EXHIBIT 10.4
[Execution]
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT, dated as of June __, 2005 (this
"Pledge Agreement"), is by HF ENTERPRISES, INC., a Delaware corporation
("Pledgor"), to and in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking association, in its capacity as agent (in such capacity, "Pledgee")
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the Lenders (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, Pledgor is now the direct and beneficial owner of all of the
issued and outstanding membership interests of Xxxxxxx Fabrics, LLC, a Delaware
limited liability company ("Issuer"), as described on Exhibit A hereto and made
a part hereof (the "Pledged Interests");
WHEREAS, Pledgor has entered into or is about to enter into financing
arrangements with Pledgee and the parties to the Loan Agreement (as hereinafter
defined) as lenders (collectively, "Lenders" and individually a "Lender")
pursuant to which Lenders (or Pledgee on behalf of Lenders) may make loans and
advances and provide other financial accommodations to Issuer and certain
affiliates of Issuer (each a "Borrower" and collectively, "Borrowers") as set
forth in the Loan and Security Agreement, dated of even date herewith, by and
among Pledgor, Borrowers, certain affiliates of Borrowers, Pledgee and Lenders
(as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement") and the other
agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto, including,
but not limited to, this Pledge Agreement (all of the foregoing, together with
the Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"); and
WHEREAS, in order to induce Pledgee and Lenders to enter into the Loan
Agreement and the other Financing Agreements and to make loans and advances and
provide other financial accommodations to Borrowers pursuant thereto, Pledgor
has agreed to secure the payment and performance of the Obligations and to
accomplish same by (i) executing and delivering to Pledgee this Pledge Agreement
and (ii) delivering to Pledgee any and all other documents which Pledgee deems
necessary to protect Pledgee's interests hereunder;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees as follows:
1. GRANT OF SECURITY INTEREST
(a) As collateral security for the prompt performance, observance
and indefeasible payment in full of all of the Obligations, Pledgor hereby
assigns, pledges, hypothecates, transfers and sets over to Pledgee and grants to
Pledgee, for itself and for the benefit of Secured Parties (as defined in the
Loan Agreement), a security interest in and lien
upon the following (collectively, the "Collateral"): (i) the Pledged Interests
and all other ownership interests of Pledgor in Issuer, all certificates (if
any) at any time representing or evidencing such ownership interests (including
without limitation the membership certificate described on Exhibit A hereto) and
(A) all right, title and interest in, to and under the Operating Agreement with
respect to Issuer set forth on Exhibit A hereto (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated, or
replaced, the "LLC Agreement"), including, without limitation, all of its right,
title and interest as a member to participate in the operation or management of
Issuer and all of its ownership interests under the LLC Agreement, and (B) all
present and future rights of Pledgor to receive payment of money or other
distribution of payments arising out of or in connection with the Pledged
Interests and all other ownership interests and its rights under the LLC
Agreement, now or hereafter owned by Pledgor, (ii) all proceeds of and to any of
the property of Pledgor described above, including, without limitation, all
causes of action, claims and warranties now or hereafter held by Pledgor in
respect of any of the items listed above, and (iii) Pledgor's books and records
with respect to any of the foregoing.
(b) This Pledge Agreement is executed only as security for the
Obligations and, therefore, the execution and delivery of this Pledge Agreement
shall not subject Pledgee or any Lender to, or transfer or pass to Pledgee or
any Lender, or in any way affect or modify, the liability of Pledgor under the
LLC Agreement or any related agreements, documents or instruments or otherwise.
In no event shall the acceptance of this Pledge Agreement by Pledgee or Lenders
or the exercise by Pledgee or any Lender of any rights hereunder or assigned
hereby, constitute an assumption of any liability or obligation of Pledgor to,
under or in connection with the LLC Agreement or any related agreements,
documents or instruments or otherwise.
2. OBLIGATIONS SECURED
The security interest, lien and other interests granted to Pledgee (for
itself and on behalf of Secured Parties) pursuant to this Pledge Agreement shall
secure the prompt performance and payment in full of any and all Obligations.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Pledgor hereby represents, warrants and covenants with and to Pledgee and
Lenders the following (all of such representations, warranties and covenants
being continuing so long as any of the Obligations are outstanding):
(a) The Pledged Interests are duly authorized, validly existing,
fully paid and non-assessable and constitute all of the issued and outstanding
membership interests in Issuer and Pledgor is the registered owner of such
membership interests. Pledgor is the holder of one hundred (100%) percent of the
membership interests therein and is the sole member of Issuer.
(b) The Collateral is directly, legally and beneficially owned by
Pledgor, free and clear of all claims, liens, pledges and encumbrances of any
kind, nature or description, except for the pledge, lien and security interest
in favor of Pledgee, for itself and the benefit of Secured Parties, and the
pledges, claims, liens, encumbrances and security interests permitted under the
Loan Agreement.
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(c) The Collateral is not subject to any restrictions relative to
the transfer thereof and Pledgor has the right to transfer and hypothecate the
Collateral free and clear of any liens, encumbrances or restrictions.
(d) The Collateral is duly and validly pledged to Pledgee, for
itself and for the benefit of Secured Parties, no consent or approval of any
governmental or regulatory authority or of any securities exchange or the like,
nor any consent or approval of any other third party, was or is necessary to the
validity and enforceability of this Pledge Agreement.
(e) Pledgor authorizes Pledgee to: (i) store, deposit and safeguard
the Collateral, (ii) perform any and all other acts which Pledgee in good xxxxx
xxxxx reasonable and/or necessary for the protection and preservation of the
Collateral or its value or Pledgee's security interest therein, including,
without limitation, transferring, registering or arranging for the transfer or
registration of the Collateral to or in Pledgee's, or any Lender's, own name and
receiving the income therefrom as additional security for the Obligations and
(iii) pay any charges or expenses which Pledgee deems necessary for the
foregoing purpose, but without any obligation to do so. Any obligation of
Pledgee for reasonable care for the Collateral in Pledgee's possession shall be
limited to the same degree of care which Pledgee uses for similar property
pledged to Pledgee by other persons.
(f) As of the date hereof, there are no certificates or other
written instruments evidencing or representing the Pledged Interests (except for
the membership certificate described on Exhibit A hereto, which certificate is
being pledged and delivered to Pledgee herewith, accompanied by an assignment of
such certificate, duly endorsed by Pledgor in blank). If at any time after the
date hereof Pledgor shall become entitled to receive or acquire, or shall
receive any other membership interest certificate, or option or right with
respect to the membership interests of Issuer (including without limitation, any
certificate representing a distribution or exchange of or in connection with
reclassification of the Pledged Interest) whether as an addition to, in
substitution of, or in exchange for any of the Collateral or otherwise, Pledgor
agrees to accept same as Pledgee's agent, to hold same in trust for Pledgee and
to deliver same forthwith to Pledgee or Pledgee's agent or bailee in the form
received, with the endorsement(s) of Pledgor where necessary and/or appropriate
powers and/or assignments duly executed to be held by Pledgee or Pledgee's agent
or bailee subject to the terms hereof, as further security for the Obligations.
(g) The Collateral is not and shall not at any time hereafter be
investment property or otherwise subject to Article 8 of the Uniform Commercial
Code as in effect in the State of New York on the date hereof (the "UCC"),
except as Pledgee may otherwise expressly agree.
(h) Pledgor shall keep full and accurate books and records relating
to the Collateral and stamp or otherwise xxxx such books and records in such
manner as Pledgee may require in order to reflect the security interests granted
by this Pledge Agreement.
(i) Pledgor shall not, without the prior consent of Pledgee,
directly or indirectly, sell, assign, transfer, or otherwise dispose of, or
grant any option with respect to the Collateral, nor shall Pledgor create, incur
or permit any further pledge, hypothecation, encumbrance, lien, mortgage or
security interest with respect to the Collateral.
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(j) So long as no Event of Default (as hereinafter defined) has
occurred and is continuing, Pledgor shall have the right to exercise all limited
liability company rights with respect to the Collateral, except as expressly
prohibited herein or in any of the other Financing Agreements, and to receive
any distributions payable in respect of the Collateral (but subject to terms of
the Loan Agreement with respect thereto).
(k) Pledgor has delivered to Pledgee a true, correct and complete
copy of the LLC Agreement and the certificate of formation of Issuer. There are
and shall be no other agreements governing the formation, organization or terms
of the membership interests with respect to Issuer.
(l) Pledgor shall not permit Issuer, directly or indirectly, to (i)
issue, sell, grant, assign, transfer or otherwise dispose of, any additional
membership interests of Issuer or any option or warrant with respect to, or
other right or security convertible into, any additional membership interests,
now or hereafter authorized, unless all such additional membership interests,
options, warrants, rights or other such securities are made and shall remain
part of the Collateral subject to the pledge and security interest granted
herein, (ii) take any action to withdraw the authority of or to limit or
restrict the authority of Issuer's managers or officers to deal and contract
with Pledgee and to bind and obligate Issuer, or (iii) pay any interim
distribution in cash or other assets to any member, except as permitted in the
Loan Agreement. Any distribution by Issuer other than as permitted in the Loan
Agreement shall constitute a "wrongful distribution" for purposes of applicable
law.
(m) Pledgor shall promptly notify Pledgee in writing of the
occurrence of any event specified in the LLC Agreement or the certificate of
formation of Issuer that may result in Issuer's dissolution or liquidation.
(n) Pledgor shall not, and shall not permit Issuer, directly or
indirectly, to, amend, modify or supplement any of the provisions of the LLC
Agreement or the certificate of formation of Issuer without the prior written
consent of Pledgee if any such amendment, modification or supplement would or
could affect any rights of Pledgee hereunder or under any of the other Financing
Agreements or would limit or restrict the permissible activities in which Issuer
may engage.
(o) In accordance with the LLC Agreement, Pledgor as the sole member
of Issuer, hereby acknowledges and agrees that Pledgee or any of its successors,
assigns or designees, shall, at Pledgee's option upon written notice to Pledgor
of Pledgee's intent to be admitted itself (or to have any such successor,
assignee or designee admitted) as a member of Issuer at any time an Event of
Default exists or has occurred and is continuing, be admitted as a member of
Issuer without any further approval of Pledgor and without compliance by Pledgee
or any other person with any of the conditions or other requirements of the LLC
Agreement and without conferring upon any member thereof any option (whether
under the LLC Agreement or otherwise) to acquire the membership interests so
transferred to Pledgee, its successors, assigns, or designees. Pledgor agrees to
take such other action and execute such further documents as Pledgee may
reasonably request from time to time in order to give effect to the foregoing
provisions of this Section.
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(p) Pledgor shall pay all charges and assessments of any nature
against the Collateral or with respect thereto prior to said charges and/or
assessments being delinquent.
(q) Pledgor shall promptly reimburse Pledgee, on demand, together
with interest at the highest rate then applicable to the Obligations set forth
in the Loan Agreement, for any charges, assessments or expenses paid or incurred
by Pledgee for the protection, preservation and maintenance of the Collateral
and the enforcement of Pledgee's or Lenders' rights hereunder, including,
without limitation, attorneys' fees and legal expenses incurred by Pledgee in
seeking to protect, collect or enforce its rights in the Collateral or otherwise
hereunder. Any such amounts paid or incurred by Pledgee shall constitute part of
the Obligations secured hereby and may be charged by Pledgee to any loan account
of Pledgor maintained by Pledgee or any Lender, at its option.
(r) Pledgor shall furnish, or cause to be furnished, to Pledgee such
information concerning Issuer and the Collateral as may from time to time be
required under the Loan Agreement.
(s) Pledgee may notify Issuer or the appropriate transfer agent of
the Collateral to register the security interest and pledge granted herein and
to honor the rights of Pledgee with respect thereto.
(t) Pledgor authorizes Pledgee to (i) perform any and all other acts
which Pledgee deems reasonable and/or necessary for the protection and
preservation of the Collateral or its value or Pledgee's security interest
therein and (ii) pay any charges or expenses which Pledgee deems necessary for
the foregoing purpose, but without any obligation to do so (and any amounts so
paid shall constitute Obligations).
(u) Pledgor waives: (i) all rights to require Pledgee or Lenders to
proceed against any other person, entity or collateral or to exercise any
remedy, (ii) the defense of the statute of limitations in any action upon any of
the Obligations, (iii) any right of subrogation or interest in the Obligations
or Collateral until all Obligations have been paid in full in immediately
available funds and the Loan Agreement has been terminated, (iv) any rights to
notice of any kind or nature whatsoever, unless specifically required in this
Pledge Agreement, the Loan Agreement (to the extent applicable to this Pledge
Agreement) or non-waivable under any applicable law, and (v) to the extent
permissible, its rights under Section 9-207 of the UCC. Pledgor agrees that the
Collateral, other collateral, or any other guarantor or endorser may be
released, substituted or added with respect to the Obligations, in whole or in
part, without releasing or otherwise affecting the liability of Pledgor, the
pledge and security interests granted hereunder, or this Pledge Agreement.
Pledgee is entitled to all of the benefits of a secured party set forth in
Section 9-207 of the UCC.
4. AUTHORIZATION TO PLEDGE IN LLC AGREEMENT.
(a) Pledgor hereby represents, warrants and covenants with and to
Pledgee and Lenders that as of the date hereof:
(i) the LLC Agreement permits Pledgor to pledge and assign any
and all membership interests in (or other ownership interests of) Issuer
(including, without limitation,
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the Pledged Interests) to Pledgee, for itself and the ratable benefit of Secured
Parties and the LLC Agreement shall not be amended, modified, altered or changed
in such a manner to limit, restrict or prevent such pledge and assignment; and
(ii) the LLC Agreement permits Pledgee and its successors,
assigns and designees to be admitted to Issuer as a member thereof upon transfer
of membership interests to Pledgee as provided in Section 7 hereof without
compliance by Pledgee or any other person with any of the conditions or other
requirements of the LLC Agreement and without conferring upon Issuer or any
other member thereof any option to acquire the membership interests so
transferred to Pledgee or its designees.
(b) Pledgor agrees to take such other action and execute such
further documents as Pledgee may from time to time request in order to give
effect to the foregoing provisions of this Section 4.
5. NO ASSUMPTION OF LIABILITIES.
(a) Nothing herein shall be construed to make Pledgee or any Lender
liable as a member of Issuer and Pledgee or any Lender by virtue of this Pledge
Agreement or otherwise shall not have any of the duties, obligations or
liabilities of a member of Issuer. The parties hereto expressly agree that this
Pledge Agreement shall not be construed as creating a partnership or joint
venture among Pledgee or any Lender and Pledgor and/or Issuer.
(b) By accepting this Pledge Agreement, Pledgee and Lenders do not
intend to become a member of Issuer or otherwise be deemed to be a co-venturer
with respect to Pledgor or Issuer either before or after an Event of Default
shall have occurred. Pledgee and Lenders shall have only those powers set forth
herein and shall assume none of the duties, obligations or liabilities of
Pledgor or of a member of Issuer. Pledgee and Lenders shall not be obligated to
perform or discharge any obligation of Pledgor as a result of the pledge hereby
effected.
(c) The acceptance by Pledgee and Lenders of this Pledge Agreement,
with all of the rights, powers, privileges and authority so created, shall not
at any time or in any event obligate Pledgee or any Lender to appear in or
defend any action or proceeding relating to the Collateral to which it is not a
party, or to take any action hereunder or thereunder, or to expend any money or
incur any expense or perform or discharge any obligation, duty or liability
hereunder or otherwise with respect to the Collateral.
6. EVENTS OF DEFAULT
The occurrence or existence of any Event of Default under and as defined
in any of the Financing Agreements is referred to herein individually as an
"Event of Default" and collectively as "Events of Default".
7. RIGHTS AND REMEDIES
At any time an Event of Default exists or has occurred and is continuing,
in addition to all other rights and remedies of Pledgee and Lenders, whether
provided under this Pledge Agreement, the Loan Agreement, the other Financing
Agreements, applicable law or otherwise,
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Pledgee shall have the following rights and remedies which may be exercised
without notice to, or consent by, Pledgor except as such notice or consent is
expressly provided for hereunder or under the Loan Agreement (to the extent
applicable to this Pledge Agreement);
(a) Pledgee, at its option, shall be empowered to exercise its
continuing right to instruct Issuer (or the appropriate transfer agent of the
Collateral) to register any or all of the Collateral in the name of Pledgee or
in the name of Pledgee's nominee and Pledgee may complete, in any manner Pledgee
may deem expedient, any assignments or other documents heretofore or hereafter
executed in blank by Pledgor and delivered to Pledgee. After said instruction,
and without further notice, Pledgee shall have the exclusive right to exercise
all rights with respect to the Collateral (including all voting and limited
liability company rights), and exercise any and all rights of conversion,
redemption, exchange, subscription or any other rights, privileges, or options
pertaining to the Collateral as if Pledgee were the absolute owner thereof,
including, without limitation, the right to exchange, in its discretion, any and
all of the Collateral upon any merger, consolidation, reorganization,
recapitalization or other readjustment with respect thereto. Upon the exercise
of any such rights, privileges or options by Pledgee, Pledgee shall have the
right to deposit and deliver any and all of the Collateral to any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as Pledgee may determine, all without liability, except to
account for property actually received by Pledgee. However, Pledgee shall have
no duty to exercise any of the aforesaid rights, privileges or options (all of
which are exercisable in the sole discretion of Pledgee) and shall not be
responsible for any failure to do so or delay in doing so.
(b) Upon prior written notice thereof to Issuer and Pledgor, (i)
Pledgee may transfer the membership interests of Pledgor in Issuer into the name
of Pledgee (or its successors or assignees, or designee) and (ii) Pledgee (or
its successors, assignees, or designees) shall be admitted as a member of Issuer
in the place of Pledgor.
(c) In addition to all the rights and remedies of a secured party
under the UCC or other applicable law, Pledgee shall have the right, at any time
and without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon Pledgor or any other person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by applicable law), to proceed forthwith to collect, redeem, recover,
receive, appropriate, realize, sell, or otherwise dispose of and deliver the
Collateral or any part thereof in one or more lots at public or private sale or
sales at any exchange, broker's board or at any of Pledgee's offices or
elsewhere at such prices and on such terms as Pledgee may deem best. The
foregoing disposition(s) may be for cash or on credit or for future delivery
without assumption of any credit risk, with Pledgee having the right to purchase
all or any part of the Collateral so sold at any such sale or sales, public or
private, free of any right or equity of redemption in Pledgor, which right or
equity is hereby expressly waived or released by Pledgor. The proceeds of any
such collection, redemption, recovery, receipt, appropriation, realization, sale
or other disposition, after deducting all costs and expenses of every kind
incurred relative thereto or incidental to the care, safekeeping or otherwise of
any and all Collateral or in any way relating to the rights of Pledgee
hereunder, including attorneys' fees and legal expenses, shall be applied first
to the satisfaction of the Obligations (in such order as Pledgee may elect and
whether or not due) and then to the payment of any other amounts required by
applicable law, including
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Section 9-615(a)(3) of the UCC, with Pledgor to be and remain liable for any
deficiency. Pledgor shall be liable to Pledgee and Lenders for the payment on
demand of all such costs and expenses, together with interest at the highest
rate then applicable to Obligations set forth in the Loan Agreement and any
attorneys' fees and legal expenses incurred by Pledgee. Any such amounts shall
constitute Obligations under the Loan Agreement and may be charged by Pledgee to
the loan account of Pledgor maintained by Pledgee at its option. Pledgor agrees
that ten (10) days prior written notice by Pledgee designating the place and
time of any public sale or of the time after which any private sale or other
intended disposition of any or all of the Collateral is to be made, is
reasonable notification of such matters.
