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EXHIBIT 99.B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of March 4, 1997
is made by The Rattlesnake Holding Company., Inc., a Delaware corporation (the
"Company") in favor of J.L.B. OF NEVADA, INC. and Xxxxxxx Xxxxx (the "Secured
Party").
The Secured Promissory Notes dated as of March 4, 1997 in the
aggregate amount of Five Hundred Thousand Dollars ($500,000) (collectively the
"Note") executed by the Company in favor of the Secured Party provides, subject
to its terms and conditions, for a concurrent loan to the Company. It is a
condition to the concurrent loan under the Note by the Secured Party that the
Company shall have executed and delivered, and granted the Lien provided for in
this Agreement.
To induce the Secured Party to enter into, and to extend credit under,
the Note and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company has agreed to pledge,
assign and grant a security interest in the Collateral as security for the
Secured Obligations. Accordingly, the Company agrees with the Secured Party as
follows:
1. Definitions and Interpretation.
1.1 Certain Defined Terms. The following terms shall have
the following meanings under this Agreement:
"BASIC DOCUMENT" shall mean the Note and this Agreement.
"CODE" shall mean the Uniform Commercial Code as in effect in
the State of New York from time to time or, by reason of mandatory application,
any other applicable jurisdiction.
"COLLATERAL" shall mean all right, title and interest of the
Company in the shares of capital stock (the "Stock") held by the Company in the
following subsidiaries (collectively the "Subsidiaries") of the company: 100
shares of Rattlesnake Ventures, Inc., 100 shares of Rattlesnake-Danbury, Inc.,
100 shares of Rattlesnake-Lynbrook, Inc. and 100 shares of Common Stock of
Rattlesnake-Flemington, Inc.
"DEFAULT" shall mean any default described in the Note.
"LIEN" shall mean, with respect to any property, any
mortgage, lien, pledge, charge, security interest or encumbrance
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of any kind in respect of such property or any agreement to give, or notice of,
any of the foregoing.
"SECURED OBLIGATIONS" shall mean any and all obligations of
the Company for the performance of its agreements, covenants and undertakings
under or in respect of the Note, including the payment of all amounts owed
thereunder.
1.2 Interpretation. In this Agreement, unless otherwise
indicated, the singular includes the plural and plural the singular; words
importing either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions
of sections), exhibits, annexes or schedules are to this Agreement; references
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to such instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of any such document); and references to
persons or entities including their respective permitted successors and
assigns.
2. Collateral.
2.1 Grant. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Company hereby pledges, assigns and
grants to the Secured Party a security interest in all of the Company's right,
title and interest in and to the Collateral.
2.2 Perfection. Concurrently with the execution and delivery
of this Agreement, the Company shall (i) file such financing statements and
other documents in such offices as the Secured Party may reasonably request in
writing to perfect and establish the Lien granted by this Agreement, (ii)
deliver to the attorneys for the Secured Party and pledge to the Secured Party
certificates representing the Stock, and (iii) take all such other actions as
shall be necessary or as the Secured Party may request to perfect and establish
the priority of the Lien granted by this Agreement.
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2.3 Preservation and Protection of Security Interests.
The Company shall:
(a) upon the acquisition after the date of this
Agreement by the Company of any instrument or chattel paper evidencing all or
any part of the interests constituting the Collateral, promptly deliver and
pledge to the Secured Party all such instruments or chattel paper, endorsed or
accompanied by such instruments of assignment and transfer in such form and
substance as the Secured Party may request; and
(b) give, execute, deliver, file or record any
and all financing statements, notices, contracts, agreements or other
instruments, obtain any and all governmental approvals and take any and all
steps that may be necessary or as the Secured Party may request to create,
perfect, establish the priority of, or to preserve the validity, perfection or
priority of, the Lien granted by this Agreement or to enable the Secured Party
to exercise and enforce its rights, remedies, powers and privileges under this
Agreement with respect to such Lien.
2.4 Attorney-in-Fact.
(a) The Secured Party is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, to preserve the validity, perfection and priority of the Lien
granted by this Agreement (including, without limitation, the filing or
recording of such financing statements as Secured Party may deem appropriate or
necessary) and, following any Default, to exercise its rights, remedies, powers
and privileges under this Agreement. This appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Secured Party shall be entitled under this Agreement upon
the occurrence and continuation of any Default (i) to ask, demand, collect, xxx
for, recover, receive and give receipt and discharge for amounts due and to
become due under and in respect of all or any part of the Collateral; (ii) to
receive, endorse and collect any instruments or other drafts, instruments,
documents and chattel paper in connection with clause (i) above (including any
draft or check representing the proceeds of insurance or the return of unearned
premiums); (iii) to file any claims or take any action or proceeding that the
Secured Party may deem necessary or advisable for the collection of all or any
part of the Collateral, including the collection of any compensation due and to
become due under any contract or agreement with respect to all or any part of
the Collateral; and (iv) to execute, in connection with any sale or disposition
of the Collateral under Section 4,
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any endorsements, assignments, bills of sale or other instruments of conveyance
or transfer with respect to all or any part of the Collateral.
(b) So long as no Default shall have occurred and
be continuing, the Company shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral for all
purposes not inconsistent with the terms of this Agreement.
(c) If any Default shall have occurred and be
continuing, and whether or not the Secured Party exercises any available right
to declare any Secured Obligation due and payable or seeks or pursues any other
right, remedy, power or privilege available to it under applicable law, this
Agreement or any other Basic Document, all payments and other distributions on
the Collateral shall be paid directly to the Secured Party or its designee,
retained by it and applied as set forth in Section 4.04.
2.5 Rights and Obligations.
(a) The Company shall remain liable to perform
its duties and obligations under the contracts and agreements included in the
Collateral in accordance with their respective terms to the same extent as if
this Agreement had not been executed and delivered. The exercise by the Secured
Party of any right, remedy, power or privilege in respect of this Agreement
shall not release the Company from any of its duties and obligations under such
contracts and agreements. The Secured Party shall have no duty, obligation or
liability under such contracts and agreements by reason of this Agreement or
any other Basic Document, nor shall the Secured Party be obligated to perform
any of the duties or obligations of the Company under any such contract or
agreement or to take any action to collect or enforce any claim under any such
contract or agreement.
(b) No Lien granted by this Agreement in the
Company's right, title and interest in any contract or agreement shall be
deemed to be a consent by the Secured Party to any such contract or agreement.
(c) No reference in this Agreement to proceeds or
to the sale or other disposition of Collateral shall authorize the Company to
sell or otherwise dispose of any Collateral.
(d) The Secured Party shall not be required to
take steps necessary to preserve any rights against prior parties to any part
of the Collateral.
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3. Representations, Warranties and Covenants. As of the date
of this Agreement, the Company represents, warrants and covenants to the
Secured Party as follows:
3.1 Title. The Company is the sole beneficial owner of
the Collateral in which it purports to xxxxx x Xxxx pursuant to this Agreement,
and such Collateral is free and clear of all Liens. The Lien granted by this
Agreement in favor of the Secured Party has attached and constitutes a
perfected security interest in all of such Collateral prior to all other Liens.
3.2 Sales and Other Liens. The Company shall not
dispose of any Collateral, create, incur, assume or suffer to exist any Lien
upon any Collateral or file or suffer to be on file or authorize to be filed,
in any jurisdiction, any financing statement or like instrument with respect to
all or any part of the Collateral in which the Secured Party is not named as
the sole secured party.
3.3 Principal Place of Business. The Company's chief
executive office and principal place of business is located at
the address set forth below.
3.4 Further Assurances. The Company agrees that, from
time to time upon the written request of the Secured Party, the Company will
execute and deliver such further documents and do such other acts and things as
the Secured Party may reasonably request in order fully to effect the purposes
of this Agreement.
3.5 Stock and Future Issuances. The Stock constitutes
all of the issued and outstanding shares of capital stock of the Subsidiaries.
No additional capital stock of the Subsidiaries may be issued, and no transfer
of assets of the Subsidiaries shall be made, until the repayment of the Note in
full.
4. Remedies.
4.1 Events of Default, Etc. If any Default shall have
occurred and be continuing:
(a) The Secured Party in its discretion may make
any reasonable compromise or settlement it deems desirable with respect to any
of the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(b) The Secured Party in its discretion may, in
its name or in the name of the Company or otherwise, demand, xxx for, collect
or receive any money or property at any time payable or receivable on account
of or in exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
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(c) The Secured Party in its discretion may, upon
ten business days' prior written notice to the Company of the time and place,
with respect to all or any part of the Collateral which shall then be or shall
thereafter come into the possession, custody or control of the Secured Party or
any of its agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Secured Party deems best, for cash,
for credit or for future delivery (without thereby assuming any credit risk)
and at public or private sale, without demand of performance or notice of
intention to effect any such disposition or of time or place of any such sale
(except such notice as is required above or by applicable statute and cannot be
waived), and the Secured Party or any other person or entity may be the
purchaser, lessee or recipient of any or all of the Collateral so disposed of
at any public sale (or, to the extent permitted by law, at any private sale)
and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Company, any such demand, notice and right or equity being
hereby expressly waived and released. The Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be
so adjourned; and
(d) The Secured Party shall have, and in its
discretion may exercise, all of the rights, remedies, powers and privileges
with respect to the Collateral of a secured party under the Code (whether or
not the Code is in effect in the jurisdiction where such rights, remedies,
powers and privileges are asserted) and such additional rights, remedies,
powers and privileges to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights, remedies, powers and privileges in
respect of this Agreement or the Collateral may be asserted, including the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if the
Secured Party were the sole and absolute owner of the Collateral (and the
Company agrees to take all such action as may be appropriate to give effect to
such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 4.01 shall be applied in accordance
with Section 4.4.
4.2 Deficiency. If the proceeds of, or other realization
upon, the Collateral by virtue of the exercise of remedies under Section 4.01
are insufficient to cover the costs and expenses of such exercise and the
payment in full of the
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other Secured Obligations, the Company shall remain liable for any deficiency.
4.3 Private Sale.
(a) The Secured Party shall incur no liability as
a result of the sale, lease or other disposition of all or any part of the
Collateral at any private sale pursuant to Section 4.01 conducted in a
commercially reasonable manner. The Company hereby waives any claims against
the Secured Party arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if the Secured Party accepts the first
offer received and does not offer the Collateral to more than one offeree.
(b) The Company recognizes that, by reason of
certain prohibitions contained in the Securities Act of 1933 and applicable
state securities laws, the Secured Party may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to distribution or resale. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Secured Party than those obtainable through a public sale
without such restrictions, and, notwithstanding such circumstances, agree that
any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Secured Party shall have no obligation to engage
in public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the respective Issuer of such Collateral to
register it for public sale.
4.4 Application of Proceeds. Except as otherwise
expressly provided in this Agreement and except as provided below in this
Section 4.04, the proceeds of, or other realization upon, all or any part of
the Collateral by virtue of the exercise of remedies under Section 4.01 and any
other cash at the time held by the Secured Party under this Agreement, shall be
applied by the Secured Party:
First, to the payment of the costs and expenses of
such exercise of remedies, including reasonable out-of-pocket costs and
expenses of the Secured Party, the fees and expenses of its agents and counsel
and all other expenses incurred and advances made by the Secured Party in that
connection;
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Next, to the payment in full of the remaining
Secured Obligations in such manner as the Secured Party may
determine; and
Finally, to the payment to the Company, or its
respective successors or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining.
As used in this Section 4, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Company or any issuer of,
or account debtor or other obligor on, any of the Collateral.
5. Miscellaneous.
5.1 Waiver. No failure on the part of the Secured Party
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, remedy, power or privilege under this Agreement shall operate as
a waiver of such right, remedy, power or privilege, nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
5.2 Notices. All notices and communications to be given
under this Agreement shall be given or made in writing to the intended
recipient at the address specified below or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall
be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case, given or addressed as
provided in this Section 5.02:
To the Company: The Rattlesnake Holding Company, Inc.
0 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
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With a copy to: Xxxxxxxxx & XxXxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxx X. XxXxxxx
To the Secured Party:
Xxxxxxx Xxxxx J.L.B. of Nevada, Inc.
c/o Lancer Group 0000 Xxxx Xxxxxxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxxx 000
Xxxxx 0000 Xxx Xxxxx, XX 00000
Xxx Xxxx, XX 00000 Attn: Xxx Xxxxxxxx
With a copy to: Xxxxxx & Xxxxxxxx
Xxx Xxxxxx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Fax No. (000) 000-0000
Attn: Xxxxxx Xxxx
5.3 Expenses, Etc. The Company agrees to pay or to reimburse
the Secured Party for all costs and expenses (including reasonable attorney's
fees and expenses) that may be incurred by the Secured Party in any effort to
enforce any of the provisions of Section 4 or any of the obligations of the
Company in respect of the Collateral or in connection with (a) the preservation
of the Lien of, or the rights of the Secured Party under this Agreement or (b)
any actual or attempted sale, lease, disposition, exchange, collection,
compromise, settlement or other realization in respect of, or care of, the
Collateral, including all such costs and expenses (and reasonable attorney's
fees and expenses) incurred in any bankruptcy, reorganization, workout or other
similar proceeding relating to the Company.
5.4 Amendments, Etc. Any provision of this Agreement may be
modified, supplemented or waived only by an instrument in writing duly executed
by the Company and the Secured Party. Any such modification, supplement or
waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Secured Party, each holder of any of the Secured Obligations and the Company,
and any such waiver shall be effective only in the specific instance and for
the purposes for which given.
5.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company, the Secured
Party and each holder of any of the Secured Obligations and their
respective successors and permitted assigns. The Company shall
not assign or transfer its rights under this Agreement without the prior
written consent of the Secured Party.
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5.6 Survival. All representations and warranties made
in this Agreement or in any certificate or other document delivered pursuant to
or in connection with this Agreement shall survive the execution and delivery
of this Agreement or such certificate or other document (as the case may be) or
any deemed repetition of any such representation or warranty.
5.7 Agreements Superseded. This Agreement supersedes
all prior agreements and understandings, written or oral, among the parties
with respect to the subject matter of this Agreement.
5.8 Severability. Any provision of this Agreement that 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.
5.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
THE RATTLESNAKE HOLDING COMPANY, INC.
a Delaware corporation
By /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx, Chairman
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