XXXXX FARGO BANK EXHIBIT J
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GRANT OF SECURITY INTEREST. In consideration of any financial accommodation
or loan heretofore, now or hereafter extended to or made to ZUELLIG BOTANICALS,
INC. ("Borrowers"), or any of them if more than one Borrower, by XXXXX FARGO
BANK, NATIONAL ASSOCIATION ("Bank"), and as security for the payment of all
Indebtedness of Borrowers to Bank, the undersigned ZUELLIG GROUP N.A., INC.
("Pledgor") hereby assigns, transfers to and pledges with Bank the following
money and property:
All shares of common stock, par value $.001 per share, of Xxxxxx, Inc., a
Colorado corporation ("Xxxxxx"), now owned or hereafter acquired by Pledgor,
and that certain Registration Rights Agreement dated December 8, 1998, by and
among Xxxxxx, Pledgor, and Borrower, and that certain Escrow Agreement dated as
of June 11, 1999 among Pledgor, Xxxxxx, Borrowers and American Securities &
Trust, Inc. ("Escrow Agreement").
together with all other money or property heretofore delivered or which shall
hereafter be delivered to or come into the possession, custody or control of
Bank in any manner or for any purpose whatsoever during the existence of this
Agreement (collectively called "Collateral"), and whether held in a general or
special account or deposit for safekeeping or otherwise, together with whatever
is receivable or received when any of the Collateral or proceeds thereof are
sold, collected, exchanged or otherwise disposed of, whether such disposition
is voluntary or involuntary, including without limitation, (a) all rights to
payment, including returned premiums, with respect to any insurance relating to
any of the foregoing, (b) all rights to payment with respect to any cause of
action affecting or relating to any of the foregoing, and (c) all stock rights,
rights to subscribe, stock splits, liquidating dividends, cash dividends,
dividends paid in stock, new securities or other property of any kind which
Pledgor is or may hereafter be entitled to receive on account of any securities
pledged hereunder, including without limitation, stock received by Pledgor due
to stock splits or dividends paid in stock or sums paid upon or in respect of
any securities pledged hereunder upon the liquidation or dissolution of the
issuer thereof (hereinafter called "Proceeds"), and in the event that Pledgor
receives any such Proceeds, Pledgor will hold the same in trust on behalf of
and for the benefit of Bank and will immediately deliver all such Proceeds to
Bank in the exact form received, with the endorsement of Pledgor if necessary
and/or appropriate undated stock powers duly executed in blank, to be held by
Bank as part of the Collateral, subject to all terms hereof. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Borrowers, or any of
them, heretofore, now or hereafter made, incurred or created, whether voluntary
or involuntary and however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
Borrowers may be liable individually or jointly with others, or whether
recovery upon such Indebtedness may be or hereafter becomes unenforceable.
Notwithstanding any provision herein to the contrary, the pledge hereunder in
favor of Bank shall be subject to the transfer restrictions contained the
Escrow Agreement and in Section 6.9 (c) of the Agreement and Plan of Merger
dated as of December 8, 1998, as amended, among Pledgor, Xxxxxx, Borrowers.,
Zuellig Botanical Extracts, Inc., ZetaPharm, Inc., Xxxxxx Drug Company, Inc.,
QQB Holdings I, Inc., QQB Holdings II, Inc. and QQB Holdings III, Inc. and the
voting restrictions contained in the Governance Agreement dated as of June 11,
1999 among Xxxxxx, Pledgor, and Borrowers.
CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS. This
is a continuing agreement and all rights, powers and remedies hereunder shall
apply to all past, present and future Indebtedness of each of the Borrowers to
Bank, including that arising under successive transactions which shall either
continue the Indebtedness, increase or decrease it, or from time to time create
new Indebtedness after all or any prior Indebtedness has been satisfied, and
notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy
of any of the Borrowers or Pledgor or any other event or proceeding affecting
any of the Borrowers or Pledgor. This Agreement shall not apply to any new
Indebtedness created after actual receipt by Bank of written notice of its
revocation as to such new Indebtedness; provided however, that loans or
advances made by Bank to any of the Borrowers after revocation under
commitments existing prior to receipt by Bank of such revocation, and
extensions, renewals or modifications, of any kind, of Indebtedness incurred by
any of the Borrowers or committed by Bank prior to receipt by Bank of such
revocation, shall not be considered new Indebtedness. Any such notice must be
sent to Bank by registered U.S. mail, postage prepaid, addressed to its office
at 000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, XX 00000, or at such other
address as Bank shall from time to time designate. The obligations of Pledgor
hereunder shall be in addition to any obligations of Pledgor under any other
grants or pledges of security for any liabilities or obligations of any of the
Borrowers or any other person heretofore or hereafter given to Bank unless said
other grants or pledges of security are expressly modified or revoked in
writing; and this Agreement shall not, unless expressly herein provided, affect
or invalidate any such other grants or pledges of security.
OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint
and several and independent of the obligations of Borrowers, and a separate
action or actions may be brought and prosecuted against Pledgor whether action
is brought against any of the Borrowers or any other person, or whether any of
the Borrowers or any other person is joined in any such action or actions.
Pledgor acknowledges that there are no conditions precedent to the
effectiveness of this Agreement, and that this Agreement is in full force and
effect and is binding on Pledgor as of the date written below, regardless of
whether Bank obtains collateral or any guaranties from others or takes any
other action contemplated by Pledgor. Pledgor waives the benefit of any statute
of limitations affecting Pledgor's liability hereunder or the enforcement
thereof, and Pledgor agrees that any payment of any Indebtedness or other act
which shall toll any statute of limitations applicable thereto shall similarly
operate to toll such statute of limitations applicable to Pledgor's liability
hereunder. The liability of Pledgor hereunder shall be reinstated and revived
and the rights of Bank shall continue if and to the extent that for any reason
any amount at any time paid on account of any Indebtedness secured hereby is
rescinded or must be otherwise restored by Bank, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Bank in its sole discretion;
provided however, that if Bank chooses to contest any such matter at the
request of Pledgor, Pledgor agrees to indemnify and hold Bank harmless from and
against all costs and expenses, including reasonable attorneys' fees, expended
or incurred by Bank in connection therewith, including without limitation, in
any litigation with respect thereto.
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OBLIGATIONS OF BANK.
Any money received by Bank in respect of the Collateral may be
deposited, at Bank's option, into a non-interest bearing account
over which Pledgor shall have no control, and the same shall, for
all purposes, be deemed Collateral hereunder and shall be applied
to reduce the Indebtedness.
Bank's obligation with respect to Collateral and Proceeds in its
possession shall be strictly limited to the duty to exercise
reasonable care in the custody and preservation of such Collateral
and Proceeds, and such duty shall not include any obligation to
ascertain or to initiate any action with respect to or to inform
Pledgor of maturity dates, conversion, call or exchange rights, or
offers to purchase the Collateral or Proceeds, or any similar
matters, notwithstanding Bank's knowledge of the same. Bank shall
have no duty to take any steps necessary to preserve the rights of
Pledgor against prior parties, or to initiate any action to protect
against the possibility of a decline in the market value of the
Collateral or Proceeds. Bank shall not be obligated to take any
actions with respect to the Collateral or Proceeds requested by
Pledgor unless such request is made in writing and Bank determines,
in its sole discretion, that the requested action would not
unreasonably jeopardize the value of the Collateral and Proceeds as
security for the Indebtedness. Bank may at any time deliver the
Collateral and Proceeds, or any part thereof, to Pledgor, and the
receipt thereof by Pledgor shall be a complete and full acquittance
for the Collateral and Proceeds so delivered, and Bank shall
thereafter be discharged from any liability or responsibility
therefor.
REPRESENTATIONS AND WARRANTIES.
Pledgor represents and warrants to Bank that: (i) Pledgor is the owner
and has possession or control of the Collateral and Proceeds; (ii)
Pledgor has the right to pledge the Collateral and Proceeds; (iii)
all Collateral and Proceeds are genuine, free from liens, adverse
claims, setoffs, default, prepayment, defenses and conditions
precedent of any kind or character, except as heretofore disclosed
to Bank in writing; (iv) all statements contained herein and, where
applicable, in the Collateral are true and complete; (v) no
financing statement covering any of the Collateral or Proceeds, and
naming any secured party other than Bank, is on file in any public
office; and (vi) specifically with respect to Collateral and
Proceeds consisting of investment securities, instruments, chattel
paper, documents, contracts, insurance policies or any like
property, all persons appearing to be obligated thereon have
authority and capacity to contract and are bound as they appear to
be, and the same comply with applicable laws concerning form,
content and manner of preparation and execution.
Pledgor further represents and warrants to Bank that: (i) the
Collateral pledged hereunder is so pledged at Borrowers' request;
(ii) Bank has made no representation to Pledgor as to the
creditworthiness of any of the Borrowers; and (iii) Pledgor has
established adequate means of obtaining from each of the Borrowers
on a continuing basis financial and other information pertaining to
Borrowers' financial condition. Pledgor agrees to keep adequately
informed from such means of any facts, events or circumstances
which might in any way affect Pledgor's risks hereunder, and
Pledgor further agrees that Bank shall have no obligation to
disclose to Pledgor any information or material about any of the
Borrowers which is acquired by Bank in any manner.
COVENANTS OF PLEDGOR.
Pledgor Agrees in General: (i) to indemnify Bank against all losses,
claims, demands, liabilities and expenses of every kind caused by
property subject hereto; (ii) to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Bank in the
perfection, preservation, realization, enforcement and exercise of
its rights, powers and remedies hereunder; (iii) to permit Bank to
exercise its powers; (iv) to execute and deliver such documents as
Bank deems necessary to create, perfect and continue the security
interests contemplated hereby; and (v) not to change Pledgor's
chief place of business (or personal residence, if applicable) or
the places where Pledgor keeps any of the Collateral or Pledgor's
records concerning the Collateral and Proceeds without first giving
Bank written notice of the address to which Pledgor is moving same.
Pledgor Agrees with Regard to the Collateral and Proceeds: (i) not to
permit any lien on the Collateral or Proceeds, except in favor of
Bank; (ii) not to withdraw any funds from any deposit account
pledged to Bank hereunder without Bank's prior written consent;
(iii) not to sell, hypothecate or otherwise dispose of any of the
Collateral or Proceeds, or any interest therein, without Bank's
prior written consent; (iv) to keep, in accordance with generally
accepted accounting principles, complete and accurate records
regarding all Collateral and Proceeds, and to permit Bank to
inspect the same and make copies thereof at any reasonable time;
(v) if requested by Bank, to receive and use reasonable diligence
to collect Proceeds, in trust and as the property of Bank, and to
immediately endorse as appropriate and deliver such Proceeds to
Bank daily in the exact form in which they are received together
with a collection report in form satisfactory to Bank; (vi) not to
commingle Collateral or Proceeds, or collections thereunder, with
other property; (vii) in the event Bank elects to receive payments
of Proceeds hereunder, to pay all expenses incurred by Bank in
connection therewith, including expenses of accounting,
correspondence, collection efforts, reporting to account or
contract debtors, filing, recording, record keeping and expenses
incidental thereto; (viii) to provide any service and do any other
acts which may be necessary to keep all Collateral and Proceeds
free and clear of all defenses, rights of offset and counterclaims;
and (ix) if the Collateral or Proceeds consists of securities and
so long as no Event of Default exists, to vote said securities and
to give consents, waivers and ratifications with respect thereto,
provided that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair Bank's
interest in the Collateral and Proceeds or be inconsistent with or
violate any provisions of this Agreement.
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POWERS OF BANK. Pledgor appoints Bank its true attorney in fact to perform
any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank's officers and employees, or any of them, whether or not any of
the Borrowers or Pledgor is in default: (a) to perform any obligation of
Pledgor hereunder in Pledgor's name or otherwise; (b) to notify any person
obligated on any security, instrument or other document subject to this
Agreement of Bank's rights hereunder; (c) to collect by legal proceedings or
otherwise all dividends, interest, principal or other sums now or hereafter
payable upon or on account of the Collateral or Proceeds; (d) to enter into any
extension, reorganization, deposit, merger or consolidation agreement, or any
other agreement relating to or affecting the Collateral or Proceeds, and in
connection therewith to deposit or surrender control of the Collateral and
Proceeds, to accept other property in exchange for the Collateral and Proceeds,
and to do and perform such acts and things as Bank may deem proper, with any
money or property received in exchange for the Collateral or Proceeds, at
Bank's option, to be applied to the Indebtedness or held by Bank under this
Agreement; (e) to make any compromise or settlement Bank deems desirable or
proper in respect of the Collateral and Proceeds; (f) to insure, process and
preserve the Collateral and Proceeds; (g) to exercise all rights, powers and
remedies which Pledgor would have, but for this Agreement, with respect to all
Collateral and Proceeds subject hereto; and (h) to do all acts and things and
execute all documents in the name of Pledgor or otherwise, deemed by Bank as
necessary, proper or convenient in connection with the preservation, perfection
or enforcement of its rights hereunder. To effect the purposes of this
Agreement or otherwise upon instructions of Pledgor, Bank may cause any
Collateral and/or Proceeds to be transferred to Bank's name or the name of
Bank's nominee. If an Event of Default has occurred and is continuing, any or
all Collateral and/or Proceeds consisting of securities may be registered,
without notice, in the name of Bank or its nominee, and thereafter Bank or its
nominee may exercise, without notice, all voting and corporate rights at any
meeting of the shareholders of the issuer thereof, any and all rights of
conversion, exchange or subscription, or any other rights, privileges or
options pertaining to such Collateral and/or Proceeds, all as if it were the
absolute owner thereof. The foregoing shall include, without limitation, the
right of Bank or its nominee to exchange, at its discretion, any and all
Collateral and/or Proceeds upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, or upon the
exercise by the issuer thereof or Bank of any right, privilege or option
pertaining to any shares of the Collateral and/or Proceeds, and in connection
therewith, the right to deposit and deliver any and all of the Collateral
and/or Proceeds with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as Bank may determine.
All of the foregoing rights, privileges or options may be exercised without
liability on the part of Bank or its nominee except to account for property
actually received by Bank. Bank shall have no duty to exercise any of the
foregoing, or any other rights, privileges or options with respect to the
Collateral or Proceeds and shall not be responsible for any failure to do so or
delay in so doing.
PLEDGOR'S WAIVERS.
Pledgor waives any right to require Bank to: (i) proceed against any of
the Borrowers or any other person; (ii) proceed against or exhaust
any security held from any of the Borrowers or any other person;
(iii) give notice of the terms, time and place of any public or
private sale of personal property security held from any of the
Borrowers or any other person, or otherwise comply with the
provisions of Section 9504 of the California Uniform Commercial
Code; (iv) pursue any other remedy in Bank's power; or (v) make any
presentments or demands for performance, or give any notices of
nonperformance, protests, notices of protest or notices of dishonor
in connection with any obligations or evidences of indebtedness
held by Bank as security or which constitute in whole or in part
the Indebtedness secured hereunder, or in connection with the
creation of new or additional Indebtedness.
Pledgor waives any defense to its obligations hereunder based upon or
arising by reason of: (i) any disability or other defense of any of
the Borrowers or any other person; (ii) the cessation or limitation
from any cause whatsoever, other than payment in full, of the
Indebtedness of any of the Borrowers or any other person; (iii) any
lack of authority of any officer, director, partner, agent or any
other person acting or purporting to act on behalf of any of the
Borrowers which is a corporation, partnership or other type of
entity, or any defect in the formation of any such Borrower; (iv)
the application by any of the Borrowers of the proceeds of any
Indebtedness for purposes other than the purposes represented by
Borrowers to, or intended or understood by, Bank or Pledgor; (v)
any act or omission by Bank which directly or indirectly results in
or aids the discharge of any of the Borrowers or any portion of the
Indebtedness by operation of law or otherwise, or which in any way
impairs or suspends any rights or remedies of Bank against any of
the Borrowers; (vi) any impairment of the value of any interest in
the Collateral or Proceeds, or any other security for the
Indebtedness or any portion thereof, including without limitation,
the failure to obtain or maintain perfection or recordation of any
interest in any such security, the release of any such security
without substitution, and/or the failure to preserve the value of,
or to comply with applicable law in disposing of, any such
security; or (vii) any modification of the Indebtedness, in any
form whatsoever, including any modification made after revocation
hereof to any Indebtedness incurred prior to such revocation, and
including without limitation the renewal, extension, acceleration
or other change in time for payment of, or other change in the
terms of the Indebtedness or any portion thereof, including
increase or decrease of the rate of interest thereon. Until all
Indebtedness shall have been paid in full, Pledgor shall have no
right of subrogation. Pledgor waives all rights and defenses
Pledgor may have arising out of (A) any election of remedies by
Bank, even though that election of remedies, such as a
non-judicial foreclosure with respect to any security for any
portion of the Indebtedness, destroys Pledgor's rights of
subrogation or Pledgor's rights to proceed against any of the
Borrowers for reimbursement, or (B) any loss of rights Pledgor may
suffer by reason of any rights, powers or remedies of any of the
Borrowers in connection with any anti-deficiency laws or any other
laws limiting, qualifying or discharging Borrowers' Indebtedness
whether by operation of Sections 726 and 580d of the California
Code of Civil Procedure as from time to time amended, or otherwise.
Until all Indebtedness of each of the Borrowers to Bank shall have
been paid in full, Pledgor further waives any right to enforce any
remedy which Bank now has or may hereafter have against any of the
Borrowers or any other person, and waives any benefit of, or any
right to participate in, any security now or hereafter held by
Bank.
Page 3 of 6
AUTHORIZATIONS TO BANK. Pledgor authorizes Bank either before or after
revocation hereof, without notice to or demand on Pledgor, and without
affecting Pledgor's liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of, the Indebtedness or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security, other than the Collateral and Proceeds, for the payment of the
Indebtedness or any portion thereof, and exchange, enforce, waive, subordinate
or release the Collateral and Proceeds, or any part thereof, or any such other
security; (c) apply the Collateral and Proceeds or such other security and
direct the order or manner of sale thereof, including without limitation, a
non-judicial sale permitted by the terms of the controlling security agreement
or deed of trust, as Bank in its discretion may determine; (d) release or
substitute any one or more of the endorsers or guarantors of the Indebtedness,
or any portion thereof, or any other party thereto; and (e) apply payments
received by Bank from any of the Borrowers to any Indebtedness of any of the
Borrowers to Bank, in such order as Bank shall determine in its sole
discretion, whether or not such Indebtedness is covered by this Agreement, and
Pledgor hereby waives any provision of law regarding application of payments
which specifies otherwise. Bank may without notice assign this Agreement in
whole or in part.
PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Pledgor agrees
to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of
Pledgor to do so, Bank at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same. Any such payments made by Bank shall be obligations of Pledgor to
Bank, due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 14 hereof, and shall be
secured by the Collateral and Proceeds, subject to all terms and conditions of
this Agreement.
EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an "Event of Default" under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness, or (ii) any other agreement
between any of the Borrowers and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by Pledgor herein shall prove to be incorrect,
false or misleading in any material respect when made; (c) Pledgor shall fail
to observe or perform any obligation or agreement contained herein; (d) any
attachment or like levy on any property of Pledgor; and (e) Bank, in good
faith, believes any or all of the Collateral and/or Proceeds to be in danger of
misuse, dissipation, commingling, loss, theft, damage or destruction, or
otherwise in jeopardy or unsatisfactory in character or value.
REMEDIES. Upon the occurrence of any Event of Default, Bank shall have and
may exercise without demand any and all rights, powers, privileges and remedies
granted to a secured party upon default under the California Uniform Commercial
Code or otherwise provided by law, including without limitation, the right to
contact all persons obligated to Pledgor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank. All rights, powers, privileges and remedies of Bank shall be cumulative.
No delay, failure or discontinuance of Bank in exercising any right, power,
privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right,
power, privilege or remedy. Any waiver, permit, consent or approval of any kind
by Bank of any default hereunder, or any such waiver of any provisions or
conditions hereof, must be in writing and shall be effective only to the extent
set forth in writing. It is agreed that public or private sales, for cash or on
credit, to a wholesaler or retailer or investor, or user of property of the
types subject to this Agreement, or public auction, are all commercially
reasonable since differences in the sales prices generally realized in the
different kinds of sales are ordinarily offset by the differences in the costs
and credit risks of such sales. While an Event of Default exists: (a) Bank may,
at any time and at Bank's sole option, liquidate any time deposits pledged to
Bank hereunder, whether or not said time deposits have matured and
notwithstanding the fact that such liquidation may give rise to penalties for
early withdrawal of funds; (b) Pledgor will not dispose of any of the
Collateral or Proceeds except on terms approved by Bank; (c) Bank may
appropriate the Collateral and apply all Proceeds toward repayment of the
Indebtedness in such order as Bank may from time to time elect; and (d) at
Bank's request, Pledgor will assemble and deliver all Collateral and Proceeds,
and books and records pertaining thereto, to Bank at a reasonably convenient
place designated by Bank. For any Collateral or Proceeds consisting of
securities, Bank shall be under no obligation to delay a sale of any portion
thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or Federal
law, even if the issuer thereof would agree to do so.
DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or any
part of the Indebtedness, Bank may transfer all or any part of the Collateral
or Proceeds and shall be fully discharged thereafter from all liability and
responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Bank hereunder with
respect to any of the foregoing so transferred; but with respect to any
Collateral or Proceeds not so transferred, Bank shall retain all rights,
powers, privileges and remedies herein given. Any proceeds of any disposition
of any of the Collateral or Proceeds, or any part thereof, may be applied by
Bank to the payment of expenses incurred by Bank in connection with the
foregoing, including reasonable attorneys' fees, and the balance of such
proceeds may be applied by Bank toward the payment of the Indebtedness in such
order of application as Bank may from time to time elect.
COSTS, EXPENSES AND ATTORNEYS' FEES. Pledgor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel), incurred by Bank in
exercising any right, power, privilege or remedy conferred by this Agreement or
in the enforcement thereof, whether incurred at the trial or appellate level,
in an arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding relating to Pledgor or
the valuation of the Collateral and/or Proceeds, including without limitation,
the seeking of relief from or modification of the automatic stay or the
negotiation and drafting of a cash collateral order. All of the foregoing shall
be paid by Pledgor with interest at a rate per annum equal to the greater of
ten percent (10%) or
Page 4 of 6
the Prime Rate in effect from time to time. The "Prime Rate" is a base rate
that Bank from time to time establishes and which serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto.
DISCLOSURE OF INFORMATION. Pledgor acknowledges that Bank has the right to
sell, assign, transfer, negotiate or grant participations in all or any part
of, or any interest in, any Indebtedness of Borrowers to Bank and any
obligations with respect thereto, including this Agreement. In connection
therewith, Bank may disclose all documents and information which Bank now has
or hereafter acquires relating to Pledgor and/or this Agreement, whether
furnished by Borrowers, Pledgor or otherwise. Pledgor further agrees that Bank
may disclose such documents and information to Borrowers.
APPLICATION OF SINGULAR AND PLURAL IN CONTEXT AND CONSTRUCTION. In all
cases where there is but a single Borrower, then all words used herein in the
plural shall be deemed to have been used in the singular where the context and
construction so require; and when there is more than one Borrower named herein
or when this Agreement is executed by more than one Pledgor, the word
"Borrowers" and the word "Pledgor" respectively shall mean all or any one or
more of them as the context requires.
NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in Paragraph 2
hereof and to Pledgor at the address of its chief executive office (or
residence, if applicable) specified below or to such other address as any party
may designate by written notice to each other party, and shall be deemed to
have been given or made as follows: (a) if personally delivered, upon delivery;
(b) if sent by mail, upon the earlier of the date of receipt or three (3) days
after deposit in the U.S. mail, first class and postage prepaid; and (c) if
sent by telecopy, upon receipt.
GOVERNING LAW; SUCCESSORS, ASSIGNS. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, and shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties.
SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of
this Agreement.
20. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in
accordance with the terms of this Agreement. A "Dispute" shall mean any action,
dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, now existing or hereafter arising
under or in connection with, or in any way pertaining to, this Agreement and
each other document, contract and instrument required hereby or now or
hereafter delivered to Bank in connection herewith (collectively, the
"Documents"), or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Documents, including without limitation, any of the
foregoing arising in connection with the exercise of any self-help, ancillary
or other remedies pursuant to any of the Documents. Any party may by summary
proceedings bring an action in court to compel arbitration of a Dispute. Any
party who fails or refuses to submit to arbitration following a lawful demand
by any other party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
Loan Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute
shall apply to any arbitration proceeding. All discovery activities shall be
expressly limited to matters directly relevant to the Dispute being arbitrated.
Judgment upon any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C. '91 or any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary
remedies, including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a court of
competent jurisdiction before, after or during the pendency of any arbitration
or other proceeding. The exercise of any such remedy shall not waive the right
of any party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may grant
any remedy or relief that a court of the state of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than
Page 5 of 6
$5,000,000. Any Dispute in which the amount in controversy exceeds $5,000,000
shall be decided by majority vote of a panel of three arbitrators; provided
however, that all three arbitrators must actively participate in all hearings
and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary, in
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds
referred to in the Federal Arbitration Act for vacating, modifying or
correcting an award the right to judicial review of (A) whether the findings of
fact rendered by the arbitrators are supported by substantial evidence, and (B)
whether the conclusions of law are erroneous under the substantive law of the
state of California. Judgment confirming an award in such a proceeding may be
entered only if a court determines the award is supported by substantial
evidence and not based on legal error under the substantive law of the state of
California.
(f) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no Dispute shall be submitted to arbitration if the
Dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or
benefits that might accrue to them by virtue of the single action rule statute
of California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to
a referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to
the AAA's selection procedures. Judgment upon the decision rendered by a
referee shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Documents or the subject matter of the Dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Documents, or any relationship between the parties.
Pledgor warrants that its chief executive office (or residence, if applicable)
is located at the following address:
0000 Xx Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000-0000
IN WITNESS WHEREOF, this Agreement has been duly executed as of June 11, 1999.
"PLEDGOR"
ZUELLIG GROUP N.A., INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Volker Wypysyk
Title: President
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Secretary and Treasurer
Page 6 of 6
XXXXX FARGO BANK
--------------------------------------------------------------------------------
TO: XXXXX FARGO BANK, NATIONAL ASSOCIATION
GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
ZUELLIG BOTANICALS, INC., a Delaware corporation, or any of them if more than
one debtor ("Debtor"), hereby assigns, transfers to and pledges with XXXXX FARGO
BANK, NATIONAL ASSOCIATION ("Bank") all money and property this day delivered to
and deposited with Bank, together with all other money or property heretofore
delivered or which shall hereafter be delivered to or come into the possession,
custody or control of Bank in any manner or for any purpose whatsoever during
the existence of this Agreement (collectively called "Collateral"), and whether
held in a general or special account or deposit for safekeeping or otherwise,
together with whatever is receivable or received when any of the Collateral or
proceeds thereof are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including without
limitation, (a) all rights to payment, including returned premiums, with respect
to any insurance relating to any of the foregoing, (b) all rights to payment
with respect to any cause of action affecting or relating to any of the
foregoing, and (c) all stock rights, rights to subscribe, stock splits,
liquidating dividends, cash dividends, dividends paid in stock, new securities
or other property of any kind which Debtor is or may hereafter be entitled to
receive on account of any securities pledged hereunder, including without
limitation, stock received by Debtor due to stock splits or dividends paid in
stock or sums paid upon or in respect of any securities pledged hereunder upon
the liquidation or dissolution of the issuer thereof (hereinafter called
"Proceeds"), and in the event that Debtor receives any such Proceeds, Debtor
will hold the same in trust on behalf of and for the benefit of Bank and will
immediately deliver all such Proceeds to Bank in the exact form received, with
the endorsement of Debtor if necessary and/or appropriate undated stock powers
duly executed in blank, to be held by Bank as part of the Collateral, subject to
all terms hereof. For the purposes of this General Pledge Agreement, Collateral
shall mean:
All shares of common stock, par value $.001 per share, of Xxxxxx, Inc., a
Colorado corporation ("Xxxxxx"), now owned or hereafter acquired by Debtor, and
that certain Registration Rights Agreement dated December 8, 1998, by and among
Xxxxxx, Xxxxxxx Group N.A., Inc. ("Zuellig Group"), and Debtor, and that certain
Escrow Agreement dated as of June 11, 1999 among Debtor, Zuellig Group, Xxxxxx
and American Securities & Trust, Inc. ("Escrow Agreement").
Notwithstanding any provision herein to the contrary, the pledge hereunder in
favor of the Bank shall be subject to the transfer restrictions contained in the
Escrow Agreement and in Section 6.9 (c) of the Agreement and Plan of Merger
dated as of December 8, 1998, as amended, among Zuellig Group, N.A. Inc.,
Xxxxxx, Debtor, Zuellig Botanical Extracts, Inc., ZetaPharm, Inc., Xxxxxx Drug
Company, Inc., QQB Holdings I, Inc., QQB Holdings II, Inc. and QQB Holdings III,
Inc. and the voting restrictions contained in the Governance Agreement dated as
of June 11, 1999 among Xxxxxx, Zuellig Group N.A., Inc., and Debtor.
OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.
TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank existing or committed by Bank at the time Bank
receives written notice from Debtor of the termination of this Agreement.
OBLIGATIONS OF TRADE BANK. (a) Bank has no obligation to make any loans
hereunder. Any money received by Bank in respect of the Collateral may be
deposited, at Bank's option, into a non-interest bearing account over which
Debtor shall have no control, and the same shall, for all purposes, be deemed
Collateral hereunder and shall be applied to reduce the Indebtedness. (b) Bank's
obligation with respect to Collateral and Proceeds in its possession shall be
strictly limited to the duty to exercise reasonable care in the custody and
preservation of such Collateral and Proceeds, and such duty shall not include
any obligation to ascertain or to initiate any action with respect to or to
inform Debtor of maturity dates, conversion, call or exchange rights, or offers
to purchase the Collateral or Proceeds, or any similar matters, notwithstanding
Bank's knowledge of the same. Bank shall have no duty to take any steps
necessary to preserve the rights of Debtor against prior parties, or to initiate
any action to protect against the possibility of a decline in the market value
of the Collateral or Proceeds. Bank shall not be obligated to take any action
with respect to the Collateral or Proceeds requested by Debtor unless such
request is made in writing and Bank determines, in its sole discretion, that the
requested action would not unreasonably jeopardize the value of the Collateral
and Proceeds as security for the Indebtedness. Bank may at any time deliver the
Collateral and Proceeds, or any part thereof, to any Debtor, and the receipt
thereof by any Debtor shall be a complete and full acquittance for the
Collateral and Proceeds so delivered, and Bank shall thereafter be discharged
from any liability or responsibility therefor.
REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that: (a)
Debtor is the owner and has possession or control of the Collateral and
Proceeds; (b) Debtor has the right to pledge the Collateral and Proceeds; (c)
all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except as heretofore disclosed to Bank in writing; (d) all statements
contained herein and, where applicable, in the Collateral, are true and
complete; (e) no financing statement covering any of the Collateral or Proceeds,
and naming any secured party other than Bank, is on file in any public office;
and (f) specifically with respect to Collateral and Proceeds consisting of
investment securities, instruments, chattel paper, documents, contracts,
insurance policies or any like property, (i) all persons appearing to be
obligated thereon have authority and capacity to contract and are bound as they
appear to be, and (ii) the same comply with applicable laws
Page 1 of 5
concerning form, content and manner of preparation and execution.
COVENANTS OF DEBTOR. (a) Debtor Agrees in General: (i) to pay
Indebtedness secured hereby when due; (ii) to indemnify Bank against all losses,
claims, demands, liabilities and expenses of every kind caused by property
subject hereto; (iii) to pay all costs and expenses, including reasonable
attorneys' fees, incurred by Bank in the perfection, preservation, realization,
enforcement and exercise of its rights, powers and remedies hereunder; (iv) to
permit Bank to exercise its powers; (v) to execute and deliver such documents as
Bank deems necessary to create, perfect and continue the security interests
contemplated hereby; and (vi) not to change its chief place of business or the
places where Debtor keeps any of the Collateral or Debtor's records concerning
the Collateral and Proceeds without first giving Bank written notice of the
address to which Debtor is moving same. (b) Debtor Agrees with Regard to the
Collateral and Proceeds: (i) not to permit any lien on the Collateral or
Proceeds, except in favor of Bank; (ii) not to withdraw any funds from any
deposit account pledged to Bank hereunder without Bank's prior written consent;
(iii) not to sell, hypothecate or otherwise dispose of any of the Collateral or
Proceeds, or any interest therein, without Bank's prior written consent; (iv) to
keep, in accordance with generally accepted accounting principles, complete and
accurate records regarding all Collateral and Proceeds, and to permit Bank to
inspect the same and make copies thereof at any reasonable time; (v) if
requested by Bank, to receive and use reasonable diligence to collect Proceeds,
in trust and as the property of Bank, and to immediately endorse as appropriate
and deliver such Proceeds to Bank daily in the exact form in which they are
received together with a collection report in form satisfactory to Bank; (vi)
not to commingle Collateral or Proceeds, or collections thereunder, with other
property; (vii) in the event Bank elects to receive payments of Proceeds
hereunder, to pay all expenses incurred by Bank in connection therewith,
including expenses of accounting, correspondence, collection efforts, filing,
recording, record keeping and expenses incidental thereto; (viii) to provide any
service and do any other acts which may be necessary to keep all Collateral and
Proceeds free and clear of all defenses, rights of offset and counterclaims; and
(ix) if the Collateral or Proceeds consists of securities and so long as no
Event of Default exists, to vote said securities and to give consents, waivers
and ratifications with respect thereto, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would impair Bank's
interests in the Collateral and Proceeds or be inconsistent with or violate any
provisions of this Agreement.
POWERS OF TRADE BANK. Debtor appoints Bank its true attorney in fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank's officers and employees, or any of them, whether or not Debtor
is in default: (a) to perform any obligation of Debtor hereunder in Debtor's
name or otherwise; (b) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Bank's rights
hereunder; (c) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral or Proceeds; (d) to enter into any extension, reorganization,
deposit, merger or consolidation agreement, or any other agreement relating to
or affecting the Collateral or Proceeds, and in connection therewith to deposit
or surrender control of the Collateral and Proceeds, to accept other property in
exchange for the Collateral and Proceeds, and to do and perform such acts and
things as Bank may deem proper, with any money or property received in exchange
for the Collateral or Proceeds, at Bank's option, to be applied to the
Indebtedness or held by Bank under this Agreement; (e) to make any compromise or
settlement Bank deems desirable or proper in respect of the Collateral and
Proceeds; (f) to insure, process and preserve the Collateral and Proceeds; (g)
to exercise all rights, powers and remedies which Debtor would have, but for
this Agreement, with respect to all Collateral and Proceeds subject hereto; and
(h) to do all acts and things and execute all documents in the name of Debtor or
otherwise, deemed by Bank as necessary, proper and convenient in connection with
the preservation, perfection or enforcement of its rights hereunder. To effect
the purposes of this Agreement or otherwise upon instructions of Debtor, [or any
of them,] Bank may cause any Collateral and/or Proceeds to be transferred to
Bank's name or the name of Bank's nominee. If an Event of Default has occurred
and is continuing, any or all Collateral and/or Proceeds consisting of
securities may be registered, without notice, in the name of Bank or its
nominee, and thereafter Bank or its nominee may exercise, without notice, all
voting and corporate rights at any meeting of the shareholders of the issuer
thereof, any and all rights of conversion, exchange or subscription, or any
other rights, privileges or options pertaining to such Collateral and/or
Proceeds, all as if it were the absolute owner thereof. The foregoing shall
include, without limitation, the right of Bank or its nominee to exchange, at
its discretion, any and all Collateral and/or Proceeds upon the merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, or upon the exercise by the issuer thereof or Bank of any right,
privilege or option pertaining to any shares of the Collateral and/or Proceeds,
and in connection therewith, the right to deposit and deliver any and all of the
Collateral and/or Proceeds with any committee, depository, transfer agent,
registrar or other designated agency upon such terms and conditions as Bank may
determine. All of the foregoing rights, privileges or options may be exercised
without liability on the part of Bank or its nominee except to account for
property actually received by Bank. Bank shall have no duty to exercise any of
the foregoing, or any other rights, privileges or options with respect to the
Collateral or Proceeds and shall not be responsible for any failure to do so or
delay in so doing.
PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor
agrees to pay, prior to delinquency, all insurance premiums, taxes, charges,
liens and assessments against the Collateral and Proceeds, and upon the failure
of Debtor to do so, Bank at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same. Any such payments made by Bank shall be obligations of Debtor to Bank,
due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 12 hereof, and shall be
secured by the Collateral and Proceeds, subject to all terms and conditions of
this Agreement.
EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement: (a) any default in the
payment or performance of any obligation, or any defined event of default, under
(i) any contract or instrument evidencing any Indebtedness, or (ii) any other
agreement between any Debtor and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by any Debtor herein shall prove to be
incorrect, false or misleading in any material respect when made; (c) any Debtor
shall fail to observe or perform any obligation or agreement contained herein;
(d) any attachment or like levy on any property of any Debtor; and (e) Bank, in
good faith, believes any or all of the Collateral and/or Proceeds to be in
danger of misuse, dissipation, commingling, loss, theft, damage or destruction,
or otherwise in jeopardy or unsatisfactory in character or value.
Page 2 of 5
REMEDIES. Upon the occurrence of any Event of Default, Bank shall have
the right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the California Uniform Commercial
Code or otherwise provided by law, including without limitation, the right to
contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank. All rights, powers, privileges and remedies of Bank shall be cumulative.
No delay, failure or discontinuance of Bank in exercising any right, power,
privilege or remedy hereunder shall affect or operate as a waiver of such right,
power, privilege or remedy; nor shall any single or partial exercise of any such
right, power, privilege or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power, privilege
or remedy. Any waiver, permit, consent or approval of any kind by Bank of any
default hereunder, or any such waiver of any provisions or conditions hereof,
must be in writing and shall be effective only to the extent set forth in
writing. It is agreed that public or private sales, for cash or on credit, to a
wholesaler or retailer or investor, or user of property of the types subject to
this Agreement, or public auction, are all commercially reasonable since
differences in the sales prices generally realized in the different kinds of
sales are ordinarily offset by the differences in the costs and credit risks of
such sales. While an Event of Default exists: (a) Bank may, at any time and at
Bank's sole option, liquidate any time deposits pledged hereunder, whether or
not said time deposits have matured and notwithstanding the fact that such
liquidation may give rise to penalties for early withdrawal of funds; (b) Debtor
will not dispose of any of the Collateral or Proceeds except on terms approved
by Bank; (c) Bank may appropriate the Collateral and apply all Proceeds toward
repayment of the Indebtedness in such order of application as Bank may from time
to time elect; and (d) at Bank's request, Debtor will assemble and deliver all
Collateral and Proceeds, and books and records pertaining thereto, to Bank at a
reasonably convenient place designated by Bank. For any Collateral or Proceeds
consisting of securities, Bank shall have no obligation to delay a sale of any
portion thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or Federal
law, even if the issuer thereof would agree to do so.
DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or any
part of the Indebtedness, Bank may transfer all or any part of the Collateral or
Proceeds and shall be fully discharged thereafter from all liability and
responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Bank hereunder with
respect to any of the foregoing so transferred; but with respect to any
Collateral or Proceeds not so transferred, Bank shall retain all rights, powers,
privileges and remedies herein given. Any proceeds of any disposition of any of
the Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect.
COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), incurred by
Bank in exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, including any of the foregoing incurred
in connection with any bankruptcy proceeding relating to Debtor or the valuation
of the Collateral and/or Proceeds, including without limitation, the seeking of
relief from or modification of the automatic stay or the negotiation and
drafting of a cash collateral order. All of the foregoing shall be paid by
Debtor with interest at a rate per annum equal to the greater of ten percent
(10%) or the Prime Rate in effect from time to time. The "Prime Rate" is a base
rate that Xxxxx Fargo Bank, N.A. from time to time establishes and which serves
as the basis upon which effective rates of interest are calculated for those
loans making reference thereto.
STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in
full, the power of sale and all other rights, powers, privileges and remedies
granted to Bank hereunder shall continue to exist and may be exercised by Bank
at any time and from time to time irrespective of the fact that the Indebtedness
or any part thereof may have become barred by any statute of limitations, or
that the personal liability of Debtor may have ceased, unless such liability
shall have ceased due to the payment in full of all Indebtedness secured
hereunder.
MISCELLANEOUS. The obligations of Debtor are joint and several;
presentment, protest, notice of protest, notice of dishonor and notice of
nonpayment are waived with respect to any Proceeds to which Bank is entitled
hereunder; any right to direct the application of payments or security for any
Indebtedness of Debtor, or indebtedness of customers of Debtor, and any right to
require proceedings against others or to require exhaustion of security are
waived; and consent to extensions, forbearances or alterations of the terms of
Indebtedness, the release or substitution of security, and the release of
guarantors is given with respect to Proceeds subject to this Agreement; provided
however, that in each instance Bank believes in good faith that the action in
question is commercially reasonable in that it does not unreasonably increase
the risk of nonpayment of the Indebtedness to which the action applies. Until
all Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank.
OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this
Agreement as Debtor hereby expressly agrees that recourse may be had against his
or her separate property for all his or her Indebtedness to Bank secured by the
Collateral and Proceeds under this Agreement.
NOTICES. All notices, requests and demands required under this
Agreement must be in writing, addressed to Bank at the address specified in any
other loan documents entered into between Debtor and Bank and to Debtor at the
address of its chief executive office (or personal residence, if applicable)
specified below or to such other address as any party may designate by written
notice to each other party, and shall be deemed to have been given or made as
follows: (a) if personally delivered, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or three (3) days after deposit in the U.S.
mail, first class and postage prepaid; and (c) if sent by telecopy, upon
receipt.
Page 3 of 5
GOVERNING LAW; SUCCESSORS, ASSIGNS. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, and shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties.
SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
Debtor warrants that its chief executive office (or personal residence,
if applicable) is located at the following address: 0000 Xx Xxxxxxxx Xxxxxx,
Xxxx Xxxxx, XX 00000.
Page 4 of 5
IN WITNESS WHEREOF, this Agreement has been duly executed as of June 11, 1999.
"BORROWER"
ZUELLIG BOTANICALS, INC.
By: /s/ Xxxxx Xxxx
-----------------------
Name: Xxxxx Xxxx
Title: Assistant Secretary
Page 5 of 5
