EXHIBIT 10.67
EXHIBIT C
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FORM OF PLEDGE AND SECURITY AGREEMENT
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PLEDGE AND SECURITY AGREEMENT dated as of December __, 1997, made by
Polyphase Corporation, a Nevada Corporation (the "Pledgor"), in favor of The
Long Horizons Fund, L.P. (the "Lender") in order to induce the Lender to enter
into a Term Loan Agreement with Overhill Farms, Inc. (the "Borrower").
W I T N E S S E T H:
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WHEREAS, the Borrower, the Pledgor, as guarantor, and the Lender are
parties to a Term Loan Agreement, dated as of the date hereof, (such agreement,
as amended, restated, supplemented or otherwise modified from time to time,
being hereafter referred to as the "Term Loan Agreement");
WHEREAS, pursuant to the Term Loan Agreement, the Lender has agreed to make
a term loan (the "Loan") to the Borrower the proceeds of which are to be used
for the purposes therein stated;
WHEREAS, it is a condition precedent to the effectiveness of the Term Loan
Agreement and the Lender's making and maintaining the Loan to the Borrower, that
the Pledgor shall have executed and delivered to the Lender a pledge and
security agreement providing for the pledge to the Lender, and a grant to the
Lender a security interest in, all outstanding shares of capital stock from time
to time owned by the Pledgor of shares in the Borrower; and
WHEREAS, the Pledgor has determined that the execution, delivery, and
performance of this Agreement is in the best interest of the Pledgor.
NOW, THEREFORE, in consideration of the promises and the agreements herein,
the sufficiency of which is hereby acknowledged, and in order to induce the
Lender to make the Loan pursuant to the Term Loan Agreement, the Pledgor hereby
agrees with the Lender as follows:
SECTION 1. Definitions. Reference is hereby made to the Term Loan
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Agreement for a statement of the terms thereof. All terms used in this Agreement
which are defined in the Term Loan Agreement or in Article 8 or Article 9 of the
Uniform Commercial Code (the "Code") currently in effect in the State of New
York and which are not otherwise defined herein shall have the same meanings
herein as set forth therein.
SECTION 2. Pledge and Grant of Security Interest. As collateral security
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for all of the Obligations (as defined in Section 3 hereof), the Pledgor hereby
pledges and assigns to the Lender, and grants to the Lender a continuing
security interest in, the following (the "Pledged Collateral"):
(a) the indebtedness described in Schedule I hereto and all
indebtedness from time to time required to be pledged to the Lender pursuant to
the terms of this Agreement or the Term Loan Agreement (the "Pledged Debt"), the
promissory notes and other instruments evidencing the Pledged Debt and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Debt;
(b) the shares of stock described in Schedule II hereto (the
"Pledged Shares") issued by the corporations described in such Schedule II (such
corporations, together with any successor corporations, being hereafter referred
to collectively as the "Issuers" and individually as an "Issuer"), the
certificates representing the Pledged Shares, all options and other rights,
contractual or otherwise, in respect thereof (including, without limitation, any
registration rights) and all dividends, cash, instruments and other property
(including but not limited to, any stock dividend and any distribution in
connection with a stock split) from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Shares;
(c) all additional shares of stock, from time to time acquired by
the Pledgor, of any Issuer, the certificates representing such additional
shares, all options and other rights, contractual or otherwise, in respect
thereof and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares; and
(e) all proceeds of any and all of the foregoing;
in each case, howsoever its interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
SECTION 3. Security for Obligations. The security interest created hereby
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in the Pledged Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"Obligations"):
(a) the prompt payment by the Borrower and the Pledgor, as and when
due and payable, of all amounts from time to time owing by the Borrower or the
Pledgor to the Lender in respect of the Term Loan Agreement (including, without
limitation, Article VII thereof) and all other Loan Documents, including,
without limitation, principal of and interest on the Term Loan (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of the Borrower or the Guarantor whether or not the payment of
such interest is unenforceable or is not allowable due to the existence of such
case, proceeding or other action), all fees, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due
under the Term Loan Agreement and any other Loan Document; and
(b) the due performance and observance by each of the Borrower and
the Pledgor of all of their other obligations from time to time existing in
respect of the Term Loan Agreement and all other Loan Documents.
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SECTION 4. Delivery of the Pledged Collateral.
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(a) All promissory notes currently evidencing the Pledged Debt and
all certificates currently representing the Pledged Shares shall be delivered to
the Lender on or prior to the execution and delivery of this Agreement. All
other promissory notes, certificates and instruments constituting Pledged
Collateral from time to time or required to be pledged to the Lender pursuant to
the terms of this Agreement and the Term Loan Agreement, (the "Additional
Collateral") shall be promptly delivered to the Lender, but in no event later
than five (5) Business Days of receipt thereof by or on behalf of the Pledgor.
All such promissory notes, certificates and instruments shall be held by or on
behalf of the Lender pursuant hereto and shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment or undated stock powers (with signature medallion
guaranteed) executed in blank, all in form and substance reasonably satisfactory
to the Lender. Within five (5) Business Days of the receipt by the Pledgor of
the Additional Collateral, a Pledge Amendment, duly executed by the Pledgor, in
substantially the form of Annex I hereto (a "Pledge Amendment") shall be
delivered to the Lender, in respect of the Additional Collateral which are to be
pledged pursuant to this Agreement and the Term Loan Agreement, which Pledge
Amendment shall from and after delivery thereof constitute part of Schedules I
and II hereto. The Pledgor hereby authorizes the Lender to attach each Pledge
Amendment to this Agreement and agrees that all promissory notes, certificates
or instruments listed on any Pledge Amendment delivered to the Lender shall for
all purposes hereunder constitute Pledged Collateral and the Pledgor shall be
deemed upon delivery thereof to have made the representations and warranties set
forth in Section 5 with respect to such Additional Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off), promissory note or other instrument, (ii)
option or right, whether as an addition to, substitution for, or in exchange
for, any Pledged Collateral, or otherwise, (iii) dividends payable in cash
(except such dividends permitted to be retained by the Pledgor pursuant to
Section 7 hereof) or in securities or other property or (iv) dividends or other
distributions in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
surplus, the Pledgor shall receive such stock certificate, promissory note,
instrument, option, right, payment or distribution in trust for the benefit of
the Lender, shall segregate it from the Pledgor's other property and shall
deliver it forthwith to the Lender in the exact form received, with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by the Lender as Pledged Collateral and as further collateral security
for the Obligations.
SECTION 5. Representations and Warranties. The Pledgor hereby represents
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and warrants as follows:
(a) The Pledged Shares have been duly authorized and validly
issued, are fully paid and nonassessable and, except as noted in Schedule II
hereto, constitute 100% of the issued shares of capital stock of the Issuer
which is owned by the Pledgor as of the date hereof. All other
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shares of stock constituting Pledged Collateral will be duly authorized and
validly issued, fully paid and nonassessable.
(b) The promissory notes currently evidencing the Pledged Debt have
been, and all other promissory notes from time to time evidencing Pledged Debt,
when executed and delivered, will have been, duly authorized, executed and
delivered by the respective makers thereof, and all such promissory notes are or
will be, as the case may be, legal, valid and binding obligations of such
makers, enforceable against such makers in accordance with their respective
terms.
(c) The Pledgor is and will be at all times the legal and
beneficial owner of its Pledged Collateral free and clear of any Lien except for
the Lien created by this Agreement and the Liens permitted pursuant to the Term
Loan Agreement.
(d) The exercise by the Lender of any of its rights and remedies in
accordance with the terms of this Agreement will not contravene law or any
material contractual restriction binding on or affecting the Pledgor or any of
its properties and will not result in or require the creation of any Lien upon
or with respect to any of its properties other than pursuant to this Agreement
and the other Loan Documents.
(e) No authorization or approval or other action by, and no notice
to or filing with, any Governmental Authority or other regulatory body is
required to be obtained or made by the Pledgor for (i) the due execution,
delivery and performance by the Pledgor of this Agreement, (ii) the grant by the
Pledgor, or the perfection, of the security interest purported to be created
hereby in the Pledged Collateral or (iii) the exercise by the Lender of any of
its rights and remedies hereunder, except as may be required in connection with
any sale of any Pledged Collateral by laws affecting the offering and sale of
securities generally.
(f) This Agreement creates a valid security interest in favor of
the Lender in the Pledged Collateral, as security for the Obligations. The
Lender's having possession of the promissory notes evidencing the Pledged Debt,
the certificates representing the Pledged Shares and all other certificates,
instruments and cash constituting Pledged Collateral from time to time results
in the perfection of such security interest. Such security interest is, or in
the case of Pledged Collateral in which the Pledgor obtains rights after the
date hereof, will be, a perfected, first priority security interest, subject
only to the Liens permitted by the Term Loan Agreement. All action necessary or
desirable to perfect and protect such security interest has been duly taken,
except for the Lender's having possession of certificates, instruments and cash
constituting Pledged Collateral after the date hereof.
SECTION 6. Covenants as to the Pledged Collateral. So long as any
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Obligations shall remain outstanding, the Pledgor will, unless the Lender shall
otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and
permit the Lender or any agents or representatives thereof at any time or from
time to time to examine and make copies of and abstracts from such records;
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(b) at the Pledgor's expense, promptly deliver to the Lender a copy
of each material notice or other communication received by it in respect of the
Pledged Collateral;
(c) at the Pledgor's expense, defend the Lender's right, title and
security interest in and to the Pledged Collateral against the claims of any
Person;
(d) at the Pledgor's expense, at any time and from time to time,
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or that the Lender may reasonably request
in order to (i) perfect and protect the security interest purported to be
created hereby, (ii) enable the Lender to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral or (iii) otherwise
effect the purposes of this Agreement, including, without limitation, delivering
to the Lender, after the occurrence and during the continuation of an Event of
Default, irrevocable proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange
or otherwise dispose of any Pledged Collateral or any interest therein except as
permitted by the Term Loan Agreement;
(f) not create or suffer to exist any Lien upon or with respect to
any Pledged Collateral except for the Lien created hereby or pursuant to any
other Loan Document or otherwise permitted pursuant to the Term Loan Agreement;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant hereto or to the other Loan Documents without providing notice to
the Lender;
(h) not permit the issuance of (i) any additional shares of any
class of capital stock of any Issuer, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or non-
occurrence of any event or condition into, or exchangeable for, any such shares
of capital stock or (iii) any warrants (other than those permitted under the
Term Loan Agreement), options, contracts or other commitments entitling any
Person to purchase or otherwise acquire any such shares of capital stock; and
(i) not take or fail to take any action which would in any manner
impair the value or enforceability of the Lender's security interest in any
Pledged Collateral.
SECTION 7. Voting Rights, Dividends, Etc. in Respect of the Pledged
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Collateral.
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(a) So long as no Default or Event of Default shall have occurred
and be continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement or the other Loan Documents;
provided, however, that (A) the Pledgor will not
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exercise or refrain from exercising any such right, as the case may be, if the
Lender gives it notice that, in the Lender's reasonable judgment, such action
would have a material adverse effect on the value of any Pledged Collateral and
(B) the Pledgor will give the Lender at least five Business Days' notice of the
manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right;
(ii) the Pledgor may receive and retain any and all dividends
or interest paid in respect of the Pledged Collateral to the extent permitted by
the Term Loan Agreement; provided, however, that any and all (A) dividends and
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interest paid or payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Collateral, (B) dividends and other distributions paid
or payable in cash in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and (C) cash paid, payable or
otherwise distributed in redemption of, or in exchange for, any Pledged
Collateral, together with any dividend or interest payment which at the time of
such payment was not permitted by the Term Loan Agreement, shall be, and shall
forthwith be delivered to the Lender to hold as, Pledged Collateral and shall,
if received by the Pledgor, be received in trust for the benefit of the Lender,
shall be segregated from the other property or funds of the Pledgor, and shall
be forthwith delivered to the Lender in the exact form received with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by the Lender as Pledged Collateral and as further collateral security
for the Obligations; and
(iii) the Lender will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to paragraph (i) of this Section 7(a) and to receive the dividends and/or
interest which it is authorized to receive and retain pursuant to paragraph (ii)
of this Section 7(a).
(b) Upon the occurrence and during the continuance of a Default or
an Event of Default:
(i) all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of subsection (a) of this Section 7, and to receive
the dividends and interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (ii) of subsection (a) of this Section
7, shall cease, and all such rights shall thereupon become vested in the Lender
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends
and interest payments;
(ii) the Lender is authorized to notify each debtor with
respect to the Pledged Debt to make payment directly to the Lender and may
collect any and all moneys due or to become due to the Pledgor in respect of the
Pledged Debt and the Pledgor hereby authorizes each such debtor to make such
payment directly to the Lender without any duty of inquiry;
(iii) without limiting the generality of the foregoing, the
Lender may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights,
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privileges or options pertaining to any of the Pledged Collateral as if it were
the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization or other adjustment of
any Issuer, or upon the exercise by any Issuer of any right, privilege or option
pertaining to any Pledged Collateral, and, in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any committee,
depository, transfer agent, registrar or other designated agent upon such terms
and conditions as it may determine; and
(iv) all dividends and interest payments which are received by
the Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Lender, shall be segregated
from other funds of the Pledgor, and shall be forthwith paid over to the Lender
as Pledged Collateral in the exact form received with any necessary endorsement
and/or appropriate stock powers duly executed in blank, to be held by the Lender
as Pledged Collateral and as further collateral security for the Obligations.
SECTION 8. Additional Provisions Concerning the Pledged Collateral.
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(a) The Pledgor hereby authorizes the Lender to file, without the
signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Lender the Pledgor'
s attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Lender's discretion exercised reasonably, to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Pledgor under Section
7(a) hereof), including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any dividend, interest
payment or other distribution in respect of any Pledged Collateral and to give
full discharge for the same.
(c) If the Pledgor fails to perform any agreement or obligation
contained herein, the Lender itself may perform, or cause performance of, such
agreement or obligation, and the expenses of the Lender incurred in connection
therewith shall be payable by the Pledgor pursuant to Section 10 hereof.
(d) Other than the exercise of reasonable care to assure the safe
custody of the Pledged Collateral while held hereunder, the Lender shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to the Pledgor. The Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Lender accords its own property, it being understood that the
Lender shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not the Lender has or is deemed
to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged Collateral.
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(e) The Lender may at any time in its discretion (i) without notice
to the Pledgor, transfer or register in the name of the Lender or any of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights of the Pledgor under Section 7(a) hereof, and (ii) exchange certificates
or instruments constituting Pledged Collateral for certificates or instruments
of smaller or larger denominations.
SECTION 9. Remedies Upon Default. If any Event of Default shall have
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occurred and be continuing:
(a) The Lender may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party on default
under the Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Lender may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least 10 days' notice to the Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. The Lender shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given. The Lender
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) In the event that the Lender determines to exercise its right
to sell all or any part of the Pledged Collateral pursuant to subsection (a) of
this Section 9, the Pledgor will, and will cause the Borrower, at the Pledgor's
expense and upon request by the Lender: (i) execute and deliver, and cause each
issuer of such Pledged Collateral and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
the Lender, advisable to register such Pledged Collateral under the provisions
of the Securities Act of 1933, as amended (the "Securities Act"), and to cause
the registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the related prospectus
which, in the opinion of the Lender, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto, (ii)
cause each issuer of such Pledged Collateral to qualify such Pledged Collateral
under the state securities or "Blue Sky" laws of each jurisdiction, and to
obtain all necessary governmental approvals for the sale of the Pledged
Collateral, as requested by the Lender, (iii) cause each Issuer to make
available to its securityholders, as soon as practicable, an earnings statement
which will satisfy the provisions of Section 11(a) of the Securities Act, and
(iv) do or cause to be done all such other acts and things as may be necessary
to make such sale of such Pledged Collateral valid and binding and in compliance
with applicable law. Each Pledgor acknowledges the impossibility of ascertaining
the amount of damages which would be suffered by the Lender by reason of the
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failure by any Pledgor to perform any of the covenants contained in this Section
9(b) and, consequently, agrees that, if any Pledgor fails to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Pledged Collateral on the date the Lender demands
compliance with this Section 9(b); provided, however, that the payment of such
amount shall not release the Pledgor from any of its obligations under any of
the other Loan Documents.
(c) The Pledgor recognizes that the Lender may deem it
impracticable to effect a public sale of all or any part of the Pledged Shares
or any other securities constituting Pledged Collateral and that the Lender may,
therefore, determine to make one or more private sales of any such securities to
a restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that the Lender
shall have no obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act. The Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(i) publicly advertised on a bona fide basis in a newspaper or other publication
of general circulation in the financial community of New York, New York (to the
extent that such an offer may be so advertised without prior registration under
the Securities Act) or (ii) made privately in the manner described above to not
less than fifteen bona fide offerees shall be deemed to involve a "public sale"
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for the purposes of Section 9-504(3) of the Code (or any successor or similar,
applicable statutory provision) as then in effect in the State of New York,
notwithstanding that such sale may not constitute a "public offering" under the
Securities Act, and that the Lender may, in such event, bid for the purchase of
such securities.
(d) Any cash held by the Lender as Pledged Collateral and all cash
proceeds received by the Lender in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral may, in the
discretion of the Lender, be held by the Lender as collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to the
Lender pursuant to Section 10 hereof) in whole or in part by the Lender against,
all or any part of the Obligations in such order as the Lender shall elect
consistent with the provisions of the Term Loan Agreement. Any surplus of such
cash or cash proceeds held by the Lender and remaining after payment in full of
all of the Obligations shall be paid over to the Pledgor or to such person as
may be lawfully entitled to receive such surplus.
(e) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Lender is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Term Loan Agreement for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees of any
attorneys employed by the Lender to collect such deficiency.
SECTION 10. Indemnity and Expenses.
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(a) The Pledgor agrees to indemnify the Lender from and against any
and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting solely and directly from the Lender's
gross negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
(b) The Pledgor will upon demand pay to the Lender the amount of
any and all costs and expenses, including the reasonable fees and disbursements
of the Lender's counsel and of any experts and agents, which the Lender may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Lender hereunder, or (iv) the failure by
the Pledgor to perform or observe any of the provisions hereof.
SECTION 11. Notices, Etc. All notices and other communications provided for
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hereunder shall be in writing and shall be mailed, telecopied or delivered, if
to the Pledgor, to it at its address specified in the Term Loan Agreement; and
if to the Lender, to it at its address specified in the Term Loan Agreement or
as to either such Person at such other address as shall be designated by such
Person in a written notice to such other Person complying as to delivery with
the terms of this Section 11. All such notices and other communications shall be
effective (i) if mailed, when received or five days after deposited in the
mails, whichever occurs earlier, (ii) if telecopied, when transmitted and
confirmation received, or (iii) if delivered, upon delivery.
SECTION 12. Security Interest Absolute. All rights of the Lender, all
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security interests and all obligations of the Pledgor hereunder shall be
absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of the Term Loan Agreement, any other Loan Document or any other
agreement or instrument relating thereto, (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
Obligations, or any other amendment or waiver of or consent to any departure
from the Term Loan Agreement, any other Loan Document or any other agreement or
instrument relating thereto, (iii) any exchange or release of, or non-perfection
of any Lien on or security interest in, any collateral, or any release or
amendment or waiver of or consent to departure from any guaranty, for all or any
of the Obligations, or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor in respect of
the Obligations. All authorizations and agencies contained herein with respect
to any of the Pledged Collateral are irrevocable and powers coupled with an
interest.
SECTION 13. Waiver of Jury Trial. EACH OF THE PLEDGOR AND THE LENDER (BY
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ACCEPTING THIS AGREEMENT) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR ARISING FROM ANY OTHER LOAN DOCUMENT AND AGREES THAT ANY
SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
SECTION 14. Miscellaneous.
-------------
10
(a) No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by the Pledgor and the Lender, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) No failure on the part of the Lender to exercise, and no delay
in exercising, any right hereunder or under any other document shall operate as
a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Lender provided herein and in the other
Loan Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Lender under any document
against any party thereto are not conditional or contingent on any attempt by
the Lender to exercise any of its rights under any other document against such
party or against any other person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in
the Pledged Collateral and shall (i) remain in full force and effect until the
indefeasible payment in full in cash of the Obligations and (ii) be binding on
each of the Lender and the Pledgor and their respective successors and assigns,
except that the Pledgor may not assign or transfer any of its rights hereunder
without the prior written consent of the Lender and any such assignments without
the Lender's prior written consent shall be null and void, and shall inure,
together with all rights and remedies of the Lender hereunder, to the benefit of
the Pledgor and the Lender and their respective successors, transferees and
assigns. Without limiting the generality of clause (ii) of the immediately
preceding sentence, the Lender may assign or otherwise transfer its rights and
obligations under this Agreement to any other Person pursuant to the terms of
the Term Loan Agreement, and such other Person shall thereupon become vested
with all of the benefits in respect thereof granted to the Lender herein or
otherwise. Upon any such assignment or transfer, all references in this
Agreement to the Lender shall mean the assignee of the Lender. None of the
rights or obligations of the Pledgor hereunder may be assigned or otherwise
transferred without the prior written consent of the Lender and any such
assignment without the Lender's prior written consent shall be null and void.
(e) Upon the indefeasible satisfaction in full in cash of the
Obligations, and subject to the interests of Finova as governed by the
Intercreditor Agreement, (i) this Agreement and the security interest created
hereby shall terminate and all rights to the Pledged Collateral shall revert to
the Pledgor, and (ii) the Lender will, upon the Pledgor's request and at the
Pledgor's expense, (A) return to the Pledgor such of the Pledged Collateral as
shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof and (B) execute and deliver to the Pledgor, without recourse,
representation or warranty, such documents as the Pledgor shall reasonably
request to evidence such termination.
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(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except to the extent that the validity
and perfection or the perfection and the effect of perfection or non-perfection
of the security interest created hereby, or remedies hereunder, in respect of
any particular Pledged Collateral are governed by the law of a jurisdiction
other than the State of New York.
(g) The security interests and priorities contained hereunder are
to be read and understood to be consistent with the Intercreditor Agreement
between the Lender and Finova dated as of the date hereof. Such Intercreditor
Agreement shall govern the security interests in the "Collateral" (as defined in
the Intercreditor Agreement) created for the benefit of the Lender and Finova.
(h) This Agreement supersedes all prior understandings and
agreements, whether written or oral, among the parties hereto relating to the
transactions provided for herein.
(i) All representations and warranties of the Pledgor contained
herein or made in connection herewith shall survive the making of and shall not
be waived by the execution and delivery of this Agreement, the Term Loan
Agreement or any other Loan Document, any investigation by the Lender or the
making of the Term Loan. All covenants and agreements of the Pledgor contained
herein shall continue in full force and effect from and after the date hereof
until the indefeasible payment in full in cash of the Obligations.
(j) Section headings in this Agreement are included herein for the
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
(k) This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
POLYPHASE CORPORATION
By:
-------------------------------
Name:
Title:
13
EXHIBIT C
SCHEDULE I TO PLEDGED AND SECURITY AGREEMENT
Pledged Debt
------------
Principal Amount
Pledgor Name of Payee Description Outstanding
------- ------------- ----------- -----------
Overhill Farms, Inc. Polyphase unsecured, $5,500,000
Corporation intercompany
promisory note
EXHIBIT C
---------
SCHEDULE II TO PLEDGE AND SECURITY AGREEMENT
Pledged Shares
--------------
Number Certificate
Pledgor Name of Issuer of Shares Class Number(s)
------- -------------- --------- ----- ---------
Polyphase Corporation Overhill Farms, Inc. 775 Common Stock 3
EXHIBIT C
---------
ANNEX I
TO
PLEDGE AND SECURITY AGREEMENT
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated _______________, is delivered pursuant to
Section 4 of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated
as of December __, 1997, as it may heretofore have been or hereafter may be
amended or otherwise modified or supplemented from time to time and that the
promissory notes or shares listed on this Pledged Amendment shall be and become
part of the Pledged Collateral referred to in said Pledge Agreement and shall
secure all of the Obligations referred to in said Pledge Agreement.
Pledged Debt
------------
Principal Amount
Pledgor Name of Payee Description Outstanding as of
--------------------- ----------- -----------------
Pledged Shares
--------------
Number Certificate
Pledgor Name of Issuer of Shares Class Number(s)
-------------------- --------- ----- ---------
[PLEDGOR]
By:
--------------------------
Name:
Title:
