<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
---------
ERLY INDUSTRIES, INC.
--------------------------------------------------------
(Name of Issuer)
Common Stock
--------------------------------------------------------
(Title of Class of Securities)
26883910
--------------------------------------------------------
(CUSIP Number)
Michael L. Tenzer
11400 West Olympic Blvd. Suite 1040 (310)
Los Angeles, CA 90064 820-6000
--------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 22, 1995
--------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with this statement /X/. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following page(s))
Page 1 of 11 Pages
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CUSIP No. 26883910 SCHEDULE 13D Page 2 of 11 Pages
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KINGWOOD LAKES SOUTH, L.P.
- -------------------------------------------------------------------------------
(1) Name of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) / /
of a Group* (b) /X/
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
00
- -------------------------------------------------------------------------------
(5) Check box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Texas limited partnership
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power 333,333 shares
by Each Reporting --------------------------------------------------
Person with (8) Shared Voting
Power
--------------------------------------------------
(9) Sole Dispositive
Power 333,333 shares
--------------------------------------------------
(10) Shared Dispositive
Power
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
333,333 shares
- -------------------------------------------------------------------------------
(12) Check box if the Aggregate Amount in Row (11) Excludes Certain Shares* / /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
9.0%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
PN
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 26883910 SCHEDULE 13D Page 3 of 11 Pages
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TENZER COMPANY, INC.
- -------------------------------------------------------------------------------
(1) Name of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) / /
of a Group* (b) /X/
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
00
- -------------------------------------------------------------------------------
(5) Check box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
Delaware corporation
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power
by Each Reporting --------------------------------------------------
Person with (8) Shared Voting
Power 333,333 shares
--------------------------------------------------
(9) Sole Dispositive
Power
--------------------------------------------------
(10) Shared Dispositive
Power 333,333 shares
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
333,333 shares
- -------------------------------------------------------------------------------
(12) Check box if the Aggregate Amount in Row (11) Excludes Certain Shares* / /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
9.0%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 26883910 SCHEDULE 13D Page 4 of 11 Pages
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MICHAEL L. TENZER
- -------------------------------------------------------------------------------
(1) Name of Reporting Person S.S. or I.R.S. Identification No. of Above
Person
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) / /
of a Group* (b) /X/
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds*
00
- -------------------------------------------------------------------------------
(5) Check box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting
Beneficially Owned Power
by Each Reporting --------------------------------------------------
Person With (8) Shared Voting
Power 333,333 shares
--------------------------------------------------
(9) Sole Dispositive
Power
--------------------------------------------------
(10) Shared Dispositive
Power 333,333 shares
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
333,333 shares
- -------------------------------------------------------------------------------
(12) Check box if the Aggregate Amount in Row (11) Excludes Certain Shares* / /
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
9.0%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Page 5 of 11 Pages
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United States Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value $1.00 per share (the
"Common Stock") of ERLY Industries, Inc. (the "Company"). The principal
executive offices of the Company are located at 10990 Wilshire Boulevard,
Suite 1800, Los Angeles, California 90024.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c), (f). This Statement is being filed on behalf of the following
entities and persons: Kingwood Lakes South, L.P., a Texas limited partnership
(the "Limited Partnership"); Tenzer Company, Inc., a Delaware corporation and
sole general partner of the Limited Partnership (the "General Partner"), and
Michael L. Tenzer, an individual and President, Chief Financial Officer and
controlling stockholder of the General Partner ("Mr. Tenzer").
The Limited Partnership's principal business is community development and
home building, and the address of both its principal business and principal
office is 11400 West Olympic Boulevard, Suite 1040, Los Angeles, CA 90064.
The General Partner's principal business is community development and home
building, and the address of both its principal business and principal office is
11400 West Olympic Boulevard, Suite 1040, Los Angeles, CA 90064. The
directors of the General Partner are: Mr. Tenzer, Ms. Melanie J. May ("Ms.
May"), and Mr. Gary M. Tenzer ("Mr. G. Tenzer"). The following persons are
executive officers of the General Partner: Mr. Tenzer is the President and
Chief Financial Officer; Ms. May is the Chief Financial Officer and Secretary.
Mr. Tenzer is a resident of California, whose business address is
11400 West Olympic Boulevard, Suite 1040, Los Angeles, CA 90064. Mr. Tenzer's
present principal occupation or employment is as the President and Chief
Executive Officer of the General Partner, whose address is set forth above.
Mr. Tenzer is a citizen of the United States.
Ms. May is a resident of California, whose business address is 11400 West
Olympic Boulevard, Suite 1040, Los Angeles, CA 90064. Ms. May's present
principal occupation or employment is as the Chief Financial Officer and
Secretary of the General Partner, whose address is set forth above. Ms. May
is a citizen of the United States.
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Page 6 of 11 Pages
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Mr. G. Tenzer is a resident of California whose business address is
10100 Santa Monica Boulevard, Suite 420, Los Angeles, CA 90067.
Mr. G. Tenzer's present principal occupation or employment is as a mortgage
banker at the business address set forth in the previous sentence. Mr. G.
Tenzer is a citizen of the United States.
d) During the last five years, none of the Limited Partnership, the
General Partner, Mr. Tenzer, Ms. May, or Mr. G. Tenzer has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
e) During the last five years, none of the Limited Partnership, the
General Partner, Mr. Tenzer, Ms. May, or Mr. G. Tenzer has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which it or he is or was subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The shares of Common Stock reported under this filing are not being
acquired by purchase. Pursuant to a Pledge Agreement dated December 22,
1994 (the "Security Agreement"), between the Limited Partnership and
Gerald Murphy, Chairman of the Company and a Limited Partner in the Limited
Partnership ("Mr. Murphy"), entered into to secure Mr. Murphy's capital
contribution indebtedness to the Limited Partnership as represented by his
personal Promissory Note (the "Note") in the principal amount of $1,500,000
of the same date, the Limited Partnership holds a security interest in 333,333
shares of Common Stock (the "Shares"). On March 22, 1995, Mr. Murphy defaulted
under the Note. Upon such default, under the terms of the Security Agreement,
the Limited Partnership obtained the right to vote and dispose of such Shares.
At this time, the Limited Partnership has taken no action with regard to the
Shares except for sending Mr. Murphy a notice of default. The General Partner,
which controls the Limited Partnership, and Mr. Tenzer, who controls the General
Partner, may be deemed to have beneficial ownership of such Shares.
ITEM 4. PURPOSE OF TRANSACTION.
As described in Item 3 above, the Limited Partnership holds a security
interest in 333,333 shares of Common Stock, which Shares secure a debt which
went into default on March 22, 1995. In accordance with the provisions of the
Security Agreement, the Limited Partnership intends to sell some or all of the
Shares as soon as practicable to satisfy such debt, although the Limited
Partnership reserves all of its rights under the Uniform Commercial Code and
the Security Agreement (including the right to credit bid for and retain the
Shares).
Except as set forth above and except that each of the individuals named
herein reserves the right to buy, hold and/or sell shares of Common Stock for
their own accounts in their sole discretion, none of the Limited
Partnership, the General Partner, Mr. Tenzer, Ms. May or Mr. G. Tenzer has any
plans or proposals which relate to or would result in:
<PAGE>
Page 7 of 11 Pages
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(a) the acquisition by any person of additional securities, or the
disposition of securities, of the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
(d) any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or terms of
directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Company;
(f) any other material change in the Company's business or corporate
structure;
(g) changes in the Company's charter, bylaws, or instruments
corresponding thereto or other actions which may impede the acquisition
of control of the Company by any person;
(h) causing a class of securities of the Company to cease to be
authorized to be quoted on the National Association of Securities Dealers
Automated Quotation System;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
a) As of the date hereof, the Limited Partnership beneficially owns
333,333 shares of the Common Stock, constituting 9.0% of the 3,695,547 shares
of Common Stock outstanding as reported by the Company in its Form 10-Q for
the quarter ended December 31, 1994. The General Partner, which controls the
Limited Partnership, and Mr. Tenzer, who controls the General Partner, also
may be deemed to have beneficial ownership of these Shares.
<PAGE>
Page 8 of 11 Pages
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Ms. May beneficially owns 500 shares of Common Stock, 250 shares of which
are held in street name and 250 shares of which are held in an individual
retirement account in Ms. May's name.
b) The Limited Partnership has sole voting and dispositive powers with
respect to the Shares beneficially owned by it (provided that if Mr. Murphy
otherwise satisfied his obligations to the Limited Partnership under the Loan
Agreement, such voting and dispositive powers shall revert to Mr. Murphy).
The General Partner, which controls the Limited Partnership, and Mr. Tenzer,
who controls the General Partner, may be deemed to have shared voting and
dispositive powers with respect to the Shares.
Ms. May has sole voting and dispositive powers with respect to the
500 shares of Common Stock owned by her for her own account.
c) None of the Limited Partnership, the General Partner, Mr. Tenzer,
Ms. May or Mr. G. Tenzer effected any transactions relating to the Common Stock
within the past sixty days.
d) Except as set forth in this Item 5(d), no other person is known to have
the right to receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of, the Shares reported in this Statement. Pursuant
to the Security Agreement, to the extent that a sale of the Shares results in
proceeds which exceed Mr. Murphy's debt to the Limited Partnership and the costs
of the sale, the excess proceeds will be returned to Mr. Murphy.
e) Cessation of beneficial ownership: Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE COMPANY.
Except for the Security Agreement described in Item 3 above, none of the
Limited Partnership, the General Partner, Mr. Tenzer, Ms. May or Mr. G. Tenzer
has any contracts, arrangements, understandings or relationships (legal or
otherwise) with any person with respect to any securities of the Company,
including, but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, put or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT 1. Promissory Note, dated December 22, 1994, by Gerald Murphy in favor
of Kingwood Lakes South, L.P.
EXHIBIT 2. Pledge Agreement dated December 22, 1994, by Gerald Murphy in favor
of Kingwood Lakes South, L.P.
<PAGE>
Page 9 of 11 Pages
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EXHIBIT 3. Joint Filing Statement among Kingwood Lakes South, L.P., Tenzer
Company, Inc. and Michael L. Tenzer.
<PAGE>
Page 10 of 11 Pages
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SIGNATURE.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
KINGWOOD LAKES SOUTH, L.P., a
Texas Limited Partnership
By: TENZER COMPANY, INC., a
Delaware corporation, as General Partner
March 31, 1995 By: s/ Michael L. Tenzer
- ------------------------------ -----------------------------------------
Date Michael L. Tenzer
Title: President
TENZER COMPANY, INC., a Delaware
corporation
March 31, 1995 By: s/ Michael L. Tenzer
- ------------------------------ -----------------------------------------
Date Michael L. Tenzer
Title: President
MICHAEL L. TENZER
March 31, 1995 s/ Michael L. Tenzer
- ------------------------------ -----------------------------------------
Date Michael L. Tenzer
<PAGE>
Page 11 of 11 Pages
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
EXHIBIT 1. Promissory Note, dated December 22, 1994, by
Gerald Murphy in favor of Kingwood Lakes
South, L.P.
EXHIBIT 2. Pledge Agreement dated December 22, 1994, by
Gerald Murphy in favor of Kingwood Lakes
South, L.P.
EXHIBIT 3. Joint Filing Statement among Kingwood Lakes
South, L.P., Tenzer Company, Inc. and Michael
L. Tenzer.
</TABLE>
<PAGE>
PROMISSORY NOTE
$1,500,000 Houston, Texas December 22, 1994
FOR VALUE RECEIVED, the undersigned, GERALD D. MURPHY, a resident of Los
Angeles County, California, with business offices in the State of Texas
("Maker"), hereby promises to pay to the order of KINGWOOD LAKES SOUTH, L.P.,
a Texas limited partnership ("Payee"), at its offices at 11400 West Olympic
Boulevard, Suite 1040, Los Angeles, Los Angeles County, California 90064, in
lawful money of the United States of America, the principal sum of ONE MILLION,
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000.00), together with
interest at the rate hereinafter provided on the outstanding principal balance
from day to day remaining.
The entire unpaid principal balance hereof, plus all accrued and unpaid
interest hereon, shall be due and payable on March 22, 1995.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to
the lesser of (a) the Maximum Rate (hereinafter defined), or (b) the sum of two
percent (2%) PLUS the Prime Rate (hereinafter defined) in effect from day to
day, and each change in the rate of interest charged hereunder shall become
effective, without notice to Maker, on the effective date of such change in the
Prime Rate or the Maximum Rate, as the case may be; provided, however, if at any
time the rate of interest specified in clause (b) preceding shall exceed the
Maximum Rate, thereby causing the interest rate hereon to be limited to the
Maximum Rate, then any subsequent reduction in the Prime Rate will not reduce
the rate of interest hereon below the Maximum Rate until the total amount of
interest accrued hereon equals the amount of interest which would have accrued
hereon if the rate specified in clause (b) preceding had at all times been in
effect. All past due principal and interest shall bear interest at the Default
Rate (hereinafter defined).
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed
(including the first day but excluding the last day) unless such calculation
would result in a usurious rate, in which case interest shall be calculated on
the basis of a year of 365 or 366 days, as the case may be.
As used in this Note, the following terms shall have the respective
meanings indicated below:
"AGREEMENT" means that certain Pledge Agreement dated of even date
herewith between Maker and Payee, as the same may be amended or modified
from time to time.
<PAGE>
"DEFAULT RATE" means the lesser of (a) the sum of the Prime Rate
plus four percent (4%), or (b) the Maximum Rate.
"MAXIMUM RATE" means the maximum rate of non-usurious interest
permitted from day to day by applicable law, including as to Article
5069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without
limitation, that rate based upon the "indicated rate ceiling" and
calculated after taking into account any and all relevant fees, payments,
and other charges in respect of this Note which are deemed to be interest
under applicable law.
"PRIME RATE" shall mean that variable rate of interest per annum
established by Chase Manhattan Bank of New York from time to time as its
prime rate, which shall vary from time to time.
This Note may be prepaid in whole or in part at any time or from time to
time without premium, penalty, or fee.
Notwithstanding anything to the contrary contained herein, no provisions
of this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, the provisions of this
paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by
any court of competent jurisdiction, any such excess shall be applied as a
payment and reduction of the principal of indebtedness evidenced by this Note;
and, if the principal amount hereof has been paid in full, any remaining excess
shall forthwith be paid to Maker. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, Maker and Payee shall, to the extent
permitted by applicable law, (a) characterize any non-principal payment as an
expense, fee or premium, rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the indebtedness evidenced by this Note so that the
interest for the entire term does not exceed the Maximum Rate.
If default occurs in the payment of principal or interest under this Note,
or upon the occurrence of any other Event of Default, as such term is defined
in the Agreement, the holder hereof may, at its option, (a) declare the
entire unpaid
<PAGE>
principal of and accrued interest on this Note immediately due and payable
without notice, demand or presentment, all of which are hereby waived, and
upon such declaration, the same shall become and shall be immediately due and
payable, (b)foreclose or otherwise enforce all liens or security interests
securing payment hereof, or any part hereof, (c) offset against this Note any
sum or sums owed by the holder hereof to Maker, and (d) take any and all other
actions available to Payee under this Note and the Agreement, at law, in equity
or otherwise. Failure of the holder hereof to exercise any of the foregoing
options shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Maker agrees to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE IS PERFORMABLE IN LOS ANGELES COUNTY, CALIFORNIA.
Maker and each surety, guarantor, endorser, and other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive notice, presentment, demand for payment, protest, notice of protest and
non-payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time, and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any
other party, and to grant any such party any extensions of time for payment of
any of said indebtedness, or to release or substitute part or all of the
collateral securing this Note, or to grant any other indulgences or
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
/S/
---------------------------------------
GERALD D. MURPHY
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of December 22, 1994 (this "Agreement"), is
by and between GERALD D. MURPHY (the "Pledgor") and KINGWOOD LAKES SOUTH, L.P.,
a Texas limited partnership (the "Secured Party").
R E C I T A L S :
A. Pledgor has promised to contribute $1,500,000.00 as capital
contribution to Secured Party and pursuant to which Pledgor has executed that
certain Promissory Note ("Note") dated of even date herewith in the original
principal amount of $1,500,000.00, payable to the order of Secured Party.
B. Secured Party has conditioned the acceptance of Pledgor's capital
contribution evidenced by the Note upon the execution and delivery of this
Agreement by Pledgor.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
Section 1.01. SECURITY INTEREST AND PLEDGE. As collateral security for
the prompt payment in full when due of the Obligations (hereinafter defined)
(whether at stated maturity, by acceleration, or otherwise) and all present and
future obligations of Pledgor under this Agreement, Pledgor hereby pledges and
grants to Secured Party a first priority security interest in the following
property (such property being hereinafter sometimes called the "Collateral"):
(a) 333,333 shares of common capital stock of ERLY Industries, Inc.,
a California corporation ("ERLY") (based on $9.00 per share as of
December 22, 1994), evidenced by the certificate numbers reflected on
EXHIBIT "A" attached hereto (as such EXHIBIT "A" may be modified from time
to time due to the adjustments required pursuant to SECTION 3.03 hereof);
(b) additional shares of ERLY and other securities acceptable to
Secured Party; and
(c) all products, proceeds, revenues, distributions, dividends, stock
dividends, securities, general intangibles and other property, rights and
interests, and all accessions and substitutions therefor, that Pledgor
receives or is at any time entitled to receive on account of any of
the foregoing.
<PAGE>
Section 1.02. Obligations. The Collateral shall secure the following
obligations, indebtedness, and liabilities (all such obligations, indebtedness,
and liabilities being hereinafter sometimes called the "Obligations"):
(a) the Note;
(b) all costs and expenses, including, without limitation, all
attorneys' fees and legal expenses, incurred by Secured Party to preserve
and maintain the Collateral, collect the obligations herein described, and
enforce this Agreement; and
(c) all extensions, renewals, and modifications of any of the
foregoing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Pledgor represents and warrants to Secured Party that:
Section 2.01. TITLE. Pledgor owns, and with respect to Collateral
acquired after the date hereof, Pledgor will own the Collateral free and clear
of any lien, security interest, pledge, claim, or other encumbrance or any right
or option on the part of any third person to purchase or otherwise acquire the
Collateral or any part thereof, except for the security interest granted
hereunder. The Collateral is not subject to any restriction on transfer or
assignment except for compliance with applicable federal and state securities
laws and regulations promulgated thereunder. Pledgor has the unrestricted right
to pledge the Collateral as contemplated hereby. All of the Collateral has been
duly and validly issued and is fully paid and non-assessable.
Section 2.02. PLACE OF RESIDENCE. Pledgor's place of residence is in
Los Angeles, Los Angeles County, California.
Section 2.03. LITIGATION. There is no litigation, investigation, or
governmental proceeding pending or threatened against Pledgor or any of its
properties which if adversely determined would have a material adverse effect
on the Collateral.
Section 2.04. FIRST PRIORITY PERFECTED SECURITY INTEREST. This Agreement
and the transactions contemplated herein create in favor of Secured Party a
first priority perfected security interest in the Collateral. There are no
conditions precedent to the effectiveness of this Agreement that have not been
fully and permanently satisfied.
-2-
<PAGE>
ARTICLE III
AFFIRMATIVE AND NEGATIVE COVENANTS
Pledgor covenants and agrees with Secured Party that:
Section 3.01. ENCUMBRANCES. Pledgor shall not create, permit, or suffer
to exist, and shall defend the Collateral against, any lien, security interest,
or other encumbrance on the Collateral, except the pledge and security interest
of Secured Party hereunder, and shall defend Pledgor's rights in the Collateral
and Secured Party's security interest in the Collateral against the claims of
all persons.
Section 3.02. SALE OF COLLATERAL. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party.
Section 3.03. COLLATERAL COVERAGE.
(a) The value of the Collateral shall at all times be equal to or
greater than $3,000,000.00.
(b) The value of the Collateral shall be an amount such that at all
times Pledgor shall have the right under all applicable laws, during the
current fiscal quarter and the next succeeding fiscal quarter, to sell
securities pledged pursuant to this Agreement having a value, as
determined hereby, of at least $3,000,000.00.
(c) The value of the Collateral shall be determined based upon the
prices for the Collateral quoted in the Wall Street Journal on the date
of determination.
(d) If at any time the value of the Collateral does not satisfy the
requirements of paragraph (a) or (b) of this Section 3.03, Pledgor shall
deliver and pledge to Secured Party additional shares of ERLY, or other
securities acceptable to Secured Party in its sole discretion (together
with blank stock powers (in the form as that which is attached hereto as
Exhibit "B") with respect thereto) or cash such that after the delivery of
such additional shares or cash, the requirements of paragraphs (a) and (b)
of this Section 3.03 are satisfied. Such additional shares and cash shall
constitute Collateral pursuant to this Agreement and shall be subject to
the pledges hereof and the liens and security interests created hereby.
Section 3.04. MAINTENANCE OF COLLATERAL VALUE. Pledgor shall comply with
the provisions of Section 3.03 of this Agreement which relate to maintenance of
the value of the Collateral. In connection with the delivery of additional
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Collateral pursuant to Section 3.03 of this Agreement, Borrower shall execute
such documents as shall be determined by Secured Party to be necessary or
appropriate to create or perfect Secured Party's pledge of and first priority
security interest in such additional Collateral.
Section 3.05. FURTHER ASSURANCES. At any time and from time to time, upon
the request of Secured Party, and at the sole expense of Pledgor, Pledgor shall
promptly execute and deliver all such further instruments and documents and take
such further action as Secured Party may reasonably deem necessary or desirable
to preserve and perfect its security interest in the Collateral and carry out
the provisions and purposes of this Agreement, including, without limitation,
the execution and filing of such financing statements as Secured Party may
require. A carbon, photographic, or other reproduction of this Agreement or of
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement.
Section 3.06. TAXES. Pledgor agrees to pay or discharge prior to
delinquency all taxes, assessments, levies, and other governmental charges
imposed on the Collateral.
Section 3.07. DISTRIBUTIONS. If Pledgor shall become entitled to receive
or shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase, or reduction of capital or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any Collateral or otherwise, Pledgor agrees
to accept the same as Secured Party's agent and to hold the same in trust
for Secured Party, and to deliver the same forthwith to Secured Party in the
exact form received, with the appropriate endorsement of Pledgor when necessary
or appropriate undated stock powers duly executed in blank, to be held by
Secured Party as additional Collateral for the Obligations, subject to the
terms hereof. Any sums paid upon or in respect of the Collateral upon the
liquidation or dissolution of the issuer thereof shall be paid over to Secured
Party to be held by it as additional collateral for the Obligations subject to
the terms hereof; and in case any distribution of capital shall be made on or
in respect of the Collateral or any property shall be distributed upon or with
respect to the Collateral pursuant to any recapitalization or to any
reorganization of the issuer thereof, the property so distributed shall be
delivered to the Secured Party to be held by it as additional collateral for
the Obligations, subject to the terms hereof. All sums of money and property
so paid or distributed in respect of the Collateral that are received by Pledgor
shall, until paid or delivered to Secured Party, be held by Pledgor in trust as
additional security for the Obligations.
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Section 3.08. NOTIFICATION. Pledgor shall promptly notify Secured Party
of (a) any lien, security interest, encumbrance, or claim made or threatened
against the Collateral, (b) any material change in the Collateral; including,
without limitation, any material decrease in the value of the Collateral, and
(c) the occurrence or existence of any Event of Default (as hereinafter defined)
or the occurrence or existence of any condition or event that, with the giving
of notice or lapse of time or both, would be an Event of Default.
Section 3.09. INFORMATION. Pledgor shall from time to time at the request
of Secured Party deliver to Secured Party such information regarding the
Collateral and Pledgor as Secured Party may request. Pledgor shall mark its
books and records to reflect the security interest of Secured Party under this
Agreement.
Section 3.10. PROVIDE INFORMATION. Pledgor shall fully cooperate, to the
extent requested by Secured Party, in the completion of any notice, form,
schedule, or other document filed by Secured Party on its own behalf or on
behalf of Pledgor, including, without limitation, any required notice or
statement of beneficial ownership or of the acquisition of beneficial ownership
of equity securities constituting part of the Collateral, any notice of
proposed sale of any such securities pursuant to Rule 144 as promulgated by the
Securities Exchange Commission (the "SEC") under the Securities Act of 1933, as
amended. Without limiting the generality of the foregoing, Pledgor shall
furnish to Secured Party any and all information which Secured Party may
reasonably request for purposes of any such filing, regarding Pledgor, the
Collateral, and any issuer of any of the Collateral, and Pledgor shall disclose
to Secured Party all material adverse information known by Pledgor with respect
to the operations of any issuer of any of the Collateral.
ARTICLE IV
RIGHTS OF SECURED PARTY AND PLEDGOR
Section 4.01. POWER OF ATTORNEY. Pledgor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, from time to time in Secured Party's discretion, to take any and all
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives Secured Party the power
and right on behalf of Pledgor and in its own name to do any of the following,
without notice to or the consent of Pledgor:
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(a) after the occurrence and during the continuance of an Event of
Default, to demand, sue for, collect, or receive in the name of Pledgor or
in its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or any
other instruments for the payment of money under the Collateral;
(b) to pay or discharge taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against the Collateral;
(c) after the occurrence and during the continuance of an Event of
Default, (i) to direct parties liable for any payment under any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to Secured Party or as Secured Party shall direct;
(ii) to receive payment of and receipt for any and all monies, claims, and
other amounts due and to become due at any time in respect of or arising
out of any Collateral; (iii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices, and other documents relating
to the Collateral; (iv) to commence and prosecute any suit, action or
proceeding, at law or in equity, in any court of competent jurisdiction
to collect the Collateral or any part thereof, and to enforce any other
right in respect of any Collateral; (v) to defend any suit, action, or
proceeding brought against Pledgor with respect to any Collateral;
(vi) to settle, compromise, or adjust any suit, action, or proceeding
described above and, in connection therewith, to give such discharges or
releases as Secured Party may deem appropriate; (vii) to exchange any of
the Collateral for other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Collateral with
any committee, depositary, transfer agent, registrar, or other designated
agency upon such terms as Secured Party may determine; (viii) to add or
release any guarantor, endorser, surety, or other party to any of the
Collateral or the Obligations; (ix) to renew, extend, or otherwise change
the terms and conditions of any of the Collateral or Obligations; (x) to
insure any of the Collateral; and (xi) to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Secured Party were the absolute owner
thereof for all purposes, and to do, at Secured Party's option and
Pledgor's expense, at any time, or from time to time, all acts and things
which Secured Party deems necessary to protect, preserve, or realize
upon the Collateral and Secured Party's security interest therein.
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This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact,
except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on Secured Party solely to
protect, preserve and realize upon its security interest in the Collateral.
Section 4.02. VOTING RIGHTS. So long as no Event of Default shall have
occurred and be continuing, Pledgor shall be entitled to exercise any and all
voting rights relating or pertaining to the Collateral or any part thereof.
Section 4.03. PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform
or comply with any of its agreements contained herein, Secured Party itself
may, at its sole discretion, cause or attempt to cause performance or
compliance with such agreement and the expenses of Secured Party, together
with interest thereon at the maximum non-usurious per annum rate permitted by
applicable law, shall be payable by Pledgor to Secured Party on demand and
shall constitute Obligations secured by this Agreement. Notwithstanding the
foregoing, it is expressly agreed that Secured Party shall not have any
liability or responsibility for the performance of any obligation of Pledgor
under this Agreement.
Section 4.04. SECURED PARTY'S DUTY OF CARE. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation
or duty with respect to all or any part of the Collateral 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 against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.
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<PAGE>
Section 4.05. ASSIGNMENT BY SECURED PARTY. Secured Party may at any time
and from time to time assign the Obligations and any portion thereof or the
Collateral and any portion thereof, and the assignee shall be entitled to all
of the rights and remedies of Secured Party under this Agreement in relation
thereto.
ARTICLE V
DEFAULT
Section 5.01. EVENTS OF DEFAULT. Each of the following shall be deemed an
"Event of Default":
(a) Pledgor or any obligated party shall fail to pay when due the
Obligations or any part thereof.
(b) Any representation or warranty made or deemed made by Pledgor or
any obligated party in this Agreement or any other instruments executed in
connection with this Agreement or the Note at any time shall be false,
misleading, or erroneous in any material respect when made or deemed to
have been made.
(c) Pledgor or any obligated party shall fail to perform, observe or
comply with any covenant, agreement or term contained in this Agreement or
any other instruments executed in connection with this Agreement or the
Note.
(d) Pledgor or any obligated party shall commence a voluntary
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it or shall make a
general assignment for the benefit of creditors or shall generally fail to
pay its debts as they become due or shall take any corporate action to
authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against Pledgor or
any obligated party seeking liquidation, reorganization, or other relief
with respect to it or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official for it
or a substantial part of its property, and such involuntary
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<PAGE>
proceeding shall remain undismissed and unstayed for a period of thirty
(30) days.
(f) Pledgor or any obligated party shall fail to discharge within a
period of thirty (30) days after the commencement thereof any attachment,
sequestration or similar proceeding or proceedings involving an aggregate
amount in excess of $25,000.00 against any of its assets or properties.
(g) Pledgor or any obligated party shall fail to satisfy and
discharge promptly any judgment or judgments against it for the payment of
money in an aggregate amount in excess of $25,000.00.
(h) Pledgor or any obligated party shall fail to pay when due any
principal of or interest on any debt (other than the Obligations), or the
maturity of any such debt shall have been accelerated, or any such debt
shall have been required to be prepaid prior to the stated maturity
thereof, or any event shall have occurred that permits (or, with the
giving of notice or lapse of time or both, would permit) any holder or
holders of such debt or any person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such prepayment.
(i) This Agreement or any other instruments executed in connection
with this Agreement and the Note shall cease to be in full force and effect
or shall be declared null and void or the validity or enforceability
thereof shall be contested or challenged by Pledgor or any obligated party,
or any lien or security interest created by this Agreement shall for any
reason cease to be a valid, first priority perfected security interest in
and lien upon any of the Collateral purported to be covered thereby.
(j) Pledgor shall have died or have been declared incompetent by a
court of law.
Section 5.02. RIGHTS AND REMEDIES. If any Event of Default shall occur,
Secured Party shall have the following rights and remedies:
(a) In addition to all other rights and remedies granted to Secured
Party in this Agreement and in any other instrument or agreement securing,
evidencing, or relating to the Obligations, Secured Party shall have all
of the rights and remedies of a secured party under the Uniform Commercial
Code as adopted by the State of Texas. Without limiting the generality of
the foregoing, Secured Party may (i) without demand or notice to Pledgor,
collect, receive, or take possession of the Collateral or
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any part thereof; (ii) sell or otherwise dispose of the Collateral, or
any part thereof, in one or more parcels at public or private sale or
sales, at Secured Party's offices or elsewhere, for cash, on credit, or
for future delivery; or (iii) bid and become a purchaser at any sale free
of any right or equity of redemption in Pledgor, which right or equity is
hereby expressly waived and released by Pledgor to the extent permitted by
applicable law. Upon the request of Secured Party, Pledgor shall assemble
the Collateral and make it available to Secured Party at any place
designated by Secured Party that is reasonably convenient to Pledgor and
Secured Party. Pledgor agrees that Secured Party shall not be obligated
to give more than five (5) days' written notice of the time and place of
any public sale or of the time after which any private sale may take place
and that such notice shall constitute reasonable notice of such matters.
Secured Party shall not be obligated to make any sale of the Collateral,
regardless of notice of sale having been given. Secured Party may adjourn
any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Pledgor shall be
liable for all expenses of retaking, holding, preparing for sale, or the
like, and all attorneys' fees and other expenses incurred by Secured Party
in connection with the collection of the Obligations and the enforcement
of Secured Party's rights under this Agreement, all of which expenses and
fees shall constitute additional Obligations secured by this Agreement.
Secured Party may apply the Collateral against the Obligations in such
order and manner as Secured Party may elect in its sole discretion.
Pledgor shall remain liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay the
Obligations. Pledgor waives all rights of marshalling in respect of
the Collateral.
(b) Secured Party may cause any or all of the Collateral held by it
to be transferred into the name of Secured Party or the name or names of
Secured Party's nominee or nominees.
(c) Secured Party shall be entitled to receive all cash dividends
payable in respect of the Collateral.
(d) Secured Party shall have the right, but shall not be obligated
to, exercise or cause to be exercised all voting rights and corporate
powers in respect of the Collateral, and Pledgor shall deliver to Secured
Party, if requested by Secured Party, irrevocable proxies with respect to
the Collateral in form satisfactory to Secured Party.
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(e) Pledgor hereby acknowledges and confirms that Secured Party may
be unable to effect a public sale of any or all of the Collateral by reason
of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws, and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire
any shares of the Collateral for their own respective accounts for
investment and not with a view to distribution or resale thereof. Pledgor
further acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner, and Secured Party shall be under no obligation to take any steps in
order to permit the Collateral to be sold at a public sale. Secured Party
shall be under no obligation to delay a sale of any of the Collateral for
any period of time necessary to permit any issuer thereof to register such
Collateral for public sale under the Securities Act of 1933, as amended,
or under applicable state securities laws.
(f) On any sale of the Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction with which
compliance is necessary, in the view of Secured Party's counsel, in order
to avoid any violation of applicable law or in order to obtain any required
approval of the purchaser or purchasers by any applicable governmental
authority.
ARTICLE VI
MISCELLANEOUS
Section 6.01. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 6.02. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Pledgor and Secured Party and their respective
heirs, successors, and assigns, except that Pledgor may not assign any of its
rights or obligations under this Agreement without the prior written consent of
Secured Party.
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Section 6.03. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE NOTE
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO RELATING TO THE
SUBJECT MATTER HEREOF AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. The
provisions of this Agreement may be amended or waived only by an instrument
in writing signed by the parties hereto.
Section 6.04 NOTICES. All notices and other communications provided for
in this Agreement shall be in writing and may be telexed, telecopied, mailed by
certified mail, return receipt requested, or delivered to the intended recipient
at the addresses specified below or at such other address as shall be designated
by any party listed below in a notice to the other parties listed below given
in accordance with this Section.
If to Pledgor: Gerald D. Murphy
______________________
______________________
Telephone No.: (___) ___-____
Fax Number: (___) ___-____
If to Secured Party: Kingwood Lakes South, L.P.
Attention: Michael L. Tenzer
11400 West Olympic Boulevard,
Suite 1040
Los Angeles, California 90064
Telephone No.: (310) 820-6000
Fax Number: (310) 442-3643
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telex or telecopy,
subject to telephone confirmation of receipt, when personally delivered or, in
the case of a mailed notice, when duly deposited in the mails.
Section 6.05. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.
Section 6.06. HEADINGS. The headings, captions and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 6.07. SURVIVAL. All representations and warranties made in this
Agreement shall survive the execution and delivery of this Agreement, and no
investigation by
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Secured Party shall affect the representations and warranties
of Pledgor herein or the right of Secured Party to rely upon them.
Section 6.08. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 6.09. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 6.10. OBLIGATIONS ABSOLUTE. The obligations of Pledgor under this
Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release,
subordination, or impairment of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
PLEDGOR:
________________________________
GERALD D. MURPHY
SECURED PARTY:
KINGWOOD LAKES SOUTH, L.P., a
Texas limited partnership
By: Tenzer Company, Inc., a
Delaware corporation, its sole
general partner
By: ____________________________
Name: Michael L. Tenzer
Title: President
LIST OF EXHIBITS:
Exhibit "A" - List of Stock Certificate Numbers
Exhibit "B" - Form of Stock Power
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EXHIBIT "A"
LIST OF STOCK CERTIFICATE NUMBERS
Description of the Shares:
<TABLE>
<CAPTION>
Date of Number of Certificate
Issue Shares Number
-------- --------- -----------
<S> <C> <C>
06/20/77 11,984 LU8348
05/30/80 508 SL4689
06/27/80 14,693 SL4763
08/21/80 500 SL5075
02/10/84 500 SL09435
10/08/84 12,500 SL09758
09/05/86 53,457 SL11396
09/05/86 3,776 SL11399
09/24/87 62,081 SL13865
09/24/87 4,153 SL13868
02/03/88 380 SL15019
01/26/89 25,000 SL16275
01/26/89 21,977 SL16276
12/20/89 41,636 SL17840
12/20/89 40,003 SL17841
03/31/90 6,000 SL17993
10/26/90 5,300 SL19227
10/26/90 5,380 SL19229
10/26/90 10,000 SL19230
11/15/90 13,532 SL19276
</TABLE>
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EXHIBIT "B"
FORM OF STOCK POWER
I, Gerald D. Murphy, for and in consideration of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, receipt of which is hereby
acknowledged, do hereby give, assign and transfer unto Kingwood Lakes South,
L.P., a Texas limited partnership, ___________________________ (_______) shares
of the common stock of ERLY Industries, Inc., dated _____________________,
registered in my name on the books of said company, without legend or
restriction, and do hereby irrevocably constitute and appoint the Secretary of
the company as attorney to transfer the foregoing on the books of said company,
with full power of substitution in the premises, hereby ratifying and confirming
all that my said attorney shall lawfully do by virtue hereof.
Dated: ______________, 199_.
________________________________
Gerald D. Murphy
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JOINT FILING STATEMENT
Each of the undersigned hereby confirms that the foregoing Schedule 13D
and all amendments thereto with respect to the shares of common stock, par value
$1.00, of ERLY Industries, Inc. shall be filed on behalf of each of them, but
shall not constitute an admission that a group exists, and, except as described
in the foregoing Schedule 13D, each signatory hereto expressly disclaims
membership in and the existence of a group consisting of some or all of the
undersigned as defined in Section 13(d) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
KINGWOOD LAKES SOUTH, L.P., a
Texas Limited Partnership
By: TENZER COMPANY, INC., a
Delaware corporation, as General Partner
March 31, 1995 By: /s/ Michael L. Tenzer
- ------------------------ --------------------------------------
Date Michael L. Tenzer
Title: President
TENZER COMPANY, INC., a Delaware
corporation
March 31, 1995 By: /s/ Michael L. Tenzer
- ------------------------ -------------------------------------
Date Michael L. Tenzer
Title: President
MICHAEL L. TENZER
March 31, 1995 /s/ Michael L. Tenzer
- ------------------------ ------------------------------------
Date Michael L. Tenzer
