement dated as of June 15, 1999, by and between Galaxy Foods
Company and Morini Investments Limited Partnership, a copy of which is
on file and available for inspection at the principal office of Galaxy
Foods Company.
9. EVENT OF DEFAULT. An Event of Default shall occur upon the happening of
any of the following:
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(a) Default in the performance of any of the obligations contained or
referred to herein;
(b) Default in the performance of Pledgor's obligations under either
the Loan Agreement or the Note;
(c) Any materially false warranty, representation or statement is made
or furnished to Secured Party by or on behalf of Pledgor;
(d) The insolvency, failure in business, commission of an act of
bankruptcy, general assignment for the benefit of creditors, filing of any
petition in bankruptcy or for relief under the provisions of the Bankruptcy Act,
of, by, or against Pledgor; or
(e) The transfer or encumbrance, by any means, of any interest in the
Collateral other than in favor of Secured Party.
10. REMEDIES. Upon the occurrence of an Event of Default and during the
continuation thereof, Secured Party may, at its option, thereupon or thereafter,
without notice to or demand upon Pledgor, declare any and all of the
Indebtedness immediately due and payable without notice or demand and the same
shall immediately become and be due and payable without notice or demand, and
further, Secured Party may take the Collateral in its own name and dispose of
such number of Galaxy Shares as may be necessary to satisfy the outstanding
balance of the Indebtedness and any accrued interest thereon (as provided in the
Loan Agreement) and all reasonable and necessary expenses of such taking and
such sale, including, without limitation, reasonable attorneys' fees. Upon
disposition by Secured Party of such Galaxy Shares, Pledgor shall not be liable
for any deficiency in the Indebtedness or in any accrued interest or expenses,
it being understood that Secured Party shall look solely to the Collateral for
repayment of all Indebtedness, including accrued interest thereon (if any) and
all expenses. Secured Party shall promptly
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account to Pledgor in writing for any surplus derived from such sale, and if
any, Secured Party shall further cause a stock certificate evidencing such
surplus shares to be issued, at its sole cost and expense, to Pledgor.
11. MISCELLANEOUS PROVISIONS.
(a) GOVERNING LAW; WAIVER OF TRIAL BY JURY. The validity of this
Agreement and any provision hereof shall be determined under and be construed
according to Florida Statutes, Chapter 678, and other applicable laws of the
State of Florida. Each of the parties hereto waives any and all right to a trial
by jury in any case, action, claim, counterclaim or proceeding brought before
any court or tribunal concerning this Agreement or any matter arising in
connection therewith. Venue for any action shall be in Orange County, Florida,
and Pledgor hereby agrees to submit to such jurisdiction.
(b) EFFECT OF INVALIDITY OF PARTICULAR PROVISIONS. The
unenforceability or invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions herein contained
unenforceable or invalid.
(c) CUMULATIVE RIGHTS, POWERS AND REMEDIES. The rights, powers and
remedies given to Secured Party by this Agreement shall be in addition to all
rights, powers and remedies given Secured Party by virtue of any statute or rule
of law.
(d) WAIVER. Any forbearance, failure, or delay by Secured Party in
exercising any right, power or remedy under this Agreement shall not be deemed
to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy, under this Agreement shall not preclude
the further exercise thereof; and every right, power and remedy of Secured Party
shall continue in full force and effect until such right, power or remedy is
specifically waived by an instrument in writing executed by Secured Party.
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(e) BINDING EFFECT. All of the terms, covenants, warranties and
representations contained herein shall be binding upon the parties, their heirs,
successors and assigns.
(f) ENTIRE AGREEMENT. Except as specifically stated herein, this
Agreement constitutes the entire agreement between parties and supersedes all
agreements, representations, warranties, statements, promises and understandings
not specifically set forth in this Agreement or in the certificates or documents
delivered in connection herewith. Neither party has in any way relied, nor shall
in any way rely, upon any oral or written agreements, representations,
warranties, statements, promises or understandings not specifically set forth in
this Agreement or in such documents.
(g) AMENDMENTS. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
(h) HEADINGS. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) FURTHER ASSURANCES. Each of the parties hereto agree that they
shall sign such additional and supplemental documents, including irrevocable
stock powers, to implement the transactions contemplated pursuant to this
Agreement when requested to do so to any party to this Agreement or Secured
Party.
(l) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be regarded as the original and all of which
shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SECURED PARTY:
GALAXY FOODS COMPANY,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Its: Chief Financial Officer
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PLEDGOR:
MORINI INVESTMENTS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Morini Investments, LLC
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
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Its: General Partner
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