(d) Pledgor recognizes that Pledgee may be unable to effect a public
sale of all or part of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, as now or hereafter in
effect or in applicable Blue Sky or other state securities law, as now or
hereafter in effect, but may be compelled to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire such Collateral for their own account for investment and not
with a view to the distribution or resale thereof. If at the time of any sale of
the Collateral or any part thereof, the same shall not, for any reason
whatsoever, be effectively registered (if required) under the Securities Act of
1933 (or other applicable state securities law), as then in effect, Pledgee in
its sole and absolute discretion is authorized to sell such Collateral or such
part thereof by private sale in such manner and under such circumstances as
Pledgee or its counsel may deem necessary or advisable in order that such sale
may legally be effected without registration. Pledgor agrees that private sales
so made may be at prices and other terms less favorable to the seller than if
such Collateral were sold at public sale, and that Pledgee has no obligation to
delay the sale of any such Collateral for the period of time necessary to permit
Issuer, even if Issuer would agree, to register such Collateral for public sale
under such applicable securities laws. Pledgor agrees that any private sales
made under the foregoing circumstances shall be deemed to have been conducted in
a commercially reasonable manner.
(e) All of the rights and remedies of Pledgee and Lenders,
including, but not limited to, the foregoing and those otherwise arising under
this Pledge Agreement, the Loan Agreement and the other Financing Agreements,
the instruments comprising the Collateral, applicable law or otherwise, shall be
cumulative and not exclusive and shall be enforceable alternatively,
successively or concurrently as Pledgee may deem expedient. No failure or delay
on the part of Pledgee or any Lender in exercising any of its options, powers or
rights or partial or single exercise thereof, shall constitute a waiver of such
option, power or right.
8. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
(a) The validity, interpretation and enforcement of this Pledge
Agreement and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of New York but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.
(b) Pledgor irrevocably consents and submits to the non-exclusive
jurisdiction of the Supreme Court of the State of New York in New York County,
New York and the United
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Xxxxxx Xxxxxxxx Xxxxx for the Southern District of New York, whichever Pledgee
may elect, and waives any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Pledge Agreement or
in any way connected with or related or incidental to the dealings of the
parties hereto in respect of this Pledge Agreement or the transactions related
hereto or thereto, in each case whether now existing or hereafter arising, and
whether in contract, tort, equity or otherwise, and agrees that any dispute with
respect to any such matters shall be heard only in the courts described above
(except that Pledgee shall have the right to bring any action or proceeding
against Pledgor or its property in the courts of any other jurisdiction which
Pledgee deems necessary or appropriate in order to realize on the Collateral or
to otherwise enforce its rights against Pledgor or its property).
(c) Pledgor hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by U.S.
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed immediately upon
receipt thereof by Pledgor, or, at Pledgee's option, by service upon Pledgor in
any other manner provided under the rules of any such courts. Within thirty (30)
days after such service, Pledgor shall appear in answer to such process, failing
which Pledgor shall be deemed in default and judgment may be entered by Pledgee
against Pledgor for the amount of the claim and other relief requested.
(d) EACH OF PLEDGOR AND PLEDGEE HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
PLEDGE AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF PLEDGOR AND PLEDGEE
OR ANY LENDER IN RESPECT OF THIS PLEDGE AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. PLEDGOR 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 PLEDGOR OR PLEDGEE MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
PLEDGE AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Pledgee and Lenders shall not have any liability to Pledgor
(whether in tort, contract, equity or otherwise) for losses suffered by Pledgor
in connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Pledge Agreement, or any act, omission or
event occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Pledgee or such Lender, that
the losses were the result of acts or omissions constituting gross negligence or
willful misconduct. In any such litigation, Pledgee shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this Pledge
Agreement.
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9. MISCELLANEOUS
(a) Pledgor agrees that at any time and from time to time upon the
written request of Pledgee, Pledgor shall execute and deliver such further
documents, in form satisfactory to Pledgee, and will take or cause to be taken
such further acts as Pledgee may request in order to effect the purposes of this
Pledge Agreement and perfect or continue the perfection of the security interest
in the Collateral granted to Pledgee hereunder.
(b) Beyond the exercise of reasonable care to assure the safe
custody of the Collateral (whether such custody is exercised by Pledgee, or
Pledgee's nominee, agent or bailee), Pledgee or Pledgee's nominee agent or
bailee shall have no duty or liability to protect or preserve any rights
pertaining thereto and shall be relieved of all responsibility for the
Collateral upon surrendering it to Pledgor or foreclosure with respect thereto.
(c) All notices, requests and demands to or upon the respective
parties hereto shall be in writing and shall be deemed to have been duly given
or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by registered or certified mail, return receipt requested, five
(5) days after mailing by deposit (postage prepaid) in the U.S. mail. All
notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to Pledgor: HF Enterprises, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
If to Pledgee and Lenders: Wachovia Bank, National Association,
as Agent
Heritage Square II
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Portfolio Manager
Telephone No.: 000-000-0000
Telecopier: 000-000-0000
(d) Capitalized terms used and not defined herein shall have the
meanings assigned them in the Loan Agreement. All references to the plural
herein shall also mean the singular and to the singular shall also mean the
plural. All references to Pledgor, Borrowers, Issuer, Pledgee or any Lender
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns. The words
"hereof," "herein," "hereunder," "this Pledge Agreement" and words of similar
import when used in this Pledge Agreement shall refer to this Pledge Agreement
as a whole and not any particular provision of this Pledge Agreement and as this
Pledge Agreement now exists or may hereafter be
10
amended, modified, supplemented, extended, renewed, restated or replaced. An
Event of Default shall exist or continue or be continuing until such Event of
Default is cured or waived in accordance with Section 9(g) hereof or the
provisions of the Loan Agreement. All references to the term "Person" or
"Persons" herein shall mean any individual, sole proprietorship, partnership,
corporation (including, without limitation, any corporation which elects
subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability corporation, limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock company,
trust, joint venture or other entity or any government or any agency,
instrumentality or political subdivision thereof.
(e) This Pledge Agreement, shall be binding upon Pledgor and its
successors and assigns and inure to the benefit of and be enforceable by Pledgee
and its successors and assigns.
(f) If any provision of this Pledge Agreement is held to be invalid
or unenforceable, such invalidity or unenforceability shall not invalidate this
Pledge Agreement as a whole, but this Pledge Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
(g) Neither this Pledge Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only
by a written agreement signed by an authorized officer of Pledgee. Pledgee and
Lenders shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of their rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Pledgee.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Pledgee or any Lender of any right, power and/or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Pledgee or such Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
(h) This Pledge Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of this Pledge Agreement by telefacsimile or other means of
electronic transmission shall have the same force and effect as the delivery of
an original executed counterpart of this Pledge Agreement. Any party delivering
an executed counterpart of this Pledge Agreement by telefacsimile or other means
of electronic transmission shall also deliver an original executed counterpart,
but the failure to do so shall not affect the validity, enforceability or
binding effect of this Pledge Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, Pledgor has executed this Pledge and Security
Agreement as of the day and year first above written.
HF ENTERPRISES, INC.
By: ____________________________
Title: _________________________
EXHIBIT A
TO
PLEDGE AND SECURITY AGREEMENT
No. of Membership Percentage Interest
Issuer Operating Agreement (Date) Certificate No. Interests Owned
------ -------------------------- --------------- ----------------- -------------------
Xxxxxxx Fabrics, January 28, 2002, as
LLC amended 2 1 100%
A-1
