EX-99.11
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of this day of March, 2002 is made by
▇▇▇▇▇▇ TREE CONSTRUCTION, INC., which may become known as Nutritionary, Inc., a
Nevada corporation having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "PLEDGOR"), to ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "SECURED PARTY"), with an
address at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
1. PLEDGE. In order to induce the Secured Party to extend the Obligations (as
defined below), the Pledgor hereby grants a security interest in and pledges to
the Secured Party, and to all other direct or indirect affiliates of Secured
Party, all of the Pledgor's right, title and interest in and to the investment
property and other assets described in Exhibit A attached hereto and made a part
hereof, and all security entitlements of the Pledgor with respect thereto,
whether now owned or hereafter acquired, together with all additions,
substitutions, replacements and proceeds and all income, interest, dividends and
other distributions thereon (the "COLLATERAL"). If the Collateral includes
certificated securities, documents or instruments, such certificates are
herewith delivered to the Secured Party, to be held on behalf of the Secured
Party and ▇▇▇▇▇▇ ▇▇▇▇▇, accompanied by duly executed blank stock or bond powers
or assignments as applicable. The Pledgor hereby authorizes the transfer of
possession of all certificates, instruments, documents and other evidence of the
Collateral to the Secured Party.
2. OBLIGATIONS SECURED. The Collateral secures payment of any and all of
Pledgor's indebtedness and/or liabilities and obligations to Secured Party of
every kind, nature and description, direct or indirect, secured or unsecured,
joint, several, joint and several, absolute or contingent, due or to become due,
now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, including without limitation, any and all indebtedness,
liabilities and obligations under that certain note of even date herewith in the
amount of $1,500,000.00 given by Pledgor in favor of Secured Party (as the same
may be amended from time to time) (the "Note"), that Stock Purchase Agreement
dated as of March __, 2002, among Pledgor, Secured Party and ▇▇▇▇▇▇ ▇▇▇▇▇, as
the same may be amended from time to time (the "Stock Purchase Agreement"), that
certain Reimbursement and Indemnification Agreement of even date herewith from
American Health and Diet Centers, Inc. and Pledgor in favor of Secured Party
(the "Reimbursement Agreement"), that certain Security Agreement of even date
herewith from Pledgor in favor of Secured Party (the "Security Agreement"), and
any and all other documents executed and/or delivered in connection with the
transactions contemplated thereby, and any such obligations which may arise out
of, under or in connection with this Agreement, or any other document executed
in connection with this Agreement, and all obligations of Pledgor to Secured
Party hereunder or thereunder to perform acts or refrain from taking any action
(collectively, the "OBLIGATIONS").
3. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants to the
Secured Party as follows:
3.1. There are no restrictions on the pledge or transfer of any of
the Collateral.
3.2. The Pledgor is the legal owner of the Collateral, which
is registered in the name of the Pledgor.
3.3. The Collateral is free and clear of any security interests,
pledges, liens, encumbrances, charges, agreements, claims or other arrangements
or restrictions of any kind, except for the contemporaneous pledge in favor of
▇▇▇▇▇▇ ▇▇▇▇▇ as described in the Stock Purchase Agreement; and the Pledgor will
not incur, create, assume or permit to exist any pledge, security interest,
lien, charge or other encumbrance of any nature whatsoever on any of the
Collateral or assign, pledge or otherwise encumber any right to receive income
from the Collateral.
3.4. The Pledgor has the right to transfer the Collateral free of
any encumbrances and the
Pledgor will defend the Pledgor's title to the Collateral against the claims of
all persons, and any registration with, or consent or approval of, or other
action by, any federal, state or other governmental authority or regulatory body
which was or is necessary for the validity of the pledge of and grant of the
security interest in the Collateral has been obtained.
3.5. The pledge of and grant of the security interest in the
Collateral is effective to vest in the Secured Party a valid and perfected first
priority security interest, superior to the rights of any other person, in and
to the Collateral as set forth herein, except for the contemporaneous pledge in
favor of ▇▇▇▇▇▇ ▇▇▇▇▇ as described in the Stock Purchase Agreement.
4. COVENANTS. If all or part of the Collateral constitutes "margin stock" within
the meaning of Regulation U of the Federal Reserve Board, the Pledgor agrees to
execute and deliver Form U-1 to the Secured Party and, unless otherwise agreed
in writing between the Pledgor and the Secured Party, no part of the proceeds of
the Obligations may be used to purchase or carry margin stock.
5. DEFAULT.
5.1 If any of the following occur (each an "EVENT OF DEFAULT"): (i)
any Event of Default (as defined in the Transaction Documents or any other loan
or transaction documents relating to the Obligations), (ii) any default under
any of the loan or transaction documents relating to any of the Obligations that
does not have a defined set of "Events of Default" and the lapse of any notice
or cure period provided in such loan or transaction documents with respect to
such default, (iii) demand by the Secured Party under any of the Obligations
that have a demand feature, (iv) the failure by the Pledgor to perform any of
its obligations hereunder and the lapse of any notice or cure period that may be
applicable to such non-performance, (v) the falsity, inaccuracy or material
breach by the Pledgor of any written warranty, representation or statement made
or furnished to the Secured Party by or on behalf of the Pledgor, or (vi) the
failure of the Secured Party to have a perfected first priority security
interest in the Collateral as provided for herein;
then the Secured Party is authorized in its discretion to
declare any or all of the Obligations to be immediately due and payable without
demand or notice, which are expressly waived, and may exercise any one or more
of the rights and remedies granted pursuant to this Pledge Agreement or given to
a secured party under the Uniform Commercial Code of the applicable state, as it
may be amended from time to time, or otherwise at law or in equity, including
without limitation the right to sell or otherwise dispose of any or all of the
Collateral at public or private sale, with or without advertisement thereof,
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best.
5.2. (a) At any bona fide public sale, and to the extent permitted
by law, at any private sale, the Secured Party shall be free to purchase all or
any part of the Collateral, free of any right or equity of redemption in the
Pledgor, which right or equity is hereby waived and released. Any such sale may
be on cash or credit (i.e., the Secured Party may make payment on account
thereof by using any Obligation then due and payable as a credit against the
purchase price). The Secured Party shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account in compliance with Regulation D of the Securities Act of
1933 or any other applicable exemption available under such Act. The Secured
Party will not be obligated to make any sale if it determines not to do so,
regardless of the fact that notice of the sale may have been given. The Secured
Party may adjourn any sale and sell at the time and place to which the sale is
adjourned. If the Collateral is customarily sold on a recognized market or
threatens to decline speedily in value, the Secured Party may sell such
Collateral at any time without giving prior notice to the Pledgor. Whenever
notice is otherwise required by law to be sent by the Secured Party to the
Pledgor of any sale or other disposition of the Collateral, five (5) days
2
written notice sent to the Pledgor at its address specified above will be
reasonable.
(b) The Pledgor recognizes that the Secured Party may be
unable to effect or cause to be effected a public sale of the Collateral by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "ACT"), so that the Secured Party may be compelled to resort to one
or more private sales to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire the Collateral for their own account,
for investment and without a view to the distribution or resale thereof. The
Pledgor understands that private sales so made may be at prices and on other
terms less favorable to the seller than if the Collateral were sold at public
sales, and agrees that the Secured Party has no obligation to delay or agree to
delay the sale of any of the Collateral for the period of time necessary to
permit the issuer of the securities which are part of the Collateral (even if
the issuer would agree), to register such securities for sale under the Act. The
Pledgor agrees that private sales made under the foregoing circumstances shall
be deemed to have been made in a commercially reasonable manner.
5.3. The net proceeds arising from the disposition of the Collateral
after deducting expenses incurred by the Secured Party will be applied to the
Obligations in the order determined by the Secured Party. If any excess remains
after the discharge of all of the Obligations, the same will be paid to the
Pledgor. If after exhausting all of the Collateral there is a deficiency, the
Pledgor will be liable therefor to the Secured Party; PROVIDED, HOWEVER, that
nothing contained herein will obligate the Secured Party to proceed against the
Pledgor or any other party obligated under the Obligations or against any other
collateral for the Obligations prior to proceeding against the Collateral.
5.4. If any demand is made at any time upon the Secured Party for
the repayment or recovery of any amount received by it in payment or on account
of any of the Obligations from the disposition of the Collateral and if the
Secured Party repays all or any part of such amount, the Pledgor will be and
remain liable for the amounts so repaid or recovered to the same extent as if
never originally received by the Secured Party.
6. VOTING RIGHTS AND TRANSFER. Prior to the occurrence of an Event of Default,
the Pledgor will have the right to exercise all voting rights with respect to
the Collateral, subject to the terms of any of the Transaction Documents. At any
time after the occurrence of an Event of Default, the Secured Party may transfer
any or all of the Collateral into its name or that of its nominee and may
exercise all voting rights with respect to the Collateral, but no such transfer
shall constitute a taking of such Collateral in satisfaction of any or all of
the Obligations unless the Secured Party expressly so indicates by written
notice to the Pledgor.
7. DIVIDENDS, INTEREST AND PREMIUMS. The Pledgor will have the right to receive
all cash dividends, interest and premiums declared and paid on the Collateral
prior to the occurrence of any Event of Default. In the event any additional
shares are issued to the Pledgor as a stock dividend or in lieu of interest on
any of the Collateral, as a result of any split of any of the Collateral, by
reclassification or otherwise, any certificates evidencing any such additional
shares will be immediately delivered to the Secured Party, to be held on behalf
of the Secured Party and ▇▇▇▇▇▇ ▇▇▇▇▇, and such shares will be subject to this
Pledge Agreement and a part of the Collateral to the same extent as the original
Collateral. At any time after the occurrence of an Event of Default, the Secured
Party shall be entitled to receive all cash or stock dividends, interest and
premiums declared or paid on the Collateral, all of which shall be subject to
the Secured Party's rights under Section 5 above.
8. FURTHER ASSURANCES. At any time and from time to time, upon demand of the
Secured Party, the Pledgor will give, execute, file and record any notice,
financing statement, continuation statement, instrument, document or agreement
that the Secured Party may consider necessary or desirable to create, preserve,
continue, perfect or validate any security interest granted hereunder or to
enable the
3
Secured Party to exercise or enforce its rights hereunder with respect to such
security interest. Without limiting the generality of the foregoing, the Pledgor
hereby irrevocably appoints the Secured Party as the Pledgor's attorney-in-fact
to do all acts and things in the Pledgor's name that the Secured Party may deem
necessary or desirable. This power of attorney is coupled with an interest with
full power of substitution and is irrevocable. The Secured Party is authorized
to file financing statements, continuation statements and other documents under
the Uniform Commercial Code relating to the Collateral without the Pledgor's
signature, naming the Pledgor as debtor and the Secured Party as secured party.
9. NOTICES. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be
effective upon receipt if delivered personally to the Pledgor or the Secured
Party, or if sent by facsimile transmission with confirmation of delivery, or by
nationally recognized overnight courier service, to the address set forth above
or to such other address as either the Pledgor or the Secured Party may give to
the other in writing for such purpose.
10. PRESERVATION OF RIGHTS. (a) No delay or omission on the Secured Party's part
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the Secured
Party's action or inaction impair any such right or power. The Secured Party's
rights and remedies hereunder are cumulative and not exclusive of any other
rights or remedies which the Secured Party may have under other agreements, at
law or in equity.
(b) The Secured Party may, at any time and from time to time,
without notice to or the consent of the Pledgor, and without impairing or
releasing, discharging or modifying the Pledgor's liabilities hereunder, (i)
change the manner, place, time or terms of payment or performance of or interest
rates on, or other terms relating to, any of the Obligations; (ii) renew,
substitute, modify, amend or alter, or grant consents or waivers relating to any
of the Obligations, any other pledge or security agreements, or any security for
any Obligations; (iii) apply any and all payments by whomever paid or however
realized including any proceeds of any collateral, to any Obligations of the
Pledgor in such order, manner and amount as the Secured Party may determine in
its sole discretion; (iv) deal with any other person with respect to any
Obligations in such manner as the Secured Party deems appropriate in its sole
discretion; (v) substitute, exchange or release any security or guaranty; or
(vi) take such actions and exercise such remedies hereunder as provided herein.
11. ILLEGALITY. In case any one or more of the provisions contained in this
Pledge Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
12. CHANGES IN WRITING. No modification, amendment or waiver of any provision of
this Pledge Agreement nor consent to any departure by the Pledgor therefrom will
be effective unless made in a writing signed by the Secured Party, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Pledgor in any case will
entitle the Pledgor to any other or further notice or demand in the same,
similar or other circumstance.
13. ENTIRE AGREEMENT. This Pledge Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the Pledgor and the Secured Party with respect to the subject matter hereof.
14. SUCCESSORS AND ASSIGNS. This Pledge Agreement will be binding upon and inure
to the benefit of the Pledgor and the Secured Party and their respective heirs,
executors, administrators, successors and assigns; PROVIDED, HOWEVER, that the
Pledgor may not assign this Pledge Agreement in whole or in part without the
Secured Party's prior written consent and the Secured Party at any time may
assign this Pledge Agreement in whole or in part.
4
15. INTERPRETATION. In this Pledge Agreement, unless the Secured Party and the
Pledgor otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; the word "or" shall be deemed to include "and/or", the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation." Section headings in this Pledge Agreement are included for
convenience of reference only and shall not constitute a part of this Pledge
Agreement for any other purpose. If this Pledge Agreement is executed by more
than one party as Pledgor, the obligations of such persons or entities will be
joint and several. All defined terms used herein and not otherwise defined shall
be defined as in the Note, the Stock Purchase Agreement, the Reimbursement
Agreement and the Security Agreement, and/or any other documents executed and/or
delivered in connection with any of the foregoing (collectively, with this
Pledge Agreement, the "TRANSACTION DOCUMENTS").
16. INDEMNITY. The Pledgor agrees to indemnify each of the Secured Party, his
successor and assigns (the "INDEMNIFIED PARTIES") and to hold each Indemnified
Party harmless from and against any and all claims, damages, losses, liabilities
and expenses (including all fees of counsel with whom any Indemnified Party may
consult and all expenses of litigation or preparation therefor) which any
Indemnified Party may incur or which may be asserted against any Indemnified
Party as a result of the execution of or performance under this Pledge
Agreement; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not
apply to claims, damages, losses, liabilities and expenses solely attributable
to an Indemnified Party's gross negligence or willful misconduct. The indemnity
agreement contained in this Section shall survive the termination of this Pledge
Agreement. The Pledgor may participate at its expense in the defense of any such
claim.
17. GOVERNING LAW AND JURISDICTION. This Pledge Agreement has been delivered to
and accepted by the Secured Party and will be deemed to be made in the State of
New Jersey. THIS PLEDGE AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PLEDGOR AND THE SECURED PARTY DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY, EXCLUDING ITS CONFLICT OF LAWS RULES. The
Pledgor hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court for the county or judicial district where the Secured Party's
address indicated above is located; provided that nothing contained in this
Pledge Agreement will prevent the Secured Party from bringing any action,
enforcing any award or judgment or exercising any rights against the Pledgor
individually, against any security or against any property of the Pledgor within
any other county, state or other foreign or domestic jurisdiction. The Pledgor
acknowledges and agrees that the venue provided above is the most convenient
forum for both the Secured Party and the Pledgor. The Pledgor waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Pledge Agreement.
18. WAIVER OF JURY TRIAL. THE PLEDGOR IRREVOCABLY WAIVES ANY AND ALL RIGHT THE
PLEDGOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS PLEDGE AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION
WITH THIS PLEDGE AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.
The Pledgor acknowledges that it has read and understood all the provisions of
this Pledge Agreement, including the waiver of jury trial, and has been advised
by counsel as necessary or appropriate.
5
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
ATTEST: ▇▇▇▇▇▇ TREE CONSTRUCTION, INC.
By:
--------------------------------- -----------------------------------
6
EXHIBIT A TO PLEDGE AGREEMENT
(CERTIFICATED SECURITIES)
The specific assets listed below are pledged as collateral and are restricted
from trading and withdrawals.
QUANTITY DESCRIPTION OF SECURITIES CERTIFICATE NUMBER(S)
-------- ------------------------- ---------------------
81,000 Common Stock of [ ]
shares American Health and ---------------
Diet Centers, Inc.
2