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Execution Version
Stock Pledge Agreement

This Stock Pledge Agreement (this “Pledge Agreement”) dated as of January 6, 2021, is executed and delivered by Better Choice Company Inc., a Delaware corporation (“Pledgor”), to Old Plank Trail Community Bank, N.A., a national banking association (“Lender”).

1.         Background.

A.Contemporaneously herewith, Halo, Purely for Pets, Inc., a Delaware corporation (“Borrower”) desires Lender to provide certain loans, extensions of credit and other financial accommodations (collectively, the “Financial Accommodations”) to Borrower pursuant to or evidenced by, among other things, (i) that certain Loan and Security Agreement of even date herewith by and between Borrower and Lender (as amended, renewed or restated from time to time, the “Loan Agreement”), and (ii) the other documents, agreements and instruments referenced in any of the foregoing or otherwise executed and delivered from time to time by or on behalf of Borrower to Lender.  

A.Lender is willing to provide the Financial Accommodations provided, among other things, Pledgor executes and delivers this Pledge Agreement to Lender.  

A.Pledgor acknowledges and agrees that (i) Pledgor hereby owns 100% of the issued and outstanding capital stock of Borrower, and is thus benefitted by the Financial Accommodations made by Lender to Borrower, (ii) Pledgor’s execution and delivery of this Pledge Agreement is a material inducement to Lender continuing to provide the Financial Accommodations to Borrower, and (iii) without this Pledge Agreement, Lender would not have provided the Financial Accommodations to Borrower.

A.In consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of such consideration is hereby acknowledged by Pledgor, Pledgor hereby covenants unto and agrees with Lender as set forth in this Pledge Agreement.

2.         Defined Terms.  Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Loan Agreement.

3.         Pledge.  Pledgor hereby pledges to Lender and grants to Lender a first position priority security interest and lien in and to the following (collectively, the “Pledged Collateral”):

(a)        All of the shares of capital stock of Borrower, now or at any time or times hereafter owned by Pledgor or held beneficially for Pledgor, and the certificates representing the shares of such capital stock (such now‐owned shares being identified on Exhibit “A” attached hereto and made a part hereof), all options and warrants for the purchase of shares of the capital stock of Borrower now or hereafter held in the name of Pledgor or held beneficially for Pledgor (said capital stock, options and warrants and all capital stock held in the name of or beneficially for Pledgor as a result of the exercise of such options or warrants being hereinafter collectively referred to as the “Pledged Stock”), herewith delivered to Lender accompanied by stock powers in form and substance acceptable to Lender (the “Powers”) duly executed in 

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blank, 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 the Pledged Stock;

(b)        One hundred percent (100%) of all additional shares of stock of Borrower acquired by Pledgor in any manner, and the certificates representing such additional shares (any such additional shares shall constitute part of the Pledged Stock and Lender is irrevocably authorized to amend Exhibit “A” from time to time to reflect such additional shares), and all options, warrants, dividends, cash, instruments and other rights and options from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares;

(c)        The property and interests in property described in Section 5 below; and

(d)        All proceeds of the foregoing.

4.         Security for the Secured Obligations.  The Pledged Collateral secures the full and timely payment and performance of the Secured Obligations, including, without limitation, the Secured Obligations referenced in or evidenced by the Loan Documents.  

5.         Pledged Collateral Adjustments.  If, during the term of this Pledge Agreement:

(a)        any stock dividend, reclassification, readjustment, split or other change is declared or made in the capital structure of Borrower or any option included within the Pledged Collateral is exercised, or both, or

(b)        any subscription warrants or any other rights or options shall be issued in connection with the Pledged Collateral, 

then such shares, warrants, rights, options or other securities shall be immediately delivered to and held by Lender under the terms of this Pledge Agreement and shall constitute Pledged Collateral hereunder; provided, however, that nothing contained in this Section 5 shall be deemed as Lender’s consent to any stock dividend, issuance of additional stock, warrants, rights or options, reclassification, readjustment, split or other change in the capital structure of Borrower.

6.         Subsequent Changes Affecting Pledged Collateral.  Pledgor represents, warrants and covenants unto Lender that it has made its own arrangements for keeping itself informed of changes or potential changes affecting the Pledged Collateral (including, but not limited to, rights to convert, rights to subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and Pledgor agrees that Lender shall not have any obligation to inform Pledgor of any such changes or potential changes or to take any action or omit to take any action with respect thereto.  Lender may, after the occurrence and during the continuance of an Event of Default, without notice and at its option, transfer or register the Pledged Collateral or any part thereof into its or its nominee’s name with or without any indication that such Pledged Collateral is subject to the security interest hereunder.  In addition, Lender may at any time exchange certificates or instruments representing or evidencing Pledged Shares for certificates or instruments of smaller or larger denominations.

7.         Representations, Warranties and covenants.  Pledgor further represents, warrants and covenants unto Lender as follows:

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(a)        Pledgor is the sole legal and beneficial owner of all the shares of the common stock of Borrower set forth on Exhibit “A” free and clear of any lien or encumbrance, except for the security interest created by this Pledge Agreement, and that such stock constitutes one hundred percent (100.0%) of the issued and outstanding capital stock of Borrower as of the date of this Pledge Agreement;

(b)        All of the Pledged Stock has been duly authorized, validly issued and is fully paid and non-assessable;

(c)        Pledgor has full legal capacity to enter into this Pledge Agreement;

(d)        There are no restrictions upon the voting rights associated with, or upon the transfer of, any of the Pledged Collateral (except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally);

(e)        Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer such Pledged Collateral free of any liens or encumbrances;

(f)         No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other person or entity is required either (i) for the pledge of the Pledged Collateral pursuant to this Pledge Agreement or for the execution, delivery or performance of this Pledge Agreement by Pledgor, or (ii) for the exercise by Lender of the voting or other rights provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to this Pledge Agreement (except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally);

(g)        The pledge of the Pledged Collateral pursuant to this Pledge Agreement, together with the delivery to Lender of the Pledged Collateral as required hereunder, creates a valid and perfected first position priority security interest in the Pledged Collateral, in favor of Lender securing the full and timely payment of the Secured Obligations; and

(h)        The Powers are duly executed and give Lender the authority they purport to confer.

The representations, warranties and covenants set forth in this Section 7 shall survive the execution and delivery of this Pledge Agreement.

8.         Voting Rights.  During the term of this Pledge Agreement, and except as provided in the next sentence of this Section 8, Pledgor shall have the right to vote the Pledged Collateral on all corporate questions in a manner not inconsistent with the terms of this Pledge Agreement.  Upon the occurrence and during the continuance of an Event of Default, Lender may, at Lender’s option and following written notice from Lender to Pledgor, exercise all voting powers pertaining to the Pledged Collateral, including the right to take shareholder action by written consent, and Pledgor hereby irrevocably constitutes and appoints Lender as Pledgor’s proxy and attorney-in-fact, with full power of substitution, to do so.  This proxy is coupled with an interest and is irrevocable and shall continue until the termination of this Pledge Agreement in accordance with Section 15.

9.         Dividends and Other Distributions.

(a)        So long as no Event of Default has occurred or would result therefrom:

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(i)         Subject to Section 5 hereof and the restrictions set forth in the Loan Agreement, Pledgor shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral; and

(ii)        Lender shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of enabling Pledgor to receive the dividends or interest payments which it is authorized to receive and retain pursuant to Section 9(a)(i) above.

(b)        After the occurrence and during the continuance of an Event of Default, or if any of the following would result in the occurrence of an Event of Default if paid to Pledgor:

(i)         All rights of Pledgor to receive the dividends and interest payments in respect of the Pledged Collateral shall cease, and all such rights shall thereupon become vested in Lender, which shall thereupon have the sole right to receive and hold as Pledged Collateral such dividends and interest payments; and

(ii)        All proceeds of this Section 9(b) shall be received in trust for Lender, shall be segregated from other funds of Pledgor and shall be paid over immediately to Lender as Pledged Collateral in the same form as so received (with any necessary endorsements).

10.       Transfers and Other Liens.  Pledgor agrees that so long as there are any outstanding Secured Obligations, it will not (a) sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or any other shares of stock, warrants, options or other equity interests of Borrower, or (b) create or permit to exist any lien or encumbrance upon or with respect to any of the Pledged Collateral or any other shares of stock, warrants, options or other equity interests of Borrower.  

11.       Remedies.

(a)        Lender shall have, in addition to any other rights and remedies given under this Pledge Agreement or by law, all of the rights and remedies with respect to the Pledged Collateral of a secured party under the laws of the State of Illinois.  In addition, after the occurrence and during the continuance of an Event of Default, Lender shall have such powers of sale and other powers as may be conferred by applicable law.  With respect to the Pledged Collateral or any part thereof which shall then be in or shall thereafter come into the possession or custody of Lender or which Lender shall otherwise have the ability to transfer under applicable law, Lender may, in its sole discretion and without notice, except as specified below in Section 11(b) or as specifically required by the Loan Documents, after the occurrence and during the continuance of an Event of Default, sell or cause the same to be sold at any exchange, broker’s board or at public or private sale, in one or more sales or lots, at such price as Lender may deem best, for cash or on credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of the Pledged Collateral so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of any kind whatsoever.  Lender may, in its own name, or in the name of a designee or nominee, buy the Pledged Collateral at any public sale and, if permitted by applicable law, buy the Pledged Collateral at any private sale.  Pledgor will pay to Lender all reasonable expenses (including, without limitation, court costs and reasonable attorneys’ and paralegals’ fees and expenses) of, or incidental to, the enforcement of any of the provisions hereof. 

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(b)        Unless any of the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Lender will give Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made.  Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, commercial finance companies, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable.  Notwithstanding any provision to the contrary contained herein, Pledgor agrees that any requirements of reasonable notice shall be met if such notice is received by Pledgor as provided in Section 23 below at least ten (10) business days before the time of the sale or disposition; provided, however, that Lender may give any shorter notice that is commercially reasonable under the circumstances.  Any other requirement of notice, demand or advertisement for sale is waived, to the extent permitted by law.

(c)        If, at the original time or times appointed for the sale of the whole or any part of the Pledged Collateral, the highest bid, if there be but one sale, shall be inadequate to discharge in full all the Secured Obligations, or if the Pledged Collateral be offered for sale in lots, if at any of such sales, the highest bid for the lot offered for sale would indicate to Lender, in its discretion, the unlikelihood of the proceeds of the sales of the whole of the Pledged Collateral being sufficient to discharge all the Secured Obligations, or if applicable law would permit postponement or postponements of sale for any other reason, then Lender may, on one or more occasions and in its discretion, postpone any of said sales by public announcement at the time of sale or the time of previous postponement of sale, and no other notice of such postponement or postponements of sale need be given, any other notice being hereby waived; provided, however, that any sale or sales made after such postponement shall be after ten (10) days’ prior notice to Pledgor in accordance with the terms of Section 23 below.

(d)        Pledgor agrees that, upon the occurrence and during the continuance of an Event of Default, it will not at any time plead, claim or take the benefit of any appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in force in order to prevent or delay the enforcement of this Pledge Agreement, or the absolute sale of the whole or any part of the Pledged Collateral or the possession thereof by any purchaser at any sale hereunder, and Pledgor waives the benefit of all such laws to the extent it lawfully may do so.  Pledgor agrees that it will not interfere with any right, power or remedy of Lender provided for in this Pledge Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by Lender or any one or more of such rights, powers, or remedies.  No failure or delay on the part of Lender to exercise any such right, power or remedy and no notice or demand which may be given to or made upon Pledgor by Lender with respect to any such remedies shall operate as a waiver thereof, or limit or impair Lender’s right to take any action or to exercise any power or remedy hereunder, without notice or demand, or prejudice its rights as against Pledgor in any respect.

(e)        Pledgor further agrees that a breach of any of the terms or provisions contained in this Pledge Agreement will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every term and provision contained in this Pledge Agreement shall be specifically enforceable against Pledgor.

12.       Consent.  Pledgor hereby consents that from time to time, before and after the occurrence or existence of an Event of Default, with or without notice to or assent from Pledgor, any other security at any time held by or available to Lender for any of the Secured Obligations or any security at any time held by or available to Lender for any obligation of any other person or entity secondarily or otherwise liable for any of the Secured Obligations, may be exchanged, surrendered or released, and any of the Secured Obligations may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in 

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whole or in part, as Lender may see fit, and Pledgor shall remain bound under this Pledge Agreement notwithstanding any such exchange, surrender, release, alteration, renewal, extension, continuance, compromise, waiver or inaction or other dealing.  

13.       Bank Appointed Attorney‐in‐Fact.  Pledgor hereby appoints Lender as its attorney‐in‐fact, with full authority, in the name of Pledgor or otherwise, upon the occurrence and during the continuance of an Event of Default, from time to time in Lender’s sole discretion, to take any action and to execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to Pledgor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same and to arrange for the transfer of all or any part of the Pledged Collateral on the books of Borrower to the name of Lender or Lender’s nominee, to exercise all voting powers pertaining to the Pledged Collateral, and to execute proxies enabling Lender and its representatives to exercise such powers and execute written consents and waivers in connection with the taking of any shareholder action, whether in the name of Pledgor or in the name of Lender; provided, however, that Lender shall have no duty to exercise any such right or to preserve the same and shall not be liable for any failure to do so or for any delay in doing so.  This appointment shall be irrevocable and shall continue until the termination of this Pledge Agreement in accordance with Section 15.  Lender may exercise any of its rights and execute any of its duties hereunder by or through agents or employees and shall be entitled to advice of counsel concerning all matters pertaining to its rights and duties hereunder.

14.       Waivers.  Pledgor waives presentment and demand for payment, performance or observance of any of the Secured Obligations, protest and notice of dishonor or an Event of Default with respect to any of the Secured Obligations and all other notices to which Pledgor might otherwise be entitled except as otherwise expressly provided herein. 

15.       Term.  This Pledge Agreement shall remain in full force and effect until the Secured Obligations have been fully and indefeasibly paid in cash and satisfied. 

16.       Reinstatement.  This Pledge Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Pledgor for liquidation or reorganization, should Pledgor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of Pledgor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by any amount paid and not so rescinded, reduced, restored or returned.

17.       Definitions.  The singular shall include the plural and vice versa and any gender shall include any other gender as the context may require.

18.       Successors and Assigns.  This Pledge Agreement shall be binding upon and inure to the benefit of Pledgor, Lender and their respective successors and assigns.  Pledgor’s successors and assigns shall include, without limitation, a receiver, trustee and debtor‐in‐possession of or for Pledgor.

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19.       Governing Law.  This Pledge Agreement shall be interpreted, and the rights and the obligations of the parties hereto determined, in accordance with the internal laws (as opposed to the conflict of law provisions) of the State of Illinois.

20.       Severability.  Whenever possible, each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Pledge Agreement shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge Agreement; provided, however, if such invalid or unenforceable provision may be modified so as to be valid and enforceable as a matter of law, such provision shall be deemed to have been modified so as to be valid and enforceable to the maximum extent permitted by law.

21.       Further Assurances.  Pledgor agrees that it will cooperate with Lender and will execute and deliver, or cause to be executed and delivered, all such other assignments separate from certificate, proxies, instruments and documents, and will take all such other actions, including, without limitation, the execution and filing of financing statements, as Lender may reasonably request from time to time in order to carry out the provisions and purposes of this Pledge Agreement.

22.       Lender’s Duty of Care.  Lender shall not be liable for any acts, omissions, errors of judgment or mistakes of fact or law including, without limitation, acts, omissions, errors or mistakes with respect to the Pledged Collateral, except for those arising out of or in connection with Lender’s (a) gross negligence or willful misconduct, or (b) failure to use reasonable care with respect to the safe custody of the Pledged Collateral in Lender’s possession.  Without limiting the generality of the foregoing, Lender shall be under no obligation to take any steps necessary to preserve rights in the Pledged Collateral against any other parties but may do so at its option.  All expenses incurred by or on behalf of Lender after an Event of Default in connection with this Pledge Agreement shall constitute part of the obligations secured hereby.

23.       Notices.  Any and all notices, demands, requests, consents, designations, waivers and other communications required or desired hereunder shall be in writing and shall be deemed effective upon personal delivery, upon confirmed facsimile transmission, upon receipted delivery by overnight carrier, or three (3) days after mailing if mailed by registered or certified mail, return receipt requested, postage prepaid, to Pledgor or Lender at the following addresses or facsimile numbers or such other address or facsimile number as Pledgor or Lender specify in like manner; provided, however, that notices of termination of this Pledge Agreement and notices of a change of address or facsimile number shall be effective only upon receipt thereof:

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If to Pledgor, then to:

c/o Halo, Purely for Pets, Inc.
12400 Race Track Road
Tampa, Florida 33626
Attention: Robert Sauermann and Sharla A. Cook
Facsimile No.: (212) 655-3535	
If to Lender, then to:

Old Plank Trail Community Bank, N.A.
5300 W. 95th Street
Oak Lawn, IL 60453
Attention: Sean Broderick
Facsimile No.: (708) 423-5573

	
with a copy to:

Meister Seelig & Fein LLP
125 Park Avenue, 7th Floor
New York, New York 10017
Attention: Louis Lombardo, Esq.
Facsimile No.: (212) 655-3535
	

with a copy to:

Thompson Coburn LLP
55 East Monroe Street
37th Floor
Chicago, Illinois 60603
Attention: Victor A. Des Laurier, Esq.
Facsimile No.: (312) 580-2201

24.       Amendments, Waivers and Consents.  No amendment or waiver of any provision of this Pledge Agreement nor consent to any departure by Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by Lender, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

25.       Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof.

26.       Execution in Counterparts. This Pledge Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement.

27.       Merger; Recitals.  This Pledge Agreement represents the final agreement of Pledgor with respect to the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or subsequent oral agreements, between Pledgor and Lender.  The recitals set forth at the beginning of this Pledge Agreement are hereby incorporated herein by reference and made a part hereof.

[signature page follows]

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In Witness Whereof, Pledgor and Lender have executed this Pledge Agreement as of the date set forth above.

PLEDGOR:
			
	Better Choice Company Inc.,
a Delaware corporation

By:____________________________
Name: Robert Sauermann
Title: Executive Vice President

[Signature page to Stock Pledge Agreement] 

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LENDER:

Old Plank Trail Community Bank, N.A.,
a national banking association 

By:       _________________________
Name:  Sean Broderick
Title:    Vice President

[Signature page to Stock Pledge Agreement]

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Acknowledgment

The undersigned hereby acknowledge receipt of a copy of the foregoing Stock Pledge Agreement, agrees promptly to note on its books the security interests granted under such Stock Pledge Agreement, and waive any rights or requirement at any time hereafter to receive a copy of such Stock Pledge Agreement in connection with the registration of any Pledged Collateral in the name of Lender or its nominee or the exercise of voting rights by Lender. 

						
	Halo, Purely for Pets, Inc.,
a Delaware corporation

By:
Name: Robert Sauermann Title: Executive Vice Presiden

	

[Acknowledgment page to Stock Pledge Agreement]

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                                                                           Exhibit “A”
                                                                                    to
                                           Stock Pledge And Security Agreement

                                                                          Pledged Stock

Halo, Purely for Pets, Inc., a Delaware corporation
									
	Cert. Nos.	Percentage of Issued and Outstanding
Capital Stock Owned	
Shares of Common Stock Subject to Pledge
	CS-10	100%	890 shares of Common Stock

									
			
			

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Execution Version
Collateral Pledge Agreement -
Securities Account

This Collateral Pledge Agreement – Securities Account (this “Agreement”) is made as of January 6, 2021, by and between John M. Word, III, an individual (“Pledgor”), with his principal residence located at 721 S. Parker Street, Suite 300, Orange, California 92868, and Old Plank Trail Community Bank, N.A., a national banking association (“Lender”), with its principal office located at 5300 W. 95th Street, Oak Lawn, IL  60453.  Capitalized terms used and not otherwise defined herein have the meanings given such terms in that certain Loan and Security Agreement of even date herewith by and between Halo, Purely for Pets, Inc., a Delaware corporation (“Borrower”) and Lender (as amended or restated from time to time, the “Loan Agreement”).  

RECITALS

Whereas, Borrower has requested that Lender advance certain loans, extensions of credit and other financial accommodations (the “Financial Accommodations”) to Borrower pursuant to (a) the Loan Agreement, and (b) the other agreements, documents and instruments executed and delivered in connection therewith; and

Whereas, Charles Schwab Institutional acting in its capacity as trustee, custodian and/or investment manager or advisor for the “Account” (as hereinafter defined) (individually and collectively, “Securities Intermediary”), holds cash, cash equivalents and/or marketable securities owned by Pledgor, on deposit in Pledgor’s Account number 2521-4342 maintained with Securities Intermediary (such account including any master accounts, sub-accounts, additions, substitutions and replacements thereto, and including any renumbered account associated therewith, are individually and collectively, the “Account”) under a custodian account agreement wherein Securities Intermediary is acting as agent and Pledgor is the principal;

Whereas, Pledgor hereby acknowledges and agrees that (i) Pledgor owns sixteen percent (16%) of the issued and outstanding capital stock of Better Choice Company Inc., a Delaware corporation (“Parent”), and Parent owns 100% of Borrower, and thus Pledgor is benefitted by the Financial Accommodations made by Lender to Borrower, and (ii) this Agreement and Pledgor’s obligations and liabilities contained herein secure all of Borrower’s obligations and liabilities to Lender pursuant to the Loan Agreement and is thus a material inducement to Lender continuing to provide the Financial Accommodations to Borrower; and

Whereas, Lender has agreed to provide the Financial Accommodations to Borrower, provided, among other things, Pledgor executes and delivers this Agreement to Lender.

Now, Therefore, as an inducement to Lender to provide the Financial Accommodations, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor and Lender agree as follows:

1.         Collateral and Obligations.  Pledgor hereby grants a security interest in and pledges to Lender the Account and all of the property now or hereafter therein or subject thereto, including cash, cash equivalents, stocks, bonds, notes, bills, securities (whether certificated or uncertificated), security 

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entitlements and securities accounts and  investment property, together with all proceeds and income therefrom and all replacements, additions and substitutions thereof (collectively, the “Collateral”) as security for the following (together or individually, the “Obligations”): (a) all “Liabilities” (as such term is defined in the Loan Agreement), and (b) all obligations and liabilities of Pledgor to Lender, whether now existing or hereafter arising, under the Loan Agreement.

2.         Control Agreement and Account Agreement.  The Account shall be subject to the control of Lender in accordance with the terms of that certain Pledged Asset Account Agreement dated on or around the date hereof by and among Pledgor, Lender and Securities Intermediary (as amended or restated from time to time, the “Control Agreement”).  The terms of this Agreement as between Pledgor and Lender supersede and control over the terms of the Control Agreement.

3.         Warranty of Title/Collateral Representations and Covenants.  Pledgor hereby warrants and represents that the Pledgor owns all of the securities in the Account, and will own all additional securities placed in the Account, free and clear of all liens and encumbrances (except those granted by this Agreement and “Permitted Liens”, as hereinafter defined), and has full power and authority to execute this Agreement, and to subject the Collateral to the terms and conditions of this Agreement and the security interest herein created.  Pledgor further represents, warrants and covenants unto Lender that as of the effective date of this Agreement and the Control Agreement, and at all times during the term of this Agreement, Pledgor shall maintain in the Account cash or one or more of the following types of unmargined marketable securities reasonably satisfactory to Lender with an aggregate marked to market value of not less than the Minimum Required Amount (as hereinafter defined) (collectively, “Approved Securities”):  (a) cash, or (b) municipal or corporate bonds in each case rated Aaa by Moody Investor Services or AAA by Standard and Poor’s.  Notwithstanding the foregoing, if the aggregate marked to market value of the Approved Securities is less than the Minimum Required Amount at any time as a result of securities no longer being deemed Approved Securities and/or the decline in the market value thereof, Pledgor shall have five (5) Business Days from its knowledge thereof to deposit additional Approved Securities into the Account such that after giving effect thereto the marked to market value of the Approved Securities pledged to Lender under this Agreement is not less than the Minimum Required Amount, without such occurrence being deemed an Event of Default hereunder.  “Minimum Required Amount” means, $6,000,000; provided that, if no Unmatured Event of Default or Event of Default then exists or is caused thereby on a pro forma basis, the Minimum Required Amount shall reduce on a dollar for dollar basis contemporaneously with each principal payment under Term Loan A.  “Permitted Liens” means (y) Liens for taxes, assessments and other government charges or levies not yet due and payable or which are being contested in good faith and by appropriate proceedings and for which Pledgor has maintained adequate reserves and as to which the holder thereof has not sought to exercise enforcement rights with respect thereto; and (z) Liens retained by Securities Intermediary to the extent permitted by the terms of the pursuant to the Control Agreement.  

4.         Additions to Collateral; Releases Only By Lender.  Additional items of securities may be placed into the Account by Pledgor, and they shall then be subject to this Agreement and shall be Collateral.  Such additional securities placed into the Account by Pledgor shall be owned by Pledgor and shall be free and clear of all liens and encumbrances (except those granted by this Agreement and Permitted Liens).  Items of Collateral and proceeds of items of Collateral may be released from the Account only in accordance with the Control Agreement and the terms of this Agreement.  

5.         Interest and Dividends; Other Pledgor Rights.  Provided no “Event of Default” (as hereinafter defined) then exists or created thereby on a pro forma basis, Pledgor shall be entitled to receive 

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from Securities Intermediary any interest, dividends or other proceeds of the Collateral.  After the occurrence of an Event of Default, Pledgor shall not be entitled to receive from Securities Intermediary any interest, dividends or other proceeds of the Collateral.  Additionally, unless and until an Event of Default has occurred and is continuing:

a.the Pledgor shall be entitled to exercise or direct the Securities Intermediary to exercise all voting and/or consensual powers pertaining to the Collateral or any part thereof, for all purposes not inconsistent with the terms of this Agreement or the terms of any other document relating to the Obligations secured hereby; 

a.the Pledgor shall be entitled to sell the Collateral or any part thereof without Lender’s consent, provided that proceeds of such sales shall be retained in the Account except to the extent that withdrawals are permitted under clause (d) below; 

a.the Pledgor shall be entitled to purchase Approved Securities without Lender’s consent; and

a.the Pledgor shall be entitled to make withdrawals and distributions from the Account of the Collateral or any part or proceeds thereof in the manner set forth in the Control Agreement, provided that the Pledgor is otherwise in compliance with the terms of this Agreement, including Section 3 hereof, and the Minimum Required Amount is satisfied on a pro forma basis after giving effect to any such withdrawal or distribution.  

6.         Preservation of Collateral.  Lender shall, after an Event of Default, use reasonable care in the custody and preservation of Collateral in its possession, but such standard does not include:

            (a)        insuring or taking any steps to collect or realize upon the Collateral or any distribution of interest or principal;

            (b)        informing Pledgor of any decline in the value of the Collateral;

            (c)        sending notices, performing services or taking any other action in connection with the management of the Collateral; or

            (d)        ascertaining or informing Pledgor with respect to any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to the Collateral, or preserving rights in it against prior parties, whether or not Lender has or is deemed to have knowledge of it.

Pledgor shall, and Lender need not, keep the Collateral free from all liens, encumbrances and security interests (other than those created or expressly permitted by this Agreement), pay and discharge when due all taxes, levies and other charges upon it; defend it against all claims and legal proceedings by persons other than Lender, and/or preserve rights with respect to the Collateral against prior parties.  At any time, upon request, Pledgor shall deliver to Lender all notices, statements or other communications received by Pledgor with respect to the Collateral.

7.         Maintenance of Security Interest.  Pledgor shall pay all expenses and, upon request, take any action reasonably deemed advisable by Lender to preserve the Collateral or to establish, determine the 

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priority of, perfect, continue perfected, terminate and/or enforce Lender’s interest therein or rights under this Agreement.

8.         Maturity of Securities.  If an item of Collateral matures during the term of this Agreement, the proceeds thereof shall be held in the Account for the benefit of Lender.  Such proceeds may be reinvested and/or withdrawn as provided in the Control Agreement.

9.         Events of Default.  Any one of the following events shall be considered an “Event of Default” under this Agreement:

            (a)        An Event of Default shall occur under the Loan Agreement;

(b)        Pledgor shall fail to perform any obligation, covenant, agreement or promise, or rectify breach of any warranty or representation in this Agreement or the Control Agreement; 

(c)        Pledgor becomes bankrupt, insolvent or commences any federal or state bankruptcy, insolvency, reorganization or other proceeding including an assignment for the benefit of creditors that affects the rights of Lender or creditors in general; or

            (d)        Any warranty or representation of the Pledgor made to Lender in this Agreement, the Control Agreement or otherwise shall be untrue or incorrect in any material respect.

            10.       Financial Information. Pledgor will provide to Lender, (i) as soon as available, but in no event later than thirty (30) days after the end of each calendar month, Pledgor’s securities bank and brokerage account statements and (ii)  all other information reasonably requested by Lender from time to time with respect to the Collateral.  

            11.       Rights of Lender.  Upon an Event of Default, Lender may, without notice or demand of any kind:

            (a)        accelerate the Obligations, declare any or all of the Obligations due and payable and apply the Collateral to all or any portion of the Obligations;

            (b)        obtain transfer of any of the Collateral into its name or that of its nominee and sell or liquidate any of the Collateral;

            (c)        notify obligors on or issuers of any Collateral to make payment or delivery to Lender of any amounts, securities or rights due or distributable thereon or obtain notices given in connection therewith;

            (d)        in Pledgor’s name or otherwise enforce collection of any Collateral by suit or otherwise, or surrender, release or exchange all or any part of it, or compromise, extend or renew for any period any obligation evidenced by the Collateral;

            (e)        receive proceeds of the Collateral and exercise all rights as a holder of the Collateral;

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            (f)         hold any interest, dividends, increase or profits (including money) received from the Collateral as additional security for the Obligations; and

            (g)        sign or endorse Pledgor’s name on the Collateral.

Lender shall have no duty as to the collection or protection of the Collateral held hereunder or any income thereon, nor as to the preservation of any rights pertaining thereto.  Lender may exercise its rights with respect to the Collateral held hereunder without first or simultaneously resorting to any other collateral or sources of payment or reimbursement.  The marshalling of assets is hereby waived by Pledgor.

Lender is fully authorized and empowered, upon the occurrence of an Event of Default or at any time or times thereafter during a continuance of an Event of Default, to, at Lender’s option, terminate the account agreement governing the Account (the “Account Agreement”) as it applies to the Account, take direct possession of, demand or sue for, collect, or make any compromise or settlement Lender deems desirable with reference to the Collateral held hereunder and/or sell, assign, redeem and deliver any or all of the Collateral, or any substitute therefor or any additions thereto, through any broker, or at public or private sale, without notice, advertisement, or demand of any kind to anyone (except as the same may be required by law).  In connection with the foregoing, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code and/or any other applicable law and shall have the right of setoff to the extent applicable to any assets in the Account.  Lender may provide Securities Intermediary with written notice of any Event of Default; Securities Intermediary is authorized by Pledgor to rely upon any such notice without liability to Securities Intermediary for such reliance.  Written notice to Pledgor, when required by law, sent to any address of Pledgor in this Agreement at least ten (10) calendar days (counting the day of sending) before disposition of the Collateral is reasonable notice.

12.       Acts Not Affecting Obligations.  None of the following shall affect the liabilities of Pledgor under this Agreement, or the Obligations, or the rights of Lender with respect to the Collateral:

            (a)        acceptance or retention by Lender of other property or interests as security for the Obligations, or for the liability of any person other than Pledgor with respect to the Obligations;

            (b)        the release of all or any of the Collateral or other security for any of the Obligations;

            (c)        any release, extension, increase, renewal, modification or compromise of any of the Obligations or any loan documents related thereto, or the liability of any obligor thereon; or

            (d)        failure by Lender to resort to other security or any person liable for any of the Obligations before resorting to the Collateral.

Lender shall be under no duty to take or omit to take any action with respect to the Collateral while it is subject to this Agreement.  Neither Lender nor Securities Intermediary shall be liable for any loss or depreciation resulting from any action or inaction of Lender or Securities Intermediary taken in good faith pursuant to the terms of this Agreement, or as a result of following a direction or instruction from Pledgor.  Pledgor shall be responsible for the payment of all costs, fees or charges imposed by Securities Intermediary related to the Account Agreement and shall hold harmless and indemnify Lender and Securities Intermediary against any and all claims, losses, damages or expenses incurred by Lender arising out of any claims related to the Account Agreement.  Pledgor agrees to indemnify, defend and hold Lender, its parent 

Page 5

companies, subsidiaries, affiliates, their respective successors and assigns and each of their respective shareholders, directors, officers, employees and agents (collectively the “Indemnified Persons”) harmless from and against any and all loss, liability, obligation, damage, penalty, judgment, claim, deficiency, expense, interest, penalties, attorneys’ fees (including the fees and expenses of attorneys engaged by the Indemnified Person at the Indemnified Person's reasonable discretion) and amounts paid in settlement (“Claims”) to which any Indemnified Person may become subject arising out of or relating to this Agreement or the Collateral,  except to the limited extent that the Claims are proximately caused by the Indemnified Person's gross negligence, bad faith, or willful misconduct.  The indemnification provided for in this paragraph shall survive the termination of this Agreement and shall not be affected by the presence, absence or amount of or the payment or nonpayment of any claim under, any insurance.

13.       Sale of Unregistered Securities.  Whenever Lender would have the right under this Agreement to sell any Collateral which is in the form of investment securities, Pledgor agrees that if, in the opinion of Lender or its legal counsel, sales of such securities by Lender or the Pledgor without registration of the securities under the Securities Act of 1933 (the “Act”) might, unless accomplished by one or more of the methods described in subsection (a), (b) or (c) below, constitute either Lender or Pledgor an “underwriter,” as that term is defined in Section 2(11) of the Act, it shall be commercially reasonable for Lender without registration to:

            (a)        sell all or part of the securities in compliance with Rule 144 or Regulation A under the Act as then in effect, or pursuant to any other rules or regulations under the Act then in effect, compliance with which would make applicable to the sale the exemptions provided pursuant to Section 3(b) or 4(1) of the Act; or

            (b)        sell all or part of the securities in an intrastate public offering within the meaning of Section 3(a)(11) of the Act; or

            (c)        sell all or part of the securities in one or more private transactions not involving any public offering in order to secure the exemption provided in Section 4(1) of the Act, if:

            (i)         the securities are sold for cash to the highest bidder after offers to purchase have been received from at least two offerors;

            (ii)        Lender has reasonable grounds to believe and does believe that each such offeror has sufficient financial resources to enable him to purchase the securities offered and that the offer was made in good faith;

            (iii)       each such offeror was informed, prior to the time he made his offer to purchase, that offers to purchase the securities were also being solicited from others; and

            (iv)       Lender has, for at least 30 days prior to the sale, solicited offers to purchase the securities within the restrictions imposed by federal or state securities laws.

Nothing in this Section shall prevent Lender from making any other commercially reasonable disposition of the securities, and no sale of such securities shall be commercially unreasonable solely because it was not made in compliance with this Section.

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14.       Irrevocable Proxy on Default.  In addition to Lender’s other rights, Pledgor irrevocably appoints Lender as proxy, with full power of substitution and revocation, to exercise Pledgor’s rights to attend meetings, vote, consent to and/or take any action respecting the Collateral or an issuer thereof as fully as Pledgor might do.  This proxy remains effective so long as any of the Obligations are unpaid but shall not be exercised by Lender unless an Event of Default has occurred and is continuing.

15.       Rights Cumulative; No Waiver.  All of Lender’s rights and remedies hereunder are cumulative and not alternative and are in addition to any rights and remedies under the Loan Agreements and the other Loan Documents.  Forbearance by Lender with respect to any of the terms and conditions herein contained or Lender’s failure to exercise any of its rights hereunder shall not constitute a waiver thereof.  No provision hereof may be waived or modified orally; all waivers or modifications to be effective shall be in writing, signed by the parties hereto.

16.       Releases Only in Writing.  This Agreement shall remain in full force and effect until all Obligations to Lender have been performed or paid in full and Pledgor receives written notice from Lender confirming the termination of this Agreement.

17.       Requests.  All requests by Pledgor to Lender under this Agreement shall be given to Lender in writing.  All directions given by Lender to Securities Intermediary shall be given in writing.

18.       Information.  Pledgor agrees that Lender may obtain from Securities Intermediary any information it desires respecting the Collateral or the Account at any time.

19.       Surety Issues.  

(a) Lender shall not be required or obligated to take any of the following action prior to pursuing any rights or remedies Lender may have under this Agreement, whether against the Pledgor, the Collateral or otherwise: (i) take any action to collect from, or to file any claim of any kind against the Pledgor, any guarantor, or any other person or entity liable, jointly or severally, for the full and timely payment and performance of the Obligations; (ii) take any steps to protect, enforce, take possession of, perfect any interest in, foreclose or realize on any collateral or security securing the Obligations; or (iii) in any other respect, exercise any diligence whatsoever in enforcing, collecting or attempting to collect any of the Obligations by any means.

(b)        Pledgor unconditionally and irrevocably waives each and every defense which would otherwise impair, restrict, diminish or affect any of the Obligations or Lender’s rights and remedies hereunder, including, without limitation, any suretyship defenses.  Without limiting the foregoing, Lender shall have the exclusive right from time to time without impairing, restricting, diminishing or affecting any of the Obligations or Lender’s rights and remedies hereunder and without notice of any kind to Pledgor, to (i) provide additional loans and other financial accommodations to the Borrower; (ii) accept partial payments on the Obligations; (iii) take and hold collateral or security to secure the Obligations, or take any other guaranty to secure the Obligations; (iv) in its sole discretion, apply any such collateral or security, and direct the order or manner of sale thereof, and the application of the proceeds thereof; (v) release any guarantor or co-obligor of the Obligations; and (vi) settle, release, compromise, collect or otherwise liquidate the Obligations or exchange, enforce, sell, lease, use, maintain, impair and release any collateral or security therefor in any manner, without affecting or impairing any of Lender’s rights under this Agreement.

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(c)        Pledgor hereby unconditionally waives (i) notice of any default by the Pledgor in the full and prompt payment or performance of the Obligations, and (ii) presentment, notice of dishonor, protest, demand for payment and any other notices of any kind. 

(d)        Pledgor assumes full responsibility for keeping informed of (i) the extent of the Obligations; and (ii) all other circumstances bearing upon the Pledgor or the risk of non-payment of the Obligations.  Pledgor agrees that Lender shall have no duty or obligation to advise, furnish or supply Pledgor of or with any information known to Lender, any other circumstances relating to non-payment of the Obligations or otherwise.  If Lender, in its sole discretion, provides any advice or information to Pledgor, Lender shall be under no obligation to investigate the matters contained in such advice or information, or to correct such advice or information if Lender thereafter knows or should have known that such advice or information is misleading or untrue, in whole or in part, or to update or provide any other advice or information in the future.

(e)        Pledgor acknowledges and agrees that Pledgor may have a right of indemnification, subrogation, contribution and reimbursement from Lender, or any guarantor of the Obligations.  Pledgor understands the benefits of having such rights, including, but not limited to, (i) Pledgor’s right to reimbursement of all monies expended for the payment of the Obligations; and (ii) Pledgor’s subrogation to the rights of Lender after payment of the Obligations. Pledgor knowingly and voluntarily waives, releases and relinquishes Pledgor’s rights of indemnification, contribution and reimbursement from Lender or any other party.  Pledgor further shall have no right of subrogation until the Obligations are indefeasibly paid in full in cash and all of Lender’s commitments to make loans to or otherwise provide credit to Borrower shall have terminated.  

20.       Integration Clause: Governing Law.  This Agreement is intended as the final expression of the agreement between the parties with respect to the subject matter hereof.  This Agreement shall be governed in all respects by the laws of the State of Illinois, and is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.  Invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision.

21.       Notices.  Any and all notices, demands, requests, consents, designations, waivers and other communications required or desired hereunder shall be in writing and shall be deemed effective upon personal delivery, upon confirmed facsimile transmission, upon receipted delivery by overnight carrier, or three (3) days after mailing if mailed by registered or certified mail, return receipt requested, postage prepaid, to Pledgor or Lender at the following addresses or facsimile numbers or such other address or facsimile number as Pledgor or Lender specify in like manner; provided, however, that notices of termination of this Pledge Agreement and notices of a change of address or facsimile number shall be effective only upon receipt thereof:
						
	

If to Pledgor, then to:

John M. Word, III
721 S. Parker
Orange, California 92868
Attention: Clinton Gee, Chief Financial Officer

	

If to Lender, then to:

Old Plank Trail Community Bank, N.A.
5300 W. 95th Street
Oak Lawn, IL 6045
Attention: Sean Broderick
Facsimile No.: (708) 423-5573

		

with a copy to:

Thompson Coburn LLP
55 East Monroe Street
37th Floor
Chicago, Illinois 60603
Attention: Victor A. Des Laurier, Esq.
Facsimile No.: (312) 580-2201

22.       Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.  A facsimile or email transmitted executed counterpart to this Agreement and the other agreements, documents and instruments executed in connection herewith will be deemed an acceptable original for purposes of consummating this Agreement and such other agreements, documents and instruments; provided, however, Pledgor shall be required to deliver to Lender original executed signature pages in substitution for said facsimile or email transmitted signature pages upon the Lender’s request therefor.

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23.       WAIVER OF SPECIAL DAMAGES. PLEDGOR WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT PLEDGOR MAY HAVE TO CLAIM OR RECOVER FROM LENDER IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.  

24.       Service of Process; Consent to Jurisdiction; Waiver of Jury Trial.

A.        PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO PLEDGOR AT HIS PRINCIPAL RESIDENCE SET FORTH IN THE FIRST PARAGRAPH OF THIS AGREEMENT IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. 

B.         PLEDGOR AND LENDER IRREVOCABLY AGREE, AND HEREBY CONSENT AND SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS, AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, WITH REGARD TO ANY LITIGATION, ACTIONS OR PROCEEDINGS ARISING FROM, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT OR THE COLLATERAL.  PLEDGOR HEREBY WAIVES ANY RIGHT PLEDGOR MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION, ACTIONS OR PROCEEDINGS FILED IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS, OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION.

C.         PLEDGOR AND LENDER HEREBY ABSOLUTELY AND UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OBLIGATIONS OR THE COLLATERAL, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR RELATED HERETO.

[signature page follows] 
            In Witness Whereof, the parties have executed this Collateral Pledge Agreement as of the date first written above.

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	Pledgor:

___________________________________
John M. Word, III, an Individual

	Lender:

Old Plank Trail Community Bank, N.A.,
a national banking association

By:
Name: Sean Broderic
Title: Vice President

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