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Exhbiit 10.5
PLEDGE AGREEMENT
1. IDENTIFICATION.
This Pledge Agreement (the "Agreement"), dated for identification
purposes only July 28, 1997, is made by United Leisure Corporation, a Delaware
corporation ("Obligor") for the benefit of Xxxxxx Xxxxxxxx, an individual
("Secured Party").
2. RECITALS.
2.1. Secured Party has loaned certain funds (the "Loan") to Obligor, as
evidenced by that Secured Promissory Note dated July 28, 1997, in the original
principal amount of Nine Hundred Thousand Dollars ($900,000) executed by Obligor
as maker for the benefit of Secured Party as holder (the "Note").
2.2. Xxxxx Xxxxxxx, the President and majority shareholder of Obligor,
and his wife Xxxx Xxxxxxx (together, "Guarantors") have guaranteed Obligor's
obligations under the Note pursuant to the terms of that certain Secured
Guaranty dated July 28, 1997 (the "Guaranty"). Guarantors' obligations under
Secured Guaranty are secured by a pledge of certain collateral described in that
certain Guarantor Pledge Agreement dated July 28, 1997 (the "Guarantor Pledge
Agreement").
2.3. In order to induce Secured Party to make the Loan, and as security
for Obligor's performance of its obligations under the Note (collectively, the
"Obligations"), Obligor has agreed to assign and pledge to Secured Party certain
issued and outstanding shares of common stock owned by Obligor, on the terms and
conditions hereinafter set forth.
3. GRANT OF SECURITY INTEREST IN COLLATERAL.
As security for the Obligations, Obligor hereby grants, pledges,
assigns and transfers to Secured Party a lien on, and a continuing security
interest in:
3.1. 300,000 shares of Common Stock of Grand Havana Enterprises, Inc.,
a Delaware corporation, owned by Obligor, and all benefits and entitlements
evidenced thereby (the "Securities"), and all other securities, instruments and
other property issued or accepted in substitution for or in addition to any of
the foregoing, and all dividends, interest, cash, instruments, securities and
any other property at any time received, receivable or otherwise distributed in
respect of or in exchange for any of the foregoing; and
3.2. All proceeds ("Proceeds") of the sale, collection, exchange or
other disposition of the Securities, whether voluntary or involuntary, including
without limitation, all rights to payment with respect to any cause of action
affecting or relating to the Securities (the Securities and Proceeds shall
hereinafter be referred to collectively as the "Collateral").
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Obligor shall make appropriate entries upon its financial statements and books
and records disclosing Secured Party's security interest in the Collateral.
4. REPRESENTATIONS AND WARRANTIES OF OBLIGOR.
Obligor represents and warrants the following:
4.1. Obligor owns, and has the right and power to xxxxx x xxxx on, and
a security interest in, the Collateral, and has obtained all necessary third
party consents in order to grant such security interest.
4.2. Obligor has all of the requisite power and authority to enter into
this Agreement, and to perform his obligations under this Agreement and all
other documents and instruments contemplated by this Agreement or relating
hereto.
4.3. Obligor is, and as to any substitute or additional Collateral
shall be, the sole owner of the Collateral and all of the Collateral is and
shall be free from liens, encumbrances, claims, setoffs, repurchase or other
options or charges and demands of any kind or character.
4.4. All statements made by Obligor in this Agreement are true and
complete in all material respects, and shall be true, complete and correct at
the time of the effective date of each additional agreement or instrument
contemplated by this Agreement, and shall be continuing and shall remain true,
correct and in full force and effect until such time as the Obligations are
paid, performed and/or satisfied in full and any amounts owed by Obligor to
Secured Party pursuant to the Note have been paid in full.
5. TRANSFER OF COLLATERAL: FURTHER ACTION BY OBLIGOR;
COVENANTS.
5.1. The parties acknowledge that the stock certificate representing
the Securities has been lost and/or destroyed. Obligor shall obtain a
replacement stock certificate as soon as practicable after execution of this
Agreement, and in no event later than 20 days from the date hereof, and shall
immediately thereafter deliver such certificate representing the Collateral, in
suitable form for transfer or delivery and accompanied by duly executed
instruments of transfer, and Obligor shall take such other action or issue or
cause to be issued such other instructions as may be required to perfect Secured
Party's security interest in the Collateral.
5.2. Obligor shall furnish to Secured Party, promptly upon receipt
thereof, copies of all material notices, requests and other documents received
by Obligor relating to the Collateral.
5.3. Obligor shall not take or permit to be taken any action in
connection with any Collateral which would impair the value of the interest or
rights of Obligor or of Secured Party therein or thereunder.
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5.4. Obligor shall promptly execute and deliver, at the expense of
Obligor, all such further notices, instruments and documents, and shall take all
such further action, as may be necessary or advisable, or as Secured Party may
request at any time or from time to time, in order to perfect, preserve and
protect the security interest granted hereunder or to enable Secured Party to
exercise and enforce its rights, remedies and powers hereunder and in order to
consummate fully all of the transactions contemplated by this Agreement.
5.5. Obligor shall, at Obligor's expense: (a) keep complete and
accurate records regarding the Collateral; (b) permit Secured Party and its
designees at all reasonable times to inspect Obligor's books and records
regarding the Collateral; (c) supply Secured Party with such information
concerning the Collateral and deliver to Secured Party such papers and
information with respect to the Collateral as Secured Party may request; (d)
immediately notify Secured Party of any event causing material loss or
depreciation in the value of the Collateral and the amount of such loss or
depreciation; and (e) defend the right, title and interest of Secured Party in,
to and under the Collateral against the claims and demands of all persons and
entities.
6. POWER OF ATTORNEY.
Obligor hereby irrevocably constitutes and appoints Secured Party as
the true and lawful attorney of Obligor, with full power of substitution, in the
place and stead of Obligor and in the name of Secured Party or Obligor or
otherwise, at any time or times, in the discretion of Secured Party, to take any
action and to execute any instrument or document which Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
6.1. To receive, endorse and collect all checks and other orders or
instruments for the payment of money made payable to Obligor representing any
payment, dividend or other distribution in respect of any Collateral and to give
full discharge for same.
6.2. To execute endorsements, assignments or other instruments of
conveyance or transfer with respect to any Collateral.
6.3. To demand, xxx for, collect, receive and give acquittance for any
moneys due and to become due under or in respect of any Collateral.
6.4. To file any claims or take any action or institute any proceedings
which Secured Party may in its sole and absolute discretion deem necessary or
advisable for the collection of any or all Collateral or otherwise to enforce
the rights of Secured Party with respect thereto.
This power of attorney is coupled with an interest, is irrevocable and
shall not be affected by any subsequent disability or incapacity of Obligor.
7. PERFORMANCE BY SECURED PARTY.
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If Obligor fails to perform any covenant, agreement, duty or obligation
of Obligor under this Agreement, Secured Party may, at any time or times in his
discretion, take action to effect performance of such obligation. All expenses
of the Secured Party incurred in connection with the foregoing authorization
shall be payable by Obligor as provided in Paragraph 13.1 hereof. No
discretionary right, remedy or power granted to Secured Party under any part of
this Agreement shall be deemed to impose any obligation whatsoever on Secured
Party with respect thereto, such rights, remedies and powers being solely for
the protection of Secured Party.
8. DIVIDENDS, INTEREST AND VOTING POWER.
8.1. Prior to any Event of Default as defined in Article 9 herein, or
the occurrence of any event which after notice or a lapse of time, or both,
would constitute an Event of Default, Obligor shall be entitled:
(a) To exercise all voting power pertaining to the
Collateral for all purposes, but in a manner which is not
inconsistent with the provisions of this Agreement or any other
agreement, instrument or document evidencing or relating to any of
the Obligations, and Secured Party shall execute or cause to be
executed from time to time, at the expense of Obligor, such
proxies or other instruments as shall be reasonably requested in
writing by Obligor to enable Obligor to exercise such voting
power; and
(b) To receive and retain all dividends (other than stock
or liquidating dividends) and interest paid on Collateral.
(c) If, upon the dissolution or liquidation (in whole or
in part, whether voluntarily or involuntarily) of Grand Havana
Enterprises, Inc., as the issuer of the Collateral, any sum is
paid as a liquidating dividend on or with respect to any
Collateral, Obligor shall accept the same in trust for Secured
Party and shall deliver same immediately to Secured Party either
to be held by him as Collateral hereunder or to be applied to the
Obligations then due in such order and in such amounts as Secured
Party may elect. If any stock dividend is declared on any
Collateral, or any shares of stock or fractions thereof are issued
pursuant to any "stock split" involving any Collateral, or if any
distribution of capital is made on any Collateral or if any shares
of stock, obligations or other property are distributed on or with
respect to Collateral, whether on account of recapitalization,
bankruptcy, reorganization, merger or consolidation of the issuer,
or otherwise, the shares of stock, obligations or other property
so distributed shall be accepted by Obligor in trust for Secured
Party and shall be delivered to Secured Party to be held by him as
Collateral hereunder and all of the foregoing which are securities
or instruments shall constitute Collateral for all purposes
hereof. All cash so distributed shall be paid to Secured Party and
held or applied by him as provided in the first sentence of this
Paragraph 8. 1 .(c).
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8.2. Upon and after and during the continuation of an Event of Default,
Secured Party shall be entitled to exercise all voting power pertaining to any
Collateral and to receive and retain as Collateral hereunder or apply, as
provided in the first sentence of Paragraph 8.1.(c), to any of the Obligations
then due (whether by acceleration, demand or otherwise) any and all dividends
and interest at any time declared or paid on the Collateral.
8.3. All payments, shares of stock and other property referred to in Paragraphs
8. l.(b) and (c), if received by Obligor, shall be received by Obligor in trust
for Secured Party and shall be delivered by Obligor to Secured Party,
immediately upon receipt thereof by Obligor, duly endorsed or assigned to
Secured Party as appropriate, in the identical form received by Obligor.
9. EVENTS OF DEFAULT.
An event of default ("Event of Default") shall be deemed to have
occurred hereunder upon the occurrence of any of the following:
9.1. The failure of Obligor to pay interest and principal as and when
due under the Note.
9.2. The failure of any representation or warranty contained in the
Note, this Agreement, the Guaranty or the Guarantor Pledge Agreement or under
any instrument or agreement evidencing or constituting or granting security for
any or all of the Obligations, or a default under the Note, the Guaranty or the
Guarantor Pledge Agreement.
9.3. Any other event, of whatever nature, which would accelerate or
entitle Secured Party to accelerate the maturity of any or all of the
Obligations.
9.4. The filing by Obligor or Guarantors (or either of them) of a
petition commencing a voluntary case under the federal bankruptcy laws, or
commencing any proceeding under any other federal or state bankruptcy or
insolvency laws, or the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Obligor or Guarantors (or either
of them) in an involuntary case under the federal bankruptcy laws or any other
federal or state bankruptcy or insolvency law or statute, of any jurisdiction,
whether now or hereafter in effect, which order remains unstayed and in effect
for thirty (30) consecutive days or more.
Upon and after any Event of Default which is then continuing, any or
all of the Obligations shall become immediately due and payable at the option of
Secured Party, and Secured Party may dispose of Collateral as provided below.
10. DISPOSITION OF COLLATERAL.
Upon and after any Event of Default which is then continuing:
10.1. Secured Party may exercise his rights with respect to the
Collateral, without regard to the existence of any other security or source of
payment for the Obligations. In
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addition to other rights and remedies provided for herein or otherwise available
to him, Secured Party shall have all of the rights and remedies of a secured
party on default under the Uniform Commercial Code ("Code") then in effect in
the State of Nevada.
10.2. If any notice to Obligor of the sale or other disposition of
Collateral is required by then applicable law, five (5) days' prior notice (or,
if longer, the shortest period of time required by then applicable law) to
Obligor of the time and place of any public sale of Collateral or of the time
after which any private sale of any other intended disposition is to be made,
shall constitute reasonable notification.
10.3. If all or any part of the Collateral is sold on credit or for
future delivery, the Collateral so sold may be retained by Secured Party until
the purchase price is paid in full. Secured Party shall incur no liability in
case of the failure of the purchaser to pay for the Collateral as so sold, or of
the failure of Secured Party to make any sale of Collateral after giving notice
thereof, and in case of any such failure, such Collateral may again be sold upon
the same notice as in the case of an original sale.
10.4. All cash proceeds received by Secured Party in respect of any
sale, collection or other enforcement or disposition of Collateral, shall be
applied (after deduction of any amounts payable to the Secured Party pursuant to
Paragraph 13.1 hereof) against the Obligations in such order and in such amounts
as Secured Party shall in his sole and absolute discretion elect. Upon payment
in full of all Obligations, Obligor shall be entitled to the return of all
Collateral, including cash, which has not been used or applied toward the
payment of Obligations or used or applied to any and all costs or expenses of
Secured Party incurred in connection with the liquidation of the Collateral
(unless another person is legally entitled thereto). Any assignment of
Collateral by Secured Party to Obligor shall be without representation or
warranty of any nature whatsoever and wholly without recourse. Notwithstanding
the foregoing provisions hereof, Secured Party shall not be obligated to return
Collateral, unless Obligor furnishes to Secured Party indemnity, reasonably
satisfactory to Secured Party in his sole and absolute discretion.
11. REGISTRATION RIGHTS.
11.1. As used in this Paragraph 11, the following capitalized terms
shall have the following respective meanings:
(a) "Exchange Act" means The Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference
to a particular section thereof shall be deemed to include a reference
to the comparable section, if any, of any such similar federal statute.
(b) "Holder" means Secured Party or any permitted transferee of
Secured Party, which is a holder of the Securities.
(c) "Registrable Secunties" means the Securities.
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(d) "Registration Expenses" means any and all expenses incident
to performance of or compliance with this Paragraph 11, including
without limitation, (i) all SEC and stock exchange or National
Association of Securities Dealers registration and filing fees, (ii)
all fees and expenses of complying with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery
expenses, and (iv) the fees and disbursements of counsel for the
Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required
by or incident to such performance and compliance, but excluding
underwriting discounts and commissions and transfer taxes, if any.
(e) "Securities Act" means The Securities Act of 1933, as
amended, or any similar federal statute then in effect, and a reference
to a particular section thereof shall be deemed to include a reference
to the comparable section, if any, of any such similar federal statute.
(f) "SEC" means The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
11.2. If the Company at any time proposes to register any of its Common
Stock on any form for the general registration of securities under the
Securities Act, then the Company will at such time give prompt written notice to
all Holders of its intention to do so and of such Holders' rights under this
Paragraph 11.2. Upon the written request of such Holders made within twenty (20)
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of disposition thereof), the Company will use its best efforts
to cause the Registrable Secunties which the Company has been so requested to
register by the Holders thereof to be registered under the Securities Act;
provided, that (i) if, at any time after giving written notice of its intention
to register any secunties but prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company may at its
election, give written notice of such determination to each Holder and,
thereupon, shall be relieved of its obligation to register any Registrable
Secunties in connection with such registration, and (ii) if such registration
involves an underwritten offering, all Holders requesting to be included in such
registration must sell their Registrable Securities to the underwriters of such
offering on the same terms and conditions as apply to the Company or the Holder
for whose account securities are to be sold, as the case may be. If a
registration requested pursuant to this Paragraph 11.2 involves an underwritten
public offering, any Holder requesting to be included in such registration may
elect in writing, not later than three (3) days prior to the effectiveness of
the registration statement filed in connection with such registration, not to
register such securities in connection with such registration. The Company will
pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Paragraph 11.2. In connection
with any registration pursuant to this Paragraph 11.2 involving an underwritten
offering, if the managing underwriter or underwriters advise the Company in
writing that, in its or their opinion, the number of securities requested to be
included in such registration would have
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a material adverse effect on such offering (including, without limitation, a
significant decrease in the price at which such securities can be sold), then
the amount of Registrable Securities to be offered for the accounts of Holders
shall be reduced pro rata as to all requesting Holders on the basis of the
relative number of shares of Registrable Securities each such Holder has
requested to be included in such registration, or such Registrable Securities
shall be excluded from such registration, to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters; provided, however,
that if securities are being registered for the account of persons or entities
other than the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by Holders than the
fraction of similar reductions imposed on such other persons or entities (but
not the Company) with respect to the amount of securities they intended to
offer.
11.3. The Company shall grant to Holder the following demand
registration rights:
(a) At any time from and after an Event of Default under this
Agreement, Holder(s) may make three (3) written requests for the
registration under the Securities Act of all or part of their
Registrable Securities (a "Demand Registration") and the Company effect
such Demand Registration. Any request for a Demand Registration shall
specify the aggregate number of the Registrable Securities proposed to
be sold and shall also specify the intended method of disposition
thereof (the "Demand Notice"). Within ten (10) days after receipt of
such request the Company will give written notice of such registration
request to all other Holders, and the Company will include in such
registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within
twenty (20) business days after the receipt by the applicable Holder of
the Company's notice. Each such request shall also specify the
aggregate number of Registrable Securities to be registered and the
intended method of disposition thereof. In any registration initiated
as a Demand Registration, the Company will pay all Registration
Expenses in connection therewith.
(b) Any other person entitled to participate in a Demand
Registration (an "Other Shareholder") and the Company shall be
permitted to register equity securities of the Company in any Demand
Registration or to participate in the public offering, but only as
provided in this Paragraph 11.3(b), by requesting that securities of
the same class as the Registrable Securities be included in the Demand
Registration for sale in the public offering on the following terms and
conditions:
(i) Each such Other Shareholder and/or the Company must give
written notice of such election to the Holder within twenty (20)
days of the date the Demand Notice was given to the Company, such
notice to specify the number of shares proposed to be sold by
each Other Shareholder and/or the Company in the public offering
(the "Other Shares");
(ii) Each such Other Shareholder and/or the Company must
agree to sell such Other Shares on the same basis provided in the
underwriting
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arrangements, if any, approved by the Holder and to complete and
execute in a timely manner all questionnaires, powers of
attorney, indemnities, hold-back agreements, underwriting
agreements and other documents required under the terms of such
underwriting arrangements or by the SEC or by any state
securities regulatory body;
(iii) If the managing underwriter, if any, of the public
offering determines that inclusion of all or any portion of the
Other Shares in the public offering would adversely affect the
marketability of the Common Shares to be sold in the public
offering, the number of Other Shares that may be sold by each
Other Shareholder and/or the Company in the public offering shall
be limited to each number of Other Shares that the managing
underwriter, if any, determines may be included therein without
such an adverse affect. In such event, the number of Other Shares
that may be sold in the public offering shall be allocated pro
rata among each Other Shareholder and the Company based upon the
respective number of Other Shares sought to be included in such
public offering; and
(iv) If any other Shareholder and/or the Company desires to
withdraw their Other Shares from the Demand Registration, they
may do so only at the reasonable discretion of the managing
underwriter, if the Demand Registration contemplates an
underwritten offering.
11.4. Whenever the Company is required to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Agreement, the Company will, as expeditiously as possible:
(a) prepare and, in any event within ninety (90) days after the
end of the period within which request for registration may be given to
the Company (provided, however, if such registration involves an
underwritten offering, all Holders requesting to be included in such
registration must sell their Registrable Securities to the underwriters
of such offering on the same terms and conditions as apply to the
Company or the Holder for whose account the securities are to be sold,
as the case may be), file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective, provided,
however, that the Company may discontinue any registration of its
securities which is being effected pursuant to Paragraph 11.2 herein at
any time prior to the effective date of the registration statement
relating thereto. The Company will promptly notify each seller of such
Registrable Securities and confirm such advice in writing (i) when such
registration statement becomes effective, (ii) when any post-effective
amendment to such registration statement becomes effective and (iii) of
any request by the SEC for any amendment or supplement to such
registration statement or any prospectus relating thereto or for
additional information;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement as may be necessary to keep such
registration statement
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effective for a period of not less than six (6) months and to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the seller or sellers of Registrable Securities set
forth in such registration statement. If at any time the SEC should
institute or threaten to institute any proceedings for the purpose of
issuing a stop order suspending the effectiveness of any such
registration statement, the Company will promptly notify each seller of
such Registrable Securities and will use all reasonable efforts to
prevent the issuance of any such stop order or to obtain the withdrawal
thereof as soon as possible;
(c) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and summary
prospectus) in conformity with the requirements of the Securities Act,
and such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities by such
seller;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such securities
or blue sky laws of any State of the United States as the managing
underwriter, if any, shall reasonably request, and do any and all other
acts and things which may be reasonably necessary or advisable to
enable each seller and underwriter, if any, to consummate the
disposition in such jurisdictions of the Registrable Securities owned
by such seller, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
Paragraph 11.4.(d), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to list such Registrable Securities on
any securities exchange on which the Common Stock is then listed, if
such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange, and to
provide a transfer agent and registrar for such Registrable Securities
covered by such registration statement not later than the effective
date of such registration statement; and
(f) promptly notify each seller of any such Registrable Secunties
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Paragraph 11.4(b) of the
Company becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and at the
request of any such seller promptly prepare and furnish to such seller
a reasonable number of copies of an amended or
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supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing.
(g) The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish the Company
in writing such information and documents regarding such seller and the
distribution of such securities as may be required to be disclosed in
the registration statement in question by the rules and regulations
under the Securities Act or under any other applicable securities or
blue sky laws of the jurisdictions referred to in Paragraph 11.4(d).
(h) Each Holder of Registrable Securities agrees by acquisition
of such Registrable Securities that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Paragraph 11.4.(f), such Holder will forthwith discontinue disposition
of Registrable Securities under such registration statement until such
Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Paragraph 11.4.(f), and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event
the Company shall give any such notice, the period mentioned in
Paragraph 11.4.(b) shall be extended by the number of days during the
period from and including the date of the giving of such notice
pursuant to Paragraph 11.4.(f) to and including the date when each
seller of Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended
prospectus contemplated by Paragraph 11.4.(f).
11.5. The Company agrees to indemnify and hold harmless Holder(s) from
and against any and all losses, claims, damages and liabilities (including any
investigation, legal or other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted) to which Holder(s) may become subject under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or any amendment or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) any
violation by the Company of the Securities Act or the Exchange Act, or other
federal or state law applicable to the Company and relating to any action or
inaction required of the Company in connection with such registration, and shall
reimburse Holder(s) for any legal or other expenses incurred by Holder(s) in
connection with investigating or defending any such loss, claim, damage or
liability; provided, however, that the Company shall not be liable to a selling
shareholder in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue statement or alleged
omission made in such Registration
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Statement, preliminary Prospectus, Prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such selling shareholder specifically for use therein. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such selling shareholder.
12. WAIVER.
12.1. Obligor waives and agrees not to assert or take advantage of (a)
any right to require Secured Party to proceed against any other person, firm or
corporation or to proceed against or exhaust any security held by him at any
time or to pursue any other remedy in his power before proceeding against
Obligor; (b) the defense of the statute of limitations or any related defense
including without limitation, laches, in any action hereunder for the collection
of any of the Obligations; (c) any defense based upon any legal disability of
Obligor or any discharge or limitation of the liability of Obligor to Secured
Party, whether consensual or arising by operation of law or any bankruptcy,
reorganization, receivership, insolvency or debtor-relief proceeding, or from
any other cause; (d) the failure of Secured Party to file or enforce a claim
against the estate (either in administration, bankruptcy, or other proceeding)
of any other or others; (e) presentment, demand, protest and notice, of any
action or non-action on the part of the Secured Party under this or any other
instrument, or any other person whomsoever, in connection with any of the
Obligations or evidence of indebtedness hereby secured, including but not
limited to notice of the existence, creation or incurring of any new or
additional indebtedness or obligation on the part of Obligor or any endorser or
creditor of Obligor or on the part of any other person whomsoever; (f) any
defense based upon an election of remedies by Secured Party, including without
limitation an election to proceed by nonjudicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of
Obligor; (g) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; (h) any defense based on
any borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code; and (i) any defense based upon or arising out of any defense
which Obligor may have to the payment of the indebtedness hereby secured.
12.2. No exercise or nonexercise by the Secured Party of any right
hereby given him, no dealing by the Secured Party with Obligor or any other
person, and no change, impairment or suspension of any right or remedy of the
Secured Party shall in any way affect any of the obligations of Obligor
hereunder or any Collateral furnished by Obligor or give Obligor any recourse
against the Secured Party.
13. MISCELLANEOUS.
13.1. Expenses. Obligor shall pay to Secured Party, on demand, the
amount of any and all reasonable expenses, including, without limitation,
attorneys' fees, legal expenses and brokers' fees, which Secured Party may incur
in connection with (a) sale, collection or other enforcement or disposition of
Collateral; (b) exercise or enforcement of any of the rights, remedies or powers
of Secured Party hereunder or with respect to any or all of the Obligations; or
(c) failure by Obligor to perform and observe any agreements of Obligor
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contained herein which are performed by Secured Party. The expenses set forth in
this paragraph are hereby deemed included in the Obligations.
13.2. Waivers. Amendment and Remedies. No course of dealing by Secured
Party and no failure by Secured Party to exercise, or delay by Secured Party in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
Secured Party. No amendment, modification or waiver of any provision of this
Agreement and no consent to any departure by Obligor therefrom, shall, in any
event, be effective unless contained in a writing signed by Secured Party, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. The rights, remedies and powers of
Secured Party, not only hereunder, but also under any instruments and agreements
evidencing or securing the Obligations and under applicable law are cumulative,
and may be exercised by Secured Party from time to time in such order as Secured
Party may elect.
13.3. Notices. All demands, notices and other communications hereunder shall be
in writing and shall be deemed effective when delivered in hand, or three (3)
days after mailed, by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
To Obligor:
Xxxxx Xxxxxxx c/o
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
With a copy to:
Xxxxxxx, Xxxxxxxx, Mann, Greene, Chizever, Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
To Secured Party:
Xxxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
With a copy to:
Xxxxxxxxx Xxxxxxx Fields Claman & Machtinger LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esq.
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Any party may change his address by written notice in accordance with this
paragraph.
13.4. Term: Binding Effect. This Agreement shall (a) remain in full
force and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon Obligor, and the heirs, legal representatives,
successors in title and assigns of Obligor; and (c) inure to the benefit of
Secured Party and his successors and assigns.
13.5. Captions. The captions of Paragraphs, Articles and Sections in
this Agreement have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other
significance whatsoever.
13.6. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada, except to the
extent that the perfection of the security interest granted hereby in respect of
any item of Collateral may be governed by the law of another jurisdiction. If
any provision of this Agreement, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect.
Witness the execution of this Security Agreement, this 28th day of
July, 1997.
"OBLIGOR"
UNITED LEISURE CORPORATION,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx, President
The undersigned hereby acknowledges and agrees to the provisions of Paragraph 11
of the foregoing Guarantor Pledge Agreement.
GRAND HAVANA ENTERPRISES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Its: President
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