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Exhibit 10.6
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into
this 29th day of July, 1997, by and between WESTMINSTER CAPITAL, INC., A
DELAWARE CORPORATION ("Secured Party"), and UNITED LEISURE CORPORATION, A
DELAWARE CORPORATION ("Debtor").
RECITALS
A. On or about July 29, 1997, Debtor executed a certain
Secured Convertible Promissory Note (the "Note") in the stated principal amount
of One Million Nine Hundred Thousand Dollars ($1,900,000) in favor of Secured
Party. The indebtedness of Debtor to Secured Party under the Note is hereinafter
referred to as the "Indebtedness".
B. It is the purpose and intent of the parties hereto
to secure the payment by Debtor to Secured Party of the
Indebtedness by a pledge of certain collateral, according to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest
in and to 408,333 shares of the common stock of Grand Havana Enterprises, Inc.
("GHE"), a Delaware corporation, which are presently registered in the name of
Debtor, evidenced by share certificate numbers UR1300 and UR1301 ("Collateral")
and does
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hereby deliver to and deposit the Collateral with Xxxxx X. Xxxxxx, as
pledgeholder ("Pledgeholder"), together with a duly executed stock power and a
voting proxy.
During the term hereof, and subject to the provisions of this
Agreement, Pledgeholder shall hold and retain the Collateral in trust, for the
purpose of perfecting the security interest herein granted to Secured Party, and
for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the
Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the
Collateral and that there is no lien or charge against, or encumbrance or
security interest in, or adverse claim to, the Collateral, or any portion
thereof, other than the security interest created pursuant to this Agreement. So
long as there is any Indebtedness whatsoever owing to Secured Party, Debtor
agrees to keep the Collateral free and clear of any and all liens, encumbrances,
security interests (other than the security interest of Secured Party), adverse
claims or interests.
4. As long as Debtor is not in default hereunder, any and all
cash dividends or other property (but not stock dividends) which may be received
by Pledgeholder during the term of this Agreement which derives form the
Collateral shall be remitted to Debtor, and Debtor shall retain all voting
rights associated with the Collateral. Any such cash dividends or other property
so
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received by Pledgeholder after the occurrence of a default hereunder shall be
held by Pledgeholder as additional Collateral, and after the occurrence of such
default Secured Party shall have all voting rights associated with the
Collateral.
5. Debtor shall be in default under this Agreement upon the
happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness
when due, or commits a default or Event of Default under the Note or any of the
"Loan Documents" described in the Note, subject to any applicable notice and/or
"grace" periods;
(b) Debtor fails to perform any other agreement or covenant
under this Agreement within any applicable notice and/or "grace" periods
specified therein, provided that if no notice or grace period is therein
specified, Debtor shall have ten (10) days after notice thereof has been given
within which to cure any such default;
(c) All or any portion of the Collateral is seized or
levied upon by writ of attachment, garnishment, execution or otherwise, and such
seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of
its creditors, ceases to conduct its business in the ordinary course as it is
now conducted, convenes any meeting of its creditors, becomes insolvent, admits
in writing its insolvency or
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inability to pay its debts, or is unable to pay or is generally not paying its
debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to
take possession of all or any portion of the Collateral or all or any
substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by
Debtor under any provision of the federal Bankruptcy Code or any other federal
or state law relating to debtor rehabilitation, insolvency, bankruptcy,
liquidation or reorganization, or any such case or proceeding is involuntarily
commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Debtor sells all or substantially all of its assets;
(h) Any representation made by Debtor in this Agreement, or
in any of the other Loan Documents, shall have been untrue or incorrect in any
material respect when made.
Upon such default, Secured Party may, at its option, declare
all Indebtedness to be immediately due and payable. Additionally, Secured Party
shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party
shall have all the rights and remedies afforded a secured party under Division 9
of the Uniform Commercial Code of California and may, in connection therewith,
also:
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(a) Take possession of the Collateral without
judicial process, provided that this can be done without breach of the peace, or
by legal action; or
(b) Require Debