PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Agreement") is dated as of September 15, 1999,
between Xxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx, as trustees of the Xxxxx
X. Xxxxxxxxx Trust dated July 11, 1994, as amended, Xxxx Xxxxxxxxx, Xxxx Xxx
O'Dell, Xxxxx Xxxxx, and Xxx Xxxxxxxx (each of which is a "Shareholder" and
all of which are, collectively, "Pledgee"), and Food for Health Co., Inc., an
Arizona corporation ("Pledgor").
RECITALS:
A. Pledgor and Pledgee are parties to a Stock Purchase Agreement dated
August 30, 1999, under which Pledgor has agreed to purchase all outstanding
shares of the common stock of HFA Associates, Inc., an Oklahoma corporation
(the "Corporation"), including 140,000 shares of Class A common stock and
750,000 shares of Class B common stock (the "Shares") from Pledgee for a
purchase price payable in part by a Secured Promissory Note in the principal
amount of $8,000,000, signed by Pledgor (the "Secured Note").
B. Under the terms of the Stock Purchase Agreement, Pledgor has agreed
to pledge the Shares to Pledgee as security for the performance of its
obligations under the Secured Note and this Agreement.
AGREEMENTS:
In consideration of the recitals and the mutual agreements set forth in
this Agreement, the parties agree as follows:
1. Delivery of Certificates to Pledgee. Pledgor pledges to Pledgee and
grants to Pledgee a security interest in the Shares (together with all
proceeds or distributions arising from ownership of the Shares, which shall be
included in the definition of "Shares" for purposes of this Agreement) to
secure the payment of the amounts due and the performance of Pledgor's
obligations under the Secured Note, and this Agreement (collectively,
"Obligations"). Pledgor hereby delivers to Pledgee the certificates (the
"Certificates") evidencing the Shares.
2. Shares Held as Security. Pledgee shall hold the Shares as security
for the Obligations subject to the terms of this Agreement. If permitted by
law, Pledgor authorizes Pledgee to file a financing statement with respect to
the Shares signed only by Pledgee, and to file a copy of this Agreement with
such financing statement.
3. Release of Shares. Unless the parties agree otherwise, Pledgee
shall deliver to Pledgor the Certificates within 10 days after the earliest to
occur of the following conditions:
3.1 Pledgee receives payment or prepayment (as defined in the
Secured Note) of the entire amount due under the Secured Note, including all
principal, interest, and any other amounts due under the Secured Note; or
3.2 Any event by which Pledgor's liability under the Secured Note
is completely discharged.
4. Actions By Pledgee. Any and every right and action that may be
taken by the Pledgee under this Agreement is valid only if such right or
action has been authorized in advance by unanimous written consent of all of
the Shareholders and if such written consent is delivered to Pledgor upon
request.
5. Remedies Upon Default. If Pledgor defaults in its Obligations and
such default is not cured within 30 days after notice as permitted under the
Secured Note, Pledgee has at its option all of the rights and remedies of a
secured party accorded by Arizona law. Pledgee's rights under this section
will be cumulative with respect to any other rights and remedies it may have
under this Agreement.
5.1 Expenses of Disposition. Pledgee is entitled to reimbursement
for any expenses (including reasonable attorneys' fees and legal expenses)
involved in the retaking, holding, preparing for sale, selling or similar
charges, incurred in connection with the disposition of the Shares if Pledgor
defaults, including any amounts paid to discharge prior security interests or
liens or in settlement of prior security interests or liens.
6. Voting and Dividend Rights. If Pledgor has not breached the Secured
Note, and the Shares have not been deemed transferred to Pledgee because of a
default by Pledgor:
6.1 Pledgor has the right to vote the Shares without any notice to
or consent by Pledgee; and
6.2 Pledgor has the right to receive all dividends declared with
respect to the Shares so long as:
6.2.1 any dividend in connection with a partial or total
liquidation, dissolution, or reduction in capital, capital surplus, or paid in
surplus, any redemption or exchange for the Shares, or any dividend that
results from the sale of the Corporation or its assets, is paid to Pledgee and
applied to amounts due under the Secured Note, with the remainder, if any,
returned to Pledgor; and
6.2.2 any dividend in shares or property is delivered to
Pledgee and held as security for the Obligations, to be returned to Pledgor
upon release of the Shares under Section 3.
7. Other Liens. Pledgor agrees it will not sell or otherwise dispose
of the Shares and agrees to keep the Shares free and clear of all liens and
encumbrances for as long as they are pledged to Pledgee under this Agreement.
8. Reasonable Care. Pledgee is deemed to have exercised reasonable
care in the custody and preservation of the Shares in its possession if it
accords the Shares treatment substantially equal to that which Pledgee accords
its own property. Pledgee will have no responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, tenders or other
matters relative to the Shares, whether or not Pledgee has or is deemed to
have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any parties with respect to the Shares.
9. Cooperation. In order to carry out this Agreement, each party will
cooperate, will take further action, and will execute, acknowledge and deliver
any further instruments reasonably requested by either party.
10. Amendment. The parties may amend this Agreement only by a written
agreement signed by both parties or their respective successors or assigns.
11. Governing Law. This Agreement is governed by and construed and
enforced in accordance with the laws of the State of Arizona.
12. Headings. The descriptive section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together are one original.
14. Notices. All notices, requests, demands and other communications
under this Agreement must be in writing. Notices are deemed given (a) when
personally delivered (b) on the date of receipt when given by facsimile or by
overnight courier service, or (c) on the fifth business day after mailing by
first class mail. Notices must be sent to the parties at the following
addresses:
To Corporation: Food for Health Co., Inc.
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, President
Copy to: Xxxxx and Roca LLP
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx XxXxxx, Esq.
To Holder: Health Food Associates, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
with a copy to:
Xxxxxx and Xxxxxx, P.C.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000-0000
Attention: R. Xxxxx Xxxxxx
15. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Pledgor, Pledgee and their respective personal representatives,
successors and assigns and shall be binding upon any person or entity to whom
any of the Shares is transferred and the legal representatives of any such
person or persons, entity or entities.
16. Attorneys' Fees. If any dispute regarding this Agreement arises,
the prevailing party is entitled to receive, in addition to any other award,
reasonable attorneys' fees and costs, determined by the court or arbitrator
and not a jury.
"PLEDGEE"
September 15, 1999 Xxxxx X. Xxxxxxxxx
Date of Signing:------------------ --------------------------------------
Xxxxx X. Xxxxxxxxx, as trustee of the
Xxxxx X. Xxxxxxxxx Trust dated July 11,
1994, as amended
September 15, 1999 Xxxxxxx X. Xxxxxxxxx
Date of Signing:------------------ --------------------------------------
Xxxxxxx X. Xxxxxxxxx, as trustee of the
Xxxxx X. Xxxxxxxxx Trust dated July 11,
1994, as amended
September 15, 1999 Xxxx Xxxxxxxxx
Date of Signing:------------------ --------------------------------------
Xxxx Xxxxxxxxx
0000 Xxxxx 00xx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
September 15, 1999 Xxxx Xxx O'Dell
Date of Signing:------------------ --------------------------------------
Xxxx Xxx O'Dell
0000 Xxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
September 15, 1999 Xxxxx Xxxxx
Date of Signing:------------------ --------------------------------------
Xxxxx Xxxxx
00000 Xxxx 0xx
Xxxxx, Xxxxxxxx 00000
September 15, 1999 Xxx Xxxxxxxx
Date of Signing:------------------ --------------------------------------
Xxx Xxxxxxxx
0000 Xxxxx 00xx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
"PLEDGOR"
FOOD FOR HEALTH CO., INC.,
an Arizona corporation
September 15, 1999 Xxxxx Xxxxxxx
Date of Signing:------------------ --------------------------------------
Xxxxx Xxxxxxx, President
September 15, 1999 Xxxxx Xxxxxxxx
Date of Signing:------------------ --------------------------------------
Xxxxx Xxxxxxxx, Secretary
