PARTNERSHIP PLEDGE AND SECURITY AGREEMENT
THIS PARTNERSHIP PLEDGE AND SECURITY AGREEMENT ("Partnership
Pledge Agreement") is made and entered into as of January 15,
1996, by XXXXX X. XXXXX and XXXXXX X. XXXXX ("Grantors"), in
favor of XXXXXXX X. XXXXX ("Xxxxx").
RECITALS
Xxxxx has agreed to provide a loan to SHARPS INTERNATIONAL
LIMITED PARTNERSHIP, a Nevada limited partnership ("Borrower")
in the principal amount of $300,000.00 (the "Loan") as set forth
in the Funding Agreement dated as of January 15, 1996 (the
"Funding Agreement") among Grantors, Borrower and Xxxxx.
Grantors own partnership units in Borrower and have agreed to
pledge some of their limited partnership units to secure the
repayment of the Loan. Funding of the Loan is conditioned,
among other things, upon Xxxxx'x receipt of this Partnership
Pledge Agreement.
Each Grantor owns the partnership units and percentage interest
(exclusive of options) designated next to such Grantor's name as
follows:
Name General Partnership Units Limited Partnership Units % Ownership Interest
Xxxxx X. Xxxxx 4 139 29.36
Xxxxxx X. Xxxxx 4 139 29.36
("Partnership Units"). Grantors deem it in Grantors' best interest
to enter into this Partnership Pledge Agreement.
NOW, THEREFORE, the parties agree as
follows:
Grant of Security Interest. To secure the
prompt and complete payment and performance of all of the
Secured Obligations (as defined in Section 2 below), Grantors
hereby pledge, assign and grant to Xxxxx a continuing first
priority lien upon and security interest in:
(a) all of their right, title and interest in
55.5 limited Partnership Units each, or a combined pledge of 111
limited Partnership Units (the "Pledged Partnership Units), but
none of the obligations with respect thereto; and
(b) all Proceeds of the foregoing.
Subparagraphs (a) and (b) above are hereinafter collectively called
the "Pledged Collateral."
The Pledged Collateral includes, to the extent of the
Pledged Partnership Units, (1) any and all interest of each
Grantor based upon or arising out of the partnership agreements
associated with the specified partnership; (2) any and all right of
each Grantor to receive a share of the profits or other
compensation of such partnership and the right to a return of each
Grantor's contribution to the partnership; and (3) any and all
interest each Grantor has in the property of such partnership.
As used herein, the term "Proceeds" means all cash and
non-cash proceeds of the Pledged Partnership Units, including all
revenues, issues and profits arising from the sale or other
disposition of the Pledged Partnership Units, and all cash or non-
cash proceeds of any proceeds.
Secured Obligations. As used in this
Partnership Pledge Agreement, the term "Secured Obligations"
includes (a) each agreement and liability of Grantors herein and in
the Funding Agreement and; (b) Borrower's indebtedness to
Xxxxx evidenced by a Promissory Note dated January 15, 1996
in the amount of the Loan (the "Note"). Grantors agree that this
is a continuing security interest and shall remain in full force and
effect unless terminated by a written agreement executed by
Xxxxx, or so long as there may be Secured Obligations from time
to time outstanding pursuant to the Note or the Funding
Agreement.
Representations, Warranties and
Covenants. Grantors jointly and severally represent, warrant and
covenant to Xxxxx that:
Attached hereto as Exhibit A is a
true, correct and complete copy of the partnership agreement
establishing Borrower, including all modifications and
supplements thereto and restatements thereof, current as of the
date of this Partnership Pledge Agreement (the "Partnership
Agreement");
To the best of Grantors'
knowledge the Partnership Agreement is valid, binding and in full
force and effect. Except as otherwise permitted or contemplated
in the Funding Agreement, Grantors agree, so long as any
portion of the Loan shall remain outstanding not to terminate,
rescind, cancel or modify in any material respect the Partnership
Agreement without Xxxxx'x permission except as necessary as
Managing General Partners to effectuate the transactions
contemplated by this Pledge Agreement and the Funding
Agreement;
This Partnership Pledge Agreement
has been duly authorized, executed and delivered by Grantors
and, to the best of Grantors' knowledge, constitutes a legal, valid
and binding obligation of Grantors enforceable in accordance
with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the rights
of creditors generally or by the application of general principles of
equity;
Except as contained in the
Partnership Agreement, no consent, approval, authorization or
other order of any person and, to the best of Grantors'
knowledge, no consent, authorization, approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body is required to be made or obtained by Grantors
either (i) for the pledge of the Pledged Collateral pursuant to this
Partnership Pledge Agreement or for the execution, delivery or
performance of this Partnership Pledge Agreement by Grantors,
or (ii) for the exercise by Xxxxx of the voting or other rights
provided for in this Partnership Pledge Agreement or the
remedies in respect of the Pledged Collateral pursuant to this
Partnership Pledge Agreement, except as may be required in
connection with any disposition of the Pledged Collateral by laws
relating to the offering and sale of securities generally;
Except for the security interest
granted to Xxxxx pursuant to this Partnership Pledge Agreement,
Grantors are, on the date hereof, the sole record and beneficial
owners of the Pledged Collateral, having good title thereto, free
and clear of any lien, pledge, mortgage, claim, charge, security
interest or other encumbrance ("Liens");
Grantors have the right and
requisite authority to pledge, assign, transfer and deliver the
Pledged Collateral to Xxxxx as provided herein except that the
acquisition of the title to the Pledged Partnership Units by Xxxxx
could be contrary to certain provisions of the Partnership
Agreement, such as provisions restricting the transfer of more
than 50% of all Units within the Partnership during any 12-month
period; and
This Partnership Pledge Agreement
will create a valid, perfected and enforceable first priority lien on
and security interest in the Pledged Collateral and the Proceeds
thereof securing the Secured Obligations.
The representations and warranties set forth in this
Section 3 shall survive the execution and delivery of this
Partnership Pledge Agreement.
Covenants. Grantors covenant and agree
with Xxxxx that from and after the date of this Partnership Pledge
Agreement and until the Termination Date (as defined in
Section 10):
Further Assurances and
Documentation. Grantors will reasonably cooperate with Xxxxx
and, at any time and from time to time, upon the written request
of Xxxxx, and will promptly and duly execute and deliver any
and all such further instruments and documents and take such
further action as Xxxxx may reasonably deem desirable to obtain
the full benefits of this Partnership Pledge Agreement, of the
rights and powers herein granted and of the liens granted to
Xxxxx hereunder.
Limitation on Disposition of
Pledged Collateral. Grantors may not sell, transfer, lease, license
or otherwise dispose of any of the Pledged Collateral unless
(i) such sale or other disposition is to an independent third party
for cash and for fair value, and (ii) the net cash proceeds to
Grantors are simultaneously delivered to Xxxxx for application to
the repayment of the Secured Obligations.
Notices. Grantors will advise
Xxxxx promptly, in reasonable detail, (i) of any Lien asserted or
claim made against any of the Pledged Collateral or the assets or
properties of Borrower, (ii) of any material change in the
composition of the assets and properties of Borrower, and (iii) of
the occurrence of any other event that would have a material
adverse effect on the aggregate value, enforceability, priority or
collectibility of the assets and properties of Borrower or on the
security interests created hereunder.
Right of Inspection. Xxxxx shall
at all times have full and free access during normal business
hours to all the books, correspondence and records of Borrower,
and Xxxxx or its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and Grantors
agree to render to Xxxxx, such clerical and other assistance as
may be reasonably requested with regard thereto. Xxxxx agrees
to maintain the confidentiality of any information of a proprietary
nature made available to it.
Xxxxx'x Appointment as Attorney-in-Fact.
Effective in the event a Default
shall have occurred and be continuing, Grantors hereby
irrevocably constitute and appoint Xxxxx and any officer or agent
thereof, with full power of substitution, as their true and lawful
attorney-in-fact with full, irrevocable power and authority in the
place and stead of Grantors and in the name of Grantors or in
their own names, from time to time in Xxxxx'x reasonable
discretion after Default shall have occurred and be continuing, for
the purpose of carrying out the terms of this Partnership Pledge
Agreement. Without limiting the generality of foregoing, if any
Default shall have occurred and be continuing, Xxxxx shall have
the right and power to receive, endorse and collect all checks
made payable to the order of Grantors representing any
distribution in respect of the Pledged Collateral or any part thereof
and to give full discharge for the same.
Grantors hereby ratify all that said
attorney-in-fact shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until the Secured Obligations
have been fully and indefeasibly paid.
The powers conferred on Xxxxx in
this Partnership Pledge Agreement are solely to protect its interest
in the Pledged Collateral and shall not impose any duty upon
Xxxxx to exercise any such powers. Xxxxx shall be accountable
only for amounts that he actually receives as a result of the
exercise of such powers and neither Xxxxx nor any of his
employees or agents shall be responsible to Grantors for any act
or failure to act, except for Xxxxx'x own negligence or willful
misconduct and except for the negligence or willful misconduct of
Xxxxx'x employees and agents.
In the event a Default shall have
occurred and be continuing, Grantors also authorize Xxxxx, at
any time and from time to time, to execute, in connection with the
sale of the Pledged Collateral provided for in Section 7 hereof,
any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Pledged Collateral.
Certain Rights of Grantors and Xxxxx.
So long as a Default shall not have
occurred and be continuing, Grantors shall be entitled, to the
extent not inconsistent with this Partnership Pledge Agreement,
(i) to exercise the voting power with respect to the Pledged
Collateral, and for that purpose Xxxxx shall execute or cause to
be executed from time to time, at the expense of Grantors, such
proxies or other instruments in favor of Grantors, or their
nominees, in such form and for such purposes shall be
reasonably required by Grantors and as shall be specified in a
written request therefor, to enable Grantors to exercise such
voting power with respect to the Pledged Collateral, and (ii) to
receive and retain for its own account any and all cash dividends
at any time from time to time declared or paid upon any of the
Pledged Collateral.
If a Default shall have occurred and
be continuing, (i) Xxxxx shall have the right to receive any and all
cash dividends or cash dividends or other Proceeds paid in
respect of the Pledged Collateral and, upon notice to Grantors, to
apply such Proceeds to the payment of the Secured Obligations,
and (ii) Xxxxx or its nominee may exercise all voting, corporate
and other rights pertaining to the Pledged Collateral at any
meeting of the shareholders of Borrower or otherwise.
Default and Remedies.
Default. Grantors agree that time
is of the essence and the occurrence of any of the following shall
constitute a default ("Default"):
If Borrower fails to pay (a) any
installment of interest on the Note when due, or (b) any payment
of Note principal precisely when due.
If any representation or warranty
contained in this Partnership Pledge Agreement or in the Funding
Agreement, or made in writing in connection with the transactions
contemplated by this Partnership Pledge Agreement or in the
Purchase Agreement shall be knowingly false in any material
respect on the date made; or
If Grantors fail to perform any
covenant or observe any condition contained in this Partnership
Pledge Agreement or the Purchase Agreement; or
If Borrower admits in writing its
inability to pay its debts generally as they come due, or at any
time is generally not paying its debts as such debts become due,
or has filed any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law
or laws for the relief of, or relating to, debtors; or
If an involuntary petition has been
filed under any bankruptcy or insolvency statute against Grantors
or Borrower, or a custodian, receiver or trustee has been
appointed to take possession of other assets of Grantors or
Borrower, unless such petition or appointment is or has been set
aside or withdrawn or ceases or has ceased to be in effect within
60 days from the date of said filing or appointment; or
If there is filed in good faith by or
against Borrower a petition seeking the liquidation or dissolution
of Borrower or the commencement of any other procedure to
liquidate or dissolve Borrower, or there occurs any event,
condition or circumstance which causes the liquidation or
dissolution of Borrower; or
If Grantors or Borrower conceal,
remove, or permit to be concealed or removed, any part of their
property, with intent to hinder, delay or defraud their creditors or
any of them, or make or suffer a transfer of any of their property
which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or makes any transfer of their property
to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid; or suffer or permit while
insolvent, any creditor to obtain a lien upon any of their property
through legal proceedings which is not vacated within 60 days
from the date thereof; or
If Grantors or Borrower make a
general assignment of the assets of Grantors or Borrower for the
benefit of Grantors' or Borrower's creditors; or
If there is any sequestration or
attachment of, or any levy or execution upon any Pledged
Collateral provided by Grantors under this Partnership Pledge
Agreement or the Purchase Agreement; any Loan proceeds; or a
substantial portion of the other assets of Grantors, which is not
released, expunged or dismissed prior to the earlier of ten (10)
days after such sequestration, attachment or execution, or the sale
of such assets; or
If any governmental authority has
taken or instituted legal action against Borrower which is
reasonably likely to materially adversely affect Borrower's
financial condition, operations or ability to repay the Loan, and
Borrower has not remedied or provided for such situation to
Xxxxx'x reasonable satisfaction within 30 days of Xxxxx'x
written notice to Borrower of Xxxxx'x opinion; or
Acceleration. Upon the occurrence
of a Default and subject to subsection (c) and any other right
expressly granted by Xxxxx in writing to cure any Default to the
extent applicable, (i) the entire principal balance of the Loan,
together with all accrued, unpaid interest and other amounts
owing in connection with the Loan shall, at the option of Xxxxx,
become immediately due and payable, and (ii) Xxxxx shall be
immediately entitled to enforce the collection of all outstanding
secured obligations under the Note and Purchase Agreement and
to pursue any other remedy or remedies herein or in the Note or
Purchase Agreement.
Notice and Cure Periods. Except
as otherwise stated below in subsection (d), upon the occurrence
of a Default, Xxxxx shall not accelerate the Loan or pursue its
other rights and remedies unless it first gives Grantors written
notice of such Default in the manner prescribed for notices in this
Partnership Pledge Agreement and such Default is not fully cured
within the following periods:
three (3) days after such notice is
given in the event of any failure to make a monetary payment;
fifteen (15) days after such notice
is given in the event of nonmonetary Defaults not subject to other
provisions of this Section, provided (a) within five (5) days after
such notice is given, Grantors commence their cure and submit to
Xxxxx in writing their plan to cure; and (b) the cure is
continuously pursued by Grantors with due diligence. If such
Default is not reasonably capable of being cured within fifteen
(15) days, Grantors shall have such additional time as is
reasonably necessary to complete the cure, but in no event more
than thirty (30) days after the notice of Default is given; or
sixty (60) days after the filing of
any involuntary petition in bankruptcy against or for the
appointment of a receiver for Grantors (except for petitions filed
by Xxxxx), with the dismissal of such petitions by the court
within such period being deemed to cure such Default.
Exception to Notice and Cure
Periods. Notwithstanding the above provisions, the notice and
cure periods provided for in this Section shall not apply in the
following circumstances:
any Default of the type described in
subsection (a)(ii), if but only if, as a result of such Default, the
value of all or a substantial portion of the Pledged Collateral, or
Xxxxx'x security interest in that Pledged Collateral, is materially
impaired; or
if Grantors transfer or encumber all
or any portion of their interest in the Pledged Collateral without
obtaining any required consent of Xxxxx or as expressly
permitted by this Partnership Pledge Agreement; or
in any circumstance when a delay
in effecting a cure is, in the reasonable judgment of Xxxxx, likely
to result in any Pledged Collateral being damaged, becoming
uninsured or rendered unavailable to Xxxxx or the value thereof
being materially and adversely affected, or Xxxxx'x ability to
recover its outstanding balance from Borrower being materially
affected; or
any Default of the same type or
nature which occurs more than twice; or
any filing of a voluntary petition in
bankruptcy by Grantors, or for the appointment of a receiver or
trustee of all or a portion of Grantors' property; or
any assignment for the benefit of
creditors, fraudulent conveyance, or other plan or action instituted
by Grantors in an attempt to avoid the satisfaction of any lawful
indebtedness.
Nothing in this Section is to be construed as extending the term of
the Loan or the date upon which a Default occurs, and no
decision to forego any remedy for any given Default shall be
deemed a waiver on the part of Xxxxx of any right relating to any
other Default. No failure to give any notice of any Default shall
constitute a waiver of such Default or any remedy which may be
available in connection therewith. The cure periods set forth in
this Section shall be narrowly construed, and shall not impair the
exercise of any remedy not referred to above immediately upon
Default, including, without limitation, the seeking of any
mandatory or prohibitive injunction or restraining order.
Retention of Collateral. If any
Default has occurred and is continuing then Xxxxx, after any
applicable cure period provided for in subsection (c) above has
lapsed, but otherwise immediately, shall retain the Pledged
Collateral in accordance with ORS 79.5050(2) (the "Retention
Remedy") to the extent Grantors or any third parties do not object
to his exercise of the Retention Remedy. Grantors hereby waive,
to the fullest extent permitted by applicable law, their rights to
object to Xxxxx'x exercise of the Retention Remedy.
General Remedies Provision. If,
notwithstanding Section 7(e), Xxxxx is required to foreclose or
exercise remedies other than the Retention Remedy, then Xxxxx
may proceed to enforce his rights under Sections 7(g)-(l), 8 and 9
of this Partnership Pledge Agreement and the Note and Funding
Agreement by exercising such other remedies as are available
under applicable law, either by nonjudicial self-help, or by suit in
equity or action at law, including specific performance of any
covenant contained in this Partnership Pledge Agreement.
Among other such remedies, or prior to or in conjunction with his
exercise of the Retention Remedy, if Grantors fail to pay any sum
that they are required to pay to third party, fail to perform the
other covenants and agreements contained in this Partnership
Pledge Agreement or the Note and Purchase Agreement, or if any
action or proceeding is commenced which affects the Pledged
Collateral or title thereto or the interest of Xxxxx therein,
including, but not limited to, eminent domain, insolvency, or
arrangements or proceedings involving a bankrupt or decedent,
then Xxxxx, at Xxxxx'x option may pay such sums, perform
such acts, make such appearances, and take such action as is
reasonably necessary to protect Xxxxx'x interest, including, but
not limited to, disbursement of attorneys' fees.
Sale of Collateral; Exercise of
Voting Rights, etc. If a Default shall have occurred and be
continuing, in addition to the rights and remedies provided in
Section 7(f), if applicable, Xxxxx may, at its option, immediately
do any or all of the following, except as otherwise provided in the
Partnership Agreement, and subject to the provisions of
Section 20 below:
(i) Cause the Pledged Partnership
Units to be registered in its name or in the name of its nominee;
(ii) Exercise all voting powers
pertaining to such securities and otherwise act with respect thereto
as though Xxxxx were the outright owner thereof (Grantors
hereby irrevocably constituting and appointing Xxxxx their proxy
and attorney-in-fact with full power of substitution so to do);
(iii) Receive all distributions of any
kind whatsoever on all or any of such securities;
(iv) Exercise any and all rights of
collection, conversion or exchange, and any and all other rights,
privileges, options or powers of Grantors pertaining or relating to
such securities (Grantors hereby irrevocably constituting and
appointing Xxxxx their proxy and attorney-in-fact with full power
of substitution so to do);
(v) Sell, assign and deliver the whole,
or from time to time, any part of such securities at any broker's
board or at any private sale or at public auction provided such sale
is conducted in a commercially reasonable manner; and
(vi) Exercise any other remedy
specifically granted under this Partnership Pledge Agreement or
now or hereafter existing in equity, at law, by virtue of statute or
otherwise.
For the purposes of Section 7(g),
an agreement to sell all or any part of the Pledged Collateral shall
be treated as a sale thereof and Xxxxx shall be free to carry out
such sale pursuant to such agreement, and except as otherwise
provided herein including in Section 20 below, Grantors shall
not be entitled to the return of any of the same subject thereto,
notwithstanding that after Xxxxx shall have entered into such an
agreement, all Defaults may have been remedied or all obligations
under the Note may have been paid and performed in full.
At any sale made pursuant to this
Section 7(g), Xxxxx may bid for and purchase (free from any
right or equity of redemption on the part of Grantors, and except
as otherwise provided in Section 20 below), any part of or all
securities included in the Pledged Collateral that are offered for
sale and may make payment on account thereof by using any
claim then due and payable to Xxxxx or Grantors as a credit
against the purchase price, and Xxxxx may, upon compliance
with the terms of sale, hold, return and dispose of such securities
without further accountability therefor except as otherwise
provided in the Partnership Agreement and this Agreement.
Xxxxx shall not have any duty to exercise any of the rights,
privileges, options or powers or to sell or otherwise realize upon
any of such securities, as herein authorized, and Xxxxx shall not
be responsible for any failure to do so or delay in so doing.
Except as otherwise provided
herein, including in Section 20 below, any sale of, or the grant
of options to purchase, or any other realization upon, all or any
portion of such securities, under Section 7(f) shall operate to
divest all right, title, interest, claim and demand, either at law or
in equity, of Grantor in and to such securities so sold, optioned
or realized upon, or any part thereof, from, through and under
Grantors.
Grantors recognize that Xxxxx
may be unable to effect a public sale of all or a part of the Pledged
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933 as amended (the "Act"), or that Xxxxx
may be able to do so only after delay which might adversely
affect the value that might be realized upon the sale of the Pledged
Collateral. Accordingly, except as otherwise provided in the
Partnership Agreement, Grantors agree that Xxxxx may, without
the necessity of attempting to cause any registration of the
Pledged Collateral to be effected under the Act, sell the Pledged
Collateral or any part thereof in one or more private sales to a
restricted group of purchasers who may be required to agree,
among other things, that they are acquiring the Pledged Collateral
for their own account for investment and not with a view to the
distribution or resale thereof. Grantors agree that any such
private sale may be at prices or on terms less favorable to the
owner of the Pledged Collateral than would be the case if they
were sold at public sale, but that any such private sale shall
otherwise be conducted in a commercially reasonable manner.
If Section 7(f)-(k) are applicable,
then each and every right, remedy and power granted to Xxxxx
thereunder shall be cumulative and in addition to any other right,
remedy or power specifically granted herein or in any other
related document, or now or hereafter existing in equity, at law,
by virtue of statute or otherwise and may be exercised by Xxxxx,
from time to time, concurrently or independently and as often and
in such order as Xxxxx may deem expedient.
Non-Interference with Remedies; Specific
Performance.
Grantors agree that they will not
unreasonably interfere with any right, power and remedy of
Xxxxx provided for in this Partnership Pledge Agreement or now
or hereafter existing at law or in equity or by statute or otherwise,
or the exercise by Xxxxx of any one or more of such rights,
powers or remedies. The preceding sentence shall not constitute
a waiver of Grantors' rights herein, including under Section 20
below.
Grantors agree that a breach of any
of the agreements or covenants contained in this Partnership
Pledge Agreement may cause irreparable injury to Xxxxx, that
Xxxxx has no adequate remedy at law in respect of such breach
and, as a consequence, agree that each and every agreement and
covenant contained in this Partnership Pledge Agreement shall be
specifically enforceable against Grantors.
Application of Proceeds. If the Retention
Remedy cannot be exercised and Sections 7(g)-(l) are applicable,
Grantors agree that all cash proceeds received by Xxxxx in
respect of any sale of, liquidation of, or other realization upon all
or any part of the Pledged Collateral shall be applied by Xxxxx as
follows:
First, to the payment of all
reasonable costs and expenses (including the reasonable fees,
disbursements and other charges of attorneys) paid or incurred by
Xxxxx in enforcing Xxxxx'x security interest in the Pledged
Collateral, whether by sale or otherwise, or otherwise enforcing
Xxxxx'x rights hereunder;
Next, to the payment in full of the
Secured Obligations then due and owing; and
Finally, after payment in full of all
Secured Obligations then due and owing, to the payment to
Grantors, or their successors or assigns, or to whomsoever may
be lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct, of any surplus then remaining.
Termination of Agreement. Upon
payment and performance in full of all Secured Obligations (the
"Termination Date"), this Partnership Pledge Agreement shall
terminate and Xxxxx shall promptly release all of his right, title
and interest in and to the Pledged Collateral.
Unconditional Obligations. The
obligations of Grantors under this Partnership Pledge Agreement
shall be absolute and unconditional, and shall remain in full force
and effect without regard to, and shall not be released or
discharged or in any way affected by:
Any exercise or non-exercise of
any right, remedy or privilege under or in respect of this
Partnership Pledge Agreement or the Note or Funding
Agreement, or the granting of any postponements or extensions
for time of payment or other indulgences to Grantors, Borrower,
or any other person, or the settlement or adjustment of any claim
or the release or discharge or substitution of Grantors or any
person which may be or become primarily or secondarily liable
with respect to the Note; and
Any assumption by any person of
the obligations of Borrower under the Note or Funding
Agreement, or any assignment by Xxxxx referred to in
Section 12(b).
Successors, Assignments. This
Partnership Pledge Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
Amendments. Except as otherwise
provided herein, no amendment, modification, termination or
waiver of any provision of this Partnership Pledge Agreement,
nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
parties. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is
given.
Perfection of Security Interest. Upon
execution of this Partnership Pledge Agreement Grantors agree to
execute and deliver to Xxxxx UCC financing statements
describing the Pledged Partnership Units and all certificates, if
any, evidencing the Pledged Partnership Units. Grantors further
agree that in the future they will, at any time upon the reasonable
request of Xxxxx, execute and deliver such further documents
within ten (10) days and do such further acts and things as Xxxxx
may reasonably request in order to fully effect the purpose of this
Partnership Pledge Agreement.
Notices. All notices, requests, demands,
directions and other communications required under this Note
shall be in writing (including telegraphic communication) and
mailed by United States mail or facsimiled or delivered by
overnight courier or by hand to the applicable party at the
addresses indicated below:
if to Grantors:
XXXXX X. XXXXX
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
XXXXXX X. XXXXX
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
if to Xxxxx:
XXXXXXX X. XXXXX
000 XX Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
or, as to any party, at such other address as shall be designated
by such party in a written notice to each other party complying as
to delivery with the terms of this Section 16. All such notices,
requests, demands, directions and other communications so
mailed or telecopied or delivered shall be effective when received
if sent by mail, when delivered if delivered by courier or by hand,
or when transmitted if sent by facsimile.
Severability of Provisions. Any provision
of this Partnership Pledge 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 hereof or thereof or
affecting the validity or enforceability of such provision in any
other jurisdiction.
Attorneys' Fees; Costs. In the event
litigation is initiated to enforce any remedy contained in this
Partnership Pledge Agreement, then the prevailing party in that
litigation shall be entitled to recover its reasonable costs, charges,
expenses and attorneys' fees incurred in that litigation from the
nonprevailing party.
Litigation shall include any action at law or in
equity, the appeal of any trial court decision, any arbitration
proceeding, any action contesting or seeking to restrain, enjoin,
stay or postpone the exercise of any remedy and any bankruptcy,
probate or other proceeding involving Grantor including but not
limited to the following actions and proceedings in bankruptcy:
(a) filing an involuntary bankruptcy petition; (b) seeking
dismissal, abstention or conversion of a bankruptcy proceeding;
(c) challenging venue of a bankruptcy proceeding; (d) filing and
defending a proof of claim; (e) opposing or conditioning the
debtor's right to operate its business; (f) serving on a creditors'
committee; (g) seeking appointment of a trustee, examiner or
disbursing agent; (h) proposing, challenging or seeking
modification of a plan of reorganization; (i) seeking relief from
stay and/or adequate protection; (j) opposing the debtor's use of
cash collateral or obtaining credit; and (k) opposing discharge.
For the purpose of this Partnership Pledge
Agreement, the terms "attorney fees" and "costs" shall include the
reasonable fees and expenses of counsel, which may include
reporting (for depositions), printing, copying, duplicating and
other expenses, air freight and facsimile transmission charges,
and fees billed for law clerks, paralegals, production assistants,
expert witnesses and others not admitted to the bar but
performing services under the supervision of any attorney. Such
costs, expenses and fees shall be due and payable upon demand
and shall bear interest from the date of such demand to and
including the date of collection at the highest rate of interest stated
in the Loan Agreement (including any Default Rate).
Governing Law. This Partnership Pledge
Agreement shall be governed by, and construed in accordance
with, the laws of the State of Oregon (excluding the laws
applicable to conflicts or choice of law).
Legal Representation. Each party to this
Agreement has been advised to obtain independent legal counsel
prior to executing this Agreement and has had a full and fair
opportunity to do so and either obtained such representation or
voluntarily declined to do so. Each party acknowledges that
Xxxxxxx X. Xxxxxxxx, P.C. is the attorney only for Xxxxx X. Xxxxx
individually and that Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx are
the attorneys only for Xxxxxxx X. Xxxxx.
Option to Repurchase Partnership Units.
Notwithstanding any other provision of this Partnership Pledge
Agreement to the contrary, if any person or entity should at any
time acquire ownership of any of the Pledged Partnership Units,
then Grantors shall have an option to purchase up to 50% of the
Pledged Partnership Units acquired by Xxxxx ("Eligible Re-
Purchase Units") on the following terms and conditions (the "Re-
Purchase Option"):
The Re-Purchase Option cannot be
exercised until the second anniversary of the date on which
Xxxxx becomes the owner of any or all of the Pledged
Partnership Units and can only be exercised until the fifth
anniversary of such date.
The purchase price payable by
Grantors shall be $5,357 per Eligible Re-Purchase Unit, for a
maximum purchase price of approximately $300,000 if Xxxxx
acquires ownership of all of the Pledged Partnership Units and
Grantors elect to re-purchase 50% of such Units.
To exercise the Re-Purchase
Option, Grantors shall give written notice to Xxxxx of their
election to exercise the Re-Purchase Option. The notice shall
specify the number of Eligible Re-Purchase Units which Grantors
elect to purchase. The sale and purchase of the Eligible Re-
Purchase Units which Grantors elect to purchase shall be closed
within 30 days after Grantors' notice of exercise. On the closing
date for such purchase, Grantors shall deliver the entire purchase
price for the Eligible Re-Purchase Units to Xxxxx in cash.
Assignment of Loan and Note.
Notwithstanding any other provisions of this Agreement,
pursuant to Section 2 of the Funding Agreement, if Xxxxx should
at any time acquire any of the Pledged Partnership Units then
Xxxxx shall immediately assign and endorse the Loan and Note
to Grantors, who shall have unconditional right, title and interest
in the Loan and Note in the principal amount of $300,000,
without recourse to Xxxxx. The foregoing shall be in addition to
any rights of subrogation which Grantors may have under
applicable law.
Substitution of Shares. Pursuant to
Section 5 of the Funding Agreement, the parties intend that, as
part of the Reorganization, shares of Casinovations, Inc.
common stock shall be substituted for the Pledged Partnership
Units, at which time this Partnership Pledge Agreement shall be
appropriately amended and restated as a Stock Pledge Agreement.
Securities Laws. The Partnership Units
pledged herein have been issued pursuant to the Partnership
Agreement and have not been registered with the Securities and
Exchange Commission under the Securities Act of 1933, as
amended, or under the securities acts of Washington, Oregon,
Nevada, or under any other state securities laws. The sale or
other disposition of the Units is restricted, as stated in the
Partnership Agreement. By acquiring any Unit represented by
the Partnership Agreement, the acquiring party represents that
such party has acquired the Units for investment and that such
party will not sell or otherwise dispose of the Units without
registration or other compliance with the aforesaid acts and the
rules and regulations thereunder. Xxxxx acknowledges he has
read the Partnership Agreement and agrees to remain bound by its
terms and conditions.
Counterparts. This Agreement may be
executed in two or more fully or partially executed counterparts,
each of which will be deemed an original binding the signer
thereof against the other signing parties, but all counterparts
together will constitute one and the same instrument.
IN WITNESS WHEREOF, Grantors have caused this
Partnership Pledge Agreement to be executed as of the date first
above written.
GRANTORS:
XXXXX X. XXXXX
XXXXXX X. XXXXX
ACKNOWLEDGED BY XXXXX:
XXXXXXX X. XXXXX
