Exhibit 10.24
EXHIBIT B TO
SUBORDINATION AGREEMENT
CENTRAL GARDEN PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Agreement") is entered into as of this
27th day of April, 2004, by and between CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company, as administrative, payment and collateral agent for
the Lenders (in such capacities, "Secured Party") under the Term Loan and
Security Agreement, and CENTRAL GARDEN & PET COMPANY, a Delaware corporation
("Pledgor").
RECITALS
A. Reference is made to that certain Term Loan and Security Agreement
dated as of the date hereof (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, from time to
time, the "Loan Agreement"), between Easy Gardener Products, Ltd., a Texas
limited partnership (the "Borrower"), the Secured Party and Lenders, and to the
other Loan Documents.
B. Pledgor has rights to obtain ownership interests in the Borrower
pursuant to (a) that certain Warrant dated as of the date hereof and issued by
the Borrower in favor of Pledgor (the "Warrant"), and (b) that certain Call
Option Agreement dated as of the date hereof between the Borrower and the
Pledgor (the "Option"), each as further described herein. The obligations of
Lenders to make the Loans to the Borrower are conditioned on, among other
things, the execution of this Agreement and the pledge by Pledgor to Secured
Party, for its benefit and the benefit of the Lenders, of the Collateral (as
defined herein) as security for Borrower's Obligations, and Pledgor has agreed
to enter into this Agreement in order to induce Secured Party and Lenders to
enter into the Loan Documents and to make the Loans.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as an inducement for Secured
Party and Lenders to enter into the Loan Documents, the parties hereto,
intending to be legally bound, do hereby agree as follows:
SECTION 1
DEFINITIONS
1.1. Defined Terms. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Loan Agreement or,
to the extent the same are used or defined therein, the meanings provided in
Article 9 of the UCC in effect on the date hereof. Whenever the context so
requires, each reference to gender includes the masculine and feminine, the
singular number includes the plural and vice versa. This Agreement shall mean
such agreement as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time to time. Unless
otherwise specified, all accounting terms not defined in the Loan Documents
shall have the meanings given to such terms in and shall be interpreted in
accordance with GAAP. References in this Agreement to any Person shall include
such Person and its successors and permitted assigns. In this Agreement, the
following terms shall mean as follows:
"Collateral" shall mean, collectively and each individually, (i) the
Warrant (as such term is defined in that certain subordination agreement dated
as of October 29, 2003 by and between Pledgor
and Secured Party (the "Subordination Agreement"), the Option (as defined in the
Subordination Agreement), and underlying capital stock, equity securities,
membership units, partnership interests and/or ownership interests of the
Borrower, EG or EG Product Management and (ii) any and all replacements,
products and proceeds of, and dividends, distributions in property or
securities, returns of capital or other distributions made on or with respect
to, any of the foregoing.
"Default" shall mean any event, fact, circumstance or condition
that, with the giving of applicable notice or passage of time or both, would
constitute, be or result in an Event of Default hereunder or under any Loan
Document.
"Event of Default" shall mean the occurrence of any event set forth
in Section IV.
SECTION 2
COLLATERAL
2.1. Pledge of Collateral.
(a) As security for the due and punctual payment and performance by
Borrower of all the Obligations, including, without limitation, all obligations
to Secured Party and Lenders under the Loan Documents and all obligations of the
Pledgor under this Agreement (collectively, the "Secured Obligations"), Pledgor
hereby pledges and assigns to Secured Party, for its benefit and the benefit of
the Lenders, and grants to Secured Party, for its benefit and the benefit of the
Lenders, a continuing first priority security interest in and Lien on, the
Collateral and all proceeds thereof and all of its right, title and interest in
and to the foregoing.
(b) Pledgor will deliver to Secured Party, for its benefit and the
benefit of the Lenders, all certificates representing the Collateral received or
acquired by Pledgor after the date hereof within five (5) Business Days after
Pledgor's receipt or acquisition of such Collateral, in each case registered in
the name of Pledgor, duly endorsed in blank or accompanied by a stock or
interest power duly executed by Pledgor in blank, in form and substance
satisfactory to Secured Party, with any and all documentary tax stamps and other
documents necessary to cause Secured Party, for its benefit and the benefit of
the Lenders, to have a good, valid and perfected continuing first priority
pledge of and Lien on the Collateral (free and clear of any other Liens),
including, without limitation, any necessary notations in the corporate or other
records books of Pledgor or the Person in which such Collateral evidences an
ownership stake. At any time following the occurrence and continuation of an
Event of Default, at the option of Secured Party, the Collateral or any part
thereof may be registered in the name of Secured Party, for its benefit and the
benefit of the Lenders, or of its or their nominees, and Pledgor covenants that,
upon demand by Secured Party, Pledgor shall, and shall cause the Person in which
such Collateral evidences an ownership stake to, effect such registration.
(c) Secured Party shall have the right to pay any taxes relating to
the Collateral and any costs to preserve the Collateral, which payments shall be
part of the Secured Obligations.
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2.2. Voting Rights, Dividends and Distributions.
(a) So long as no Event of Default has occurred, is continuing,
would result therefrom or be caused thereby, subject to the terms of this
Agreement (i) Pledgor shall be entitled to exercise all voting and/or consensual
rights and powers relating to the Collateral, and (ii) Pledgor shall be entitled
to receive and retain cash dividends, dividends paid in-kind and/or
distributions payable on the Collateral.
(b) Each party hereto shall execute and deliver (or cause to be
executed and delivered) to the other party such proxies, powers of attorney,
dividend orders and other instruments as such other party may request for the
purpose of enabling it to exercise the voting and/or consensual rights and
powers that it is entitled to exercise pursuant to this Agreement and/or to
receive the dividends that it is authorized to receive and retain pursuant to
this Agreement.
(c) Upon the occurrence and continuation of an Event of Default, all
rights of Pledgor to exercise voting and/or consensual rights and powers and/or
to receive dividends that Pledgor is entitled to exercise and/or receive
pursuant to this Section 2.2 shall cease immediately upon five (5) Business Days
notice to Pledgor, unless the giving of such notice in the Permitted Discretion
of the Secured Party would compromise the rights and remedies of Secured Party
hereunder, in which case, without any notice to Pledgor, and all such rights
thereupon shall become vested solely and exclusively in Secured Party, for its
benefit and the benefit of the Lenders. Any dividends, distributions in
property, returns of capital and other distributions made on or in respect of
the Collateral, and any and all cash and other property received in exchange
therefor and/or redemption of any Collateral delivered to Pledgor in violation
of this Agreement shall be held in trust for the benefit of the Secured Party,
for its benefit and the benefit of the Lenders, and forthwith shall be delivered
to Secured Party, for its benefit and the benefit of the Lenders. Any and all
money and other property received by Secured Party pursuant to the provisions of
this Section 2.2(c) shall be retained by Secured Party, for its benefit and the
benefit of the Lenders, as part of the Collateral.
2.3. Intercreditor Agreement. Nothwithstanding anything in this Agreement
to the contrary, this Agreement is subject to the terms and conditions of the
Intercreditor Agreement in all respects.
2.4 Receipt and Certificate of Issuer. Upon the execution of this
Agreement, Pledgor shall cause the delivery of a Receipt and Certificate of
Issuer in the form of Exhibit A attached hereto.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Collateral. Pledgor hereby represents and warrants to Secured Party
and Lenders (which representations and warranties shall survive the execution
and delivery of this Agreement and the making of Loans under the Loan Agreement)
as follows: (a) Pledgor is, or, with respect to the Collateral received or
acquired by Pledgor after the date hereof, will be, the direct record and
beneficial owner of each share, security and other interest that comprises the
Collateral, and Pledgor has and will have good, valid and marketable title
thereto, free and clear of all Liens other than those created by this Agreement
and (b) the Collateral is and will be duly and validly pledged to Secured Party,
for its benefit and the benefit of the Lenders, in accordance with law, and
Secured Party, for its benefit and the benefit of the Lenders, has and will have
a good, valid and perfected first priority Lien on and security interest in the
Collateral and the proceeds thereof subject to no other Liens, and no filing or
other action (other than the filing of a UCC-1 with the appropriate governmental
authority and the execution and delivery of Exhibit A hereto) will be necessary
to perfect or protect such Lien. Pledgor has full legal authority and power to
own the Collateral and to execute, deliver and perform this Agreement and to
consummate the transactions contemplated
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hereunder, and Pledgor is under no legal restriction, limitation or disability
that would prevent any of the foregoing. No financing statement relating to any
of the Collateral is on file in any public office except those on behalf of
Secured Party for the benefit of itself and the Lenders.
3.2. Authorization. The execution, delivery and performance by Pledgor of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary actions on the part of Pledgor
and pursuant to all necessary consents required therefor. This Agreement has
been duly executed and delivered by Pledgor and constitutes the legal, valid and
binding obligation of Pledgor, enforceable against Pledgor in accordance with
its terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a proceeding
at law or in equity). No approval, consent, authorization of, filing
registration or qualification with, or other action by, Pledgor or any other
Person (including, without limitation, any Person whose securities constitute
part of the Collateral) or Governmental Authority is or will be necessary to
permit the valid execution, delivery and performance of this Agreement by
Pledgor or the creation of the Liens and security interests contemplated hereby
other than delivery of certificates representing the Collateral (if any) to
Secured Party and the filing of appropriate Uniform Commercial Code financing
statements.
3.3. No Conflicts. The execution, delivery and performance by Pledgor of
this Agreement and the consummation of the transactions contemplated hereby and
the granting and creation of the security interest and Liens contemplated hereby
do not and will not (a) conflict with or violate any provision of any applicable
law, statute, rule, regulation, ordinance, license or tariff or any judgment,
decree or order of any court or other Governmental Authority binding on or
applicable to Pledgor or any of its or their properties or assets; (b) conflict
with, result in a breach of, constitute a default of or an event of default
under, or an event, fact, condition or circumstance which, with notice or
passage of time, or both, would constitute or result in a conflict, breach,
default or event of default under, require any consent not obtained under, or
result in or require the acceleration of any indebtedness pursuant to, any
indenture, agreement or other instrument to which Pledgor is a party or by which
it or any of its properties or assets are bound or subject; (c) if applicable,
conflict with or violate any provision of the certificate of incorporation or
formation, by-laws, limited liability company agreement or similar documents of
Pledgor; or (d) result in the creation or imposition of any Lien of any nature
whatsoever upon any of the properties or assets of Pledgor (except as
contemplated herein).
3.4. Litigation and Compliance; Other Agreements. There is no action,
suit, proceeding or investigation pending or, to Pledgor's knowledge,
threatened, before or by any court, arbitrator or Governmental Authority (1)
against or affecting the Collateral, Pledgor, this Agreement or the transactions
contemplated hereby, or (2) that questions or could reasonably be expected to
prevent the validity of this Agreement or the right or ability of Pledgor to
execute or deliver this Agreement or to consummate the transactions contemplated
hereby or to create or grant the Liens and security interests contemplated
hereby.
(b) Pledgor is not a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction, which would
materially adversely affect its ability to execute and deliver, or perform
under, this Agreement.
3.5 Covenants.
(a) Pledgor shall take all necessary and appropriate actions to
ensure that this Agreement and the Liens and pledges created hereby are and
remain enforceable against Pledgor in
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accordance with their terms and that Pledgor complies with each of its
obligations hereunder. Pledgor shall not (i) cause or permit to be done, or
enter into or make or become a party to any agreement, arrangement or commitment
to do or cause to be done, any of the things prohibited by this Agreement or
that would breach this Agreement, or (ii) enter into or make or become a party
to any agreement, document or instrument or arrangement that conflicts with this
Agreement or that would prevent Pledgor from complying herewith and/or
performing hereunder.
(b) Pledgor hereby agrees, at Secured Party's expense, to take or
cause to be taken promptly such further actions, obtain such consents and
approvals and duly execute and deliver or cause to be executed and delivered
such further agreements, assignments, instructions or documents Secured Party
may request in its Permitted Discretion with respect to or in order to fully
effectuate the purposes, terms and conditions of this Agreement and the
consummation of the transactions contemplated hereby, whether before, at or
after the performance and/or consummation of such transactions or the occurrence
of an Event of Default, including, without limitation, any of the foregoing
necessary or required or requested by Secured Party in its Permitted Discretion
to create, perfect, maintain, preserve, continue, validate or otherwise protect,
and from time to time renew, Secured Party's, for its benefit and the benefit of
the Lenders, perfected first priority Lien on and pledge of the Collateral.
Without limiting the foregoing, upon the exercise by Secured Party or any Lender
or any of its or their Affiliates or agents of any right or remedy which
requires any consent, approval or registration with, consent, qualification or
authorization by, any Person, Pledgor shall, at Secured Party's expense, execute
and deliver, or cause the execution and delivery of, all applications,
certificates, instruments and other documents that Secured Party or any Lender
or its or their Affiliate or agents may be required to obtain for such consent,
approval, registration, qualification or authorization. Borrower will pay all
costs associated with respect to the foregoing, including without limitation,
the cost of filing any of the foregoing in all public offices or other locations
wherever Secured Party in its Permitted Discretion deems filing to be necessary
or desirable.
(c) Pledgor (i) shall (A) maintain at all times the pledge of the
Collateral to Secured Party, for its benefit and the benefit of the Lenders, and
Secured Party's, for its benefit and the benefit of the Lenders, perfected first
priority Lien on the Collateral; and (B) defend the Collateral and Secured
Party's, for its benefit and the benefit of the Lenders, perfected first
priority Lien thereon and pledge thereof against all claims and demands of all
Persons at any time and Borrower shall pay all costs and expenses (including,
without limitation, in-house documentation and diligence fees and legal expenses
and reasonable attorneys' fees and expenses) in connection with such defense,
which, at Secured Party's discretion, shall be added to the Obligations, and
(ii) shall not sell, lease, transfer, pledge, encumber, restrict, assign or
otherwise dispose of any of the Collateral or any interest therein or create,
incur, assume or suffer to exist any Lien on the Collateral or any interest
therein (except pursuant hereto).
(d) Pledgor shall, (i) keep true, complete and accurate records with
respect to the Collateral, and (ii) not take or permit to be taken any action in
connection with the Collateral or otherwise which would impair in any material
respect (as determined by Secured Party in its Permitted Discretion) the value
of the Collateral or any portion thereof or the value of the interests or rights
of Pledgor or Secured Party, for its benefit and the benefit of the Lenders,
therein, including, without limitation, any amendment to or modification of the
certificate of incorporation (or similar charter documents) or bylaws (or
similar documents) of Pledgor or such Person.
3.6 No Third Party Beneficiary. No rights are intended to be created under
this Agreement for the benefit of any third party donee, creditor or incidental
beneficiary of Pledgor.
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SECTION 4
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute
an "Event of Default" under this Agreement: (a) Pledgor shall be in violation,
breach or default of, or shall fail to perform, observe or comply with any
covenant, obligation or agreement set forth in, this Agreement or any other Loan
Document to which it is a party and such failure shall not be cured within the
applicable period, if any; provided that, with respect to the covenants set
forth herein (other than Section 3.5(c)(i)(A) and (ii) and 3.5(d)(ii) for which
there shall be no cure periods), there shall be a 30 calendar day cure period
commencing from the earlier of (i) receipt by Pledgor of written notice of such
breach, default, violation or failure, and (ii) the time at which Pledgor or any
authorized officer thereof knew or became aware, or should have known or been
aware, of such failure, violation, breach or default; (b) any representation,
statement or warranty made or deemed made by Pledgor in this Agreement shall not
be true and correct in all material respects or shall have been false or
misleading in any material respect on the date when made or deemed to have been
made except those made as of a specific date; (c) any Event of Default (as
defined in the Loan Agreement) shall occur and be continuing past any cure
period and shall not have been waived in writing; or (d) if prior to termination
of this Agreement pursuant to Section 6.11 hereof, this Agreement shall cease to
be in full force and effect or any Lien created hereunder shall cease to
constitute a valid perfected first priority Lien on the Collateral or Secured
Party, for its benefit and the benefit of the Lenders, otherwise ceases to have
a valid perfected first priority Lien on and security interest in any of the
Collateral.
SECTION 5
RIGHTS AND REMEDIES
5.1 Rights and Remedies in Loan Documents.
(a) In addition to the provisions set forth in this Agreement,
upon the occurrence and continuation of an Event of Default, Secured Party, for
its benefit and the benefit of the Lenders, shall have the right to exercise any
and all rights, powers, options and remedies provided for in any Loan Document
and/or herein, under the UCC or at law or in equity, including, without
limitation, to the fullest extent permitted by applicable law, the right (in its
sole and absolute discretion) to, which Pledgor agrees to be commercially
reasonable, (i) apply the Collateral held by Secured Party for the benefit of
Lenders, or Lenders to reduce the Secured Obligations, (ii) foreclose the Liens
created hereunder and under the Loan Documents, (iii) realize upon, take
possession of and/or sell the Collateral, with or without judicial process, at
public or private sales or at any broker's board or on any securities exchange
or otherwise, (iv) exercise all rights and powers with respect to the Collateral
as Pledgor might exercise in its absolute discretion, including, without
limitation, to (1) relinquish or abandon any Collateral or any Lien thereon, (2)
to vote all or any part of the Collateral and otherwise act with respect thereto
as though it were the outright owner thereof, (3) to settle, adjust, compromise
and arrange all claims and demands whatsoever in relation to all or any part of
the Collateral, (4) to execute all such contracts, agreements, deeds, documents
and instruments, to bring, defend and abandon all such actions, suits and
proceedings, and to take all actions in relation to all or any part of the
Collateral, and/or (5) to appoint managers, sub-agents, and officers for any of
the purposes mentioned in the foregoing provisions of this Section and to
dismiss the same, (v) collect and send notices regarding the Collateral, with or
without judicial process, (vi) by its own means or with judicial assistance,
enter any premises at which Collateral is located, or render any of the
foregoing unusable or dispose of the Collateral on such premises without any
liability for rent, storage, utilities, or other sums, and Pledgor shall not
resist or interfere with such action, (vii) at Borrower's or Pledgor's expense,
require that all or any part of the Collateral be assembled and made available
to Secured Party at any place designated by Secured Party in its Permitted
Discretion, and/or (viii) relinquish or abandon any Loan Collateral or any Lien
thereon. Secured Party,
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for its benefit and the benefit of the Lenders, shall have the right in its sole
discretion to determine which rights and/or remedies Secured Party or Lenders
may at any time pursue, relinquish, subordinate or modify, and such
determination will not in any way modify or affect any of Secured Party's or
Lenders' rights, Liens or remedies under any Loan Document or this Agreement,
applicable law or equity. The enumeration of any rights and remedies in this
Agreement or any Loan Document is not intended to be exhaustive, and all rights
and remedies of Secured Party described in this Agreement and the Loan Documents
are cumulative and are not alternative to or exclusive of any other rights or
remedies which Secured Party otherwise may have. The partial or complete
exercise of any right or remedy shall not preclude any other further exercise of
such or any other right or remedy.
(b) Notwithstanding any provision of any Loan Document,
Secured Party, in its sole discretion, shall have the right, but not the
obligation, at any time that Pledgor fails to do so, and from time to time,
without prior notice, as applicable, to: (i) discharge taxes, levies or Liens on
any of the Collateral; and (ii) pay for the maintenance, repair and/or
preservation of the Collateral.
(c) Pledgor agrees that notice received by it at least ten
(10) calendar days before the time of any intended public sale, or the time
after which any private sale or other disposition of Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. At
any sale or disposition of Collateral, Secured Party may (to the extent
permitted by applicable law) (i) purchase all or any part thereof free from any
right of redemption by Pledgor, which right is hereby waived and released, (ii)
restrict the number of prospective bidders or purchasers and/or further restrict
such prospective bidders or purchasers to Persons who will represent and agree
that they are purchasing for their own account, for investment and not with a
view to the distribution or resale of the Collateral, and (iii) otherwise
require that such sale be conducted subject to restrictions as to such other
matters as Secured Party may deem necessary in order that such sale may be
effected in such manner as to comply with all applicable state and federal
securities and other laws.
(d) Pledgor hereby acknowledges that (i) notwithstanding that
a higher price might be obtained for the Collateral at a public sale than at a
private sale or sales, the making of a public sale of the Collateral may be
subject to registration requirements under applicable securities laws and other
legal restrictions, compliance with which would require such actions on the part
of Pledgor, would entail such expenses and would subject Secured Party, any
Lender, any underwriter through whom the Collateral may be sold or any
controlling person of any of the foregoing to such liabilities, as would make a
public sale of the Collateral impractical, and accordingly, Pledgor hereby
agrees that private sales made by Secured Party or any Lender in good faith in
accordance with the provisions of this Agreement may be at prices and on other
terms less favorable to the seller than if the Collateral were sold at a public
sale, and that Secured Party and Lenders shall not have any obligation to take
any steps in order to permit the Collateral to be sold at a public sale, such a
private sale being considered or deemed to be a sale in a commercially
reasonable manner; and (ii) Secured Party is hereby authorized to comply with
any limitation or restriction in connection with such sale that may be necessary
in order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser(s) by any Governmental Authority or officer
or court.
5.2 Application of Proceeds. In addition to any other rights,
options and remedies Secured Party and Lenders have under the Loan Documents,
the UCC, at law or in equity, the proceeds of any collection, recovery, receipt,
appropriation, realization, transfer, exchange, disposition or sale of the Loan
Collateral as aforesaid shall be applied in the following order of priority: (i)
first, to the payment of all costs and expenses of every kind incurred by
Secured Party and Lenders in connection therewith or incidental to the care,
safekeeping or otherwise of any of the Loan Collateral, and to the payment of
all sums which Secured Party and Lenders may be required or may elect to pay, if
any, for taxes, assessments, insurance and other charges upon the Loan
Collateral or any part thereof, and all other
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payments that Secured Party and Lenders may be required or authorized to make
under any provision of this Agreement or any Loan Document (including, without
limitation, in each such case, in-house documentation and diligence fees and
legal expenses, search, audit, recording, professional and filing fees and
expenses and reasonable attorneys' fees and all expenses, liabilities and
advances made or incurred in connection therewith); (ii) second, to the payment
of all Secured Obligations in such order as determined by Agent in its sole
discretion; (iii) third, to the satisfaction of indebtedness secured by any
subordinate security interest of record in the Loan Collateral if written
notification of demand therefor is received before distribution of the proceeds
is completed, provided, that, if requested by Secured Party, the holder of a
subordinate security interest shall furnish reasonable proof of its interest,
and unless it does so, Secured Party and Lenders need not address its claims;
and (iv) fourth, to the payment of any surplus then remaining to Pledgor or
Borrower, as applicable, unless otherwise provided by law or directed by a court
of competent jurisdiction, provided that the Borrower shall be liable for any
deficiency if such proceeds are insufficient to satisfy the Secured Obligations
or any other item referred to in this section.
5.3 Rights of Lender to Appoint Receiver. Without limiting and in
addition to any other rights, options and remedies Secured Party and Lenders
have hereunder or under the Loan Documents, the UCC, at law or in equity, upon
the occurrence and continuation of an Event of Default, Secured Party shall have
the right to apply for and have a receiver appointed by a court of competent
jurisdiction in any action taken by Secured Party to enforce its rights and
remedies in order to manage, protect and preserve the collateral under the Loan
Documents and continue the operation of the business of Borrower and to collect
all revenues and profits thereof and apply the same to the payment of all
expenses and other charges of such receivership including the compensation of
the receiver and to the payments as aforesaid until a sale or other disposition
of such collateral under the Loan Documents shall be finally made and
consummated.
5.4 Attorney in Fact. Pledgor hereby irrevocably appoints Secured
Party, for its benefit and the benefit of the Lenders, as its attorney in fact
to take any action Lender deems necessary or desirable upon the occurrence and
continuation of an Event of Default to perfect, protect and realize upon its
Lien and first priority security interest in the Collateral, for its benefit and
the benefit of the Lenders, including the execution and delivery of any and all
documents or instruments related to the Collateral in Pledgor's name, or
otherwise to effect fully the purpose, terms and conditions of this Agreement
and the other Loan Documents, and said appointment shall create in Secured
Party, for its benefit and the benefit of the Lenders, a power coupled with an
interest.
SECTION 6
MISCELLANEOUS
6.1 No Waiver of Defaults; Waiver. No course of action or dealing,
renewal, waiver, release or extension of any provision of any Loan Document or
this Agreement, or single or partial exercise of any such provision, or delay,
failure or omission on Secured Party's or Lenders' part in enforcing any such
provision shall affect the liability of Pledgor or operate as a waiver of such
provision or preclude any other or further exercise of such provision. No waiver
by Secured Party or any Lender of any one or more defaults by any other party in
the performance of any of the provisions of any Loan Document or this Agreement
shall operate or be construed as a waiver of any future default, whether of a
like or different nature, and each such waiver shall be limited solely to the
express terms and provisions of such waiver. Notwithstanding any other provision
of any Loan Document or this Agreement, by completing the Closing and/or funding
the Loans, neither Secured Party nor any Lender waives any breach of any
representation or warranty under any Loan Document or this Agreement, and all of
Secured Party's and Lenders' claims and rights resulting therefrom are
specifically reserved. Except as expressly provided for herein, Pledgor hereby
waives setoff, counterclaim, demand, presentment, protest, all defenses with
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respect to any and all instruments and all notices and demands of any
description (including, without limitation, notice of acceptance hereof, notice
of any Loan made, credit extended, collateral received or delivered) and the
pleading of any statute of limitations as a defense to any demand under any Loan
Document, it being the intention that Pledgor shall remain liable under this
Agreement and the Loan Documents until the full amount of all Secured
Obligations shall have been indefeasibly paid in cash and performed and
satisfied in full and the Loan Agreement terminated, notwithstanding any act,
omission or anything else which might otherwise operate as a legal or equitable
discharge of Pledgor. Pledgor hereby waives any and all defenses and
counterclaims it may have or could interpose in any action or procedure brought
by Secured Party or any Lender to obtain an order of court recognizing the
assignment of, or Lien of Secured Party, for its benefit and the benefit of the
Lenders, in and to, any Collateral.
6.2 Entire Agreement. This Agreement and the other Loan Documents to which
Pledgor is a party constitute the entire agreement between Pledgor and Secured
Party and Lenders with respect to the subject matter hereof and thereof, and
supersede all prior agreements and understandings, if any, relating to the
subject matter hereof or thereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing signed by the parties hereto. Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
6.3 Amendment. No provision of this Agreement may be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by a
written agreement signed by Secured Party and Pledgor.
6.4 Notices. Any notice or request under this Agreement shall be given to
any party thereto at such party's address set forth beneath its signature on the
signature page thereto, or at such other address as such party may hereafter
specify in a notice given in the manner required under this Section 6.4. Any
such notice or request shall be given only by, and shall be deemed to have been
received upon (each, a "Receipt"): (a) registered or certified mail, return
receipt requested, on the date on which such received as indicated in such
return receipt, (b) delivery by a nationally recognized overnight courier, one
(1) Business Day after deposit with such courier, or (c) facsimile or electronic
transmission, in each case upon telephone or further electronic communication
from the recipient acknowledging receipt (whether automatic or manual from
recipient), as applicable.
6.5 Governing Law; Jurisdiction; Construction. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York without giving effect to its choice of law provisions. Any judicial
proceeding against Pledgor with respect to any of the Secured Obligations, any
of the Collateral or this Agreement may be brought in any federal or state court
of competent jurisdiction located in the State of New York. By execution and
delivery of this Agreement, Pledgor (a) accepts the non-exclusive jurisdiction
of the aforesaid courts and irrevocably agrees to be bound by any judgment
rendered thereby, (b) waives personal service of process, (c) agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, pursuant to Section 6.4 hereof, and (d) waives any objection
to jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction, venue, convenience or forum
non conveniens. Nothing shall affect the right of Secured Party or any Lender to
serve process in any manner permitted by law or shall limit the right of Secured
Party or any Lender to bring proceedings against Pledgor in the courts of any
other jurisdiction having jurisdiction. Any judicial proceedings against
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Secured Party or any Lender, involving, directly or indirectly, the Secured
Obligations, Collateral or this Agreement shall be brought only in a federal or
state court located in the State of New York. Pledgor acknowledges that it
participated in the negotiation and drafting of this Agreement and that,
accordingly, it shall not move or petition a court construing this Agreement to
construe it more stringently against one party than against any other.
6.6 Severability; Captions; Counterparts; Facsimile Signature. If any
provision of this Agreement is adjudicated to be invalid under applicable laws
or regulations, such provision shall be inapplicable to the extent of such
invalidity without affecting the validity or enforceability of the remainder of
this Agreement which shall be given effect so far as possible. The captions in
this Agreement are intended for convenience and reference only and shall not
affect the meaning or interpretation of this Agreement. This Agreement may be
executed in one or more counterparts (which taken together, as applicable, shall
constitute one and the same instrument) and by facsimile transmission, which
facsimile signatures shall be considered original executed counterparts. Each
party to this Agreement agrees that it will be bound by its own facsimile
signature and that it accepts the facsimile signature of each other party.
6.7 Successors and Assigns. This Agreement (a) shall inure to the benefit
of, and may be enforced by, Secured Party and Lenders, Transferees, Participants
(to the extent expressly provided in the Loan Agreement) and all future holders
of the Notes, any of the Secured Obligations or any of the collateral as defined
in the Loan Documents and each of their respective successors and permitted
assigns, and (b) shall be binding upon and enforceable against Pledgor and
Pledgor's permitted assigns and successors. Pledgor shall not assign, delegate
or transfer this Agreement or any of its rights or obligations thereunder
without the prior written consent of Secured Party. This Agreement shall be
binding upon Pledgor and its respective heirs, administrators, executors,
successors and assigns. Nothing contained in this Agreement or any other Loan
Document shall be construed as a delegation to Secured Party or any Lender of
Pledgor's duty of performance. PLEDGOR ACKNOWLEDGES AND AGREES THAT SECURED
PARTY AND LENDERS AT ANY TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND REISSUE
(WITHOUT ANY SUBSTANTIVE CHANGES OTHER THAN THOSE RESULTING FROM SUCH DIVISION)
THE NOTES, AND/OR (II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR
TRANSFER ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT, ANY
NOTE, THE OBLIGATIONS, THE LOAN COLLATERAL AND/OR THE LOAN DOCUMENTS TO ONE OR
MORE TRANSFEREES IN EACH CASE ON THE TERMS AND CONDITIONS PROVIDED IN THE LOAN
AGREEMENT. The terms "Secured Party" and "Lenders" in this Agreement includes
Transferees and Participants and Secured Party's successors and assigns, each of
which shall have all rights and benefits of Secured Party or Lender thereunder.
Each Transferee and Participant shall have all of the rights and benefits with
respect to the Secured Obligations, Notes, Loan Collateral, this Agreement
and/or Loan Documents held by it as fully as if the original holder thereof.
Notwithstanding any other provision of this Agreement or any Loan Document,
Secured Party and Lenders may disclose to any Transferee or Participant all
information, reports, financial statements, certificates and documents obtained
under any provision of this Agreement.
6.8 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING
HEREUNDER OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES WITH RESPECT HERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
10
CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES
TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
6.9 Expenses. Borrower shall pay all costs and expenses incurred by
Secured Party and/or its Affiliates (and, with respect to all items below,
Lenders in connection with, relating to and/or arising out of or resulting from
any Event of Default or occurring thereafter), including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
recording, professional and filing fees and expenses and all other out-of-pocket
charges and expenses (including, without limitation, UCC and judgment and tax
lien searches and UCC filings and fees for post-Closing UCC and judgment and tax
lien searches and wire transfer fees and audit expenses), and reasonable
attorneys' fees and expenses, (i) in any effort to enforce, protect or collect
payment of any Secured Obligation or to enforce this Agreement or any related
agreement, document or instrument, (ii) arising in any way out of administration
of the Secured Obligations or the taking or refraining from taking by Secured
Party or Lender of any action requested by Pledgor, (iii) in connection with
instituting, maintaining, preserving, enforcing and/or foreclosing on Secured
Party's, for the benefit of itself and Lenders, Liens in any of the Collateral
or securities pledged under this Agreement, whether through judicial proceedings
or otherwise, (iv) in defending or prosecuting any actions, claims or
proceedings arising out of or relating to Secured Party's and/or Lenders'
transactions with Pledgor, and (v) arising out of or relating to any Event of
Default or occurring thereafter or as a result thereof.
6.10 Termination. This Agreement shall continue in full force and effect
until full performance and indefeasible payment in full in cash of all Secured
Obligations and termination of the Loan Agreement. Notwithstanding any other
provision of this Agreement or any Loan Document, no termination of this
Agreement shall affect Secured Party's or Lenders' rights or any of the Secured
Obligations existing as of the effective date of such termination until the
Secured Obligations have been fully performed and indefeasibly paid in cash in
full. The Liens granted to Secured Party, for its benefit and the benefit of the
Lenders, hereunder and any financing statements filed pursuant hereto and the
rights and powers of Secured Party and Lenders hereunder shall continue in full
force and effect until all of the Secured Obligations have been fully performed
and indefeasibly paid in full in cash.
6.11 [Intentionally Omitted.]
6.12 Approvals and Duties; Release of Collateral. Unless expressly
provided herein to the contrary, any approval, consent, waiver or satisfaction
of Secured Party or Lenders with respect to any matter that is subject of any
Loan Document may be granted or withheld by Secured Party in its sole and
absolute discretion. Secured Party and Lenders shall have no responsibility for
or obligation or duty with respect to any of the Collateral (other than the duty
of reasonable care with respect to the safekeeping of such Collateral in their
custody) or any matter or proceeding arising out of or relating thereto,
including, without limitation, any obligation or duty to collect any sums due in
respect thereof or to protect or preserve any rights pertaining thereto.
Immediately following full performance and satisfaction and indefeasible payment
in full in cash of all Secured Obligations, the Liens created hereby shall
terminate and Secured Party and Lenders shall execute and deliver such
documents, at Secured Party's expense, as are necessary to release their Liens
in the Collateral and shall return the Collateral to Pledgor. Secured
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Party and each Lender shall not be deemed to have made any representation or
warranty with respect to any Collateral so delivered except that such Collateral
is free and clear, on the date of such delivery, of any and all Liens arising
from its own acts.
6.13 Survival. It is the express intention and agreement of the parties
hereto that all covenants, representations, warranties and waivers and
indemnities made by Pledgor herein shall survive the execution, delivery and
termination of this Agreement until all Obligations are performed in full and
indefeasibly paid in full in cash and the Loan Documents are terminated.
6.14 NO LIABILITY OF PLEDGOR. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN CONTAINED, PLEDGOR SHALL HAVE NO PERSONAL LIABILITY OF ANY NATURE
WHATSOEVER WITH RESPECT TO THE SECURED OBLIGATIONS OR OTHERWISE IN RESPECT OF
THIS AGREEMENT AND THE SOLE RECOURSE OF SECURED PARTY SHALL BE TO THE
COLLATERAL.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Pledge Agreement as of the date first written above.
CAPITALSOURCE FINANCE LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: JosephTuritz
------------
Title: General Counsel
---------------
CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
CENTRAL GARDEN & PET COMPANY, a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------
Title: Chairman
--------
Central Garden & Pet Company
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone:
--------------------
FAX:
--------------------------
E-MAIL:
-----------------------
Acknowledged:
EASY GARDENER PRODUCTS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Title: CFO
-----------------------------
EXHIBIT A TO CENTRAL GARDEN PLEDGE AGREEMENT
RECEIPT AND CERTIFICATE OF ISSUER
The undersigned hereby certifies, acknowledges and agrees as follows
to and with CAPITALSOURCE FINANCE LLC, in its capacity as Agent (the "Agent")
for the Lenders (as defined therein) parties to the Loan Agreement dated as of
October 29, 2003 (as amended, restated, modified or supplemented from time to
time the "Loan Agreement") by and among EASY GARDENER PRODUCTS, LTD
("Borrower"), such Lenders, the other Credit Parties, and the Agent:
1. Capitalized terms used and not defined herein shall have the
meanings ascribed to such terms in the Loan Agreement.
2. The undersigned is the Issuer and has sole custody of and is
solely responsible for its registration books, if any.
3. Central Garden & Pet Company (the "Pledgor") is the holder of
_______ percent (____%) of the ownership interests of the Issuer and its
interests in the Issuer (the "Pledged Interests") are reflected as such on the
registration books. The Pledged Interests consist of _______________ percent
(______%) of the outstanding ownership interests in the Issuer.
4. The undersigned, by execution of this Certificate, acknowledges
receipt of irrevocable instructions and direction from the Pledgor contained in
the Central Garden Pledge Agreement dated as of October 29, 2003 (the "Pledge
Agreement") and herein, (i) to register on its registration books the Lien in
favor of the Agent for the benefit of the Secured Parties (as defined in the
Pledge Agreement) upon the Pledged Interests as an assignment and security
interest therein (the "Registered Assignment") as provided in the Pledge
Agreement and to place a copy of this executed Certificate in its minute book;
and (ii) to otherwise fully comply with the other provisions herein contained.
The execution of this Certificate and the Pledge Agreement by the Pledgor and
the Issuer shall constitute such irrevocable instructions and direction.
5. The Registered Assignment on the Pledged Interests has been duly
registered of record on the registration books of the Issuer. There is no
registration of record of, or to the knowledge of the Issuer any claim with
respect to, any Lien or other interest or restriction of transfer on the Pledged
Interests, other than the Registered Assignment.
6. The Issuer will not cause, suffer or permit to occur any transfer
of record of (a) the Pledged Interests or any interest therein, or (b) any other
interest in the Issuer the effect of which transfer would be to lessen the
percentage interest in the Issuer as specified in paragraph 3 above, except in
accordance with the prior written consent, or as provided below at the
direction, of the Agent or as permitted pursuant to the Loan Agreement or the
Loan Documents.
7. Upon receipt of written notice from the Agent that an Event of
Default has occurred and that all or any part of the Pledged Interests or any
interest therein has been sold, assigned or otherwise transferred by such holder
pursuant to the terms of the Pledge Agreement, and identifying the Agent and the
interest or interests assigned, the Issuer shall forthwith cause the
registration books for the Issuer to be duly noted to reflect each of such
transfers of record.
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8. Issuer agrees that it will comply with the foregoing provisions
including any instructions from the Agent without further consent from the
Pledgor.
This Certificate may be executed by the parties in one or more
counterparts, and each executed counterpart shall be considered an original.
Upon notice from the Agent of the payment in full of the Obligations
under the Loan Agreement and the termination of the Commitments thereunder, the
Issuer shall remove the Registered Assignment from the register and take such
other action as the Pledgor may reasonably request and at its expense.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Done this the 29 day of October, 2003.
ISSUER:
EASY GARDENER PRODUCTS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Title: CFO
----------------------------------
Acknowledged and Agreed to this
29th day of October, 2003.
CENTRAL GARDEN & PET COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Chairman
---------------------------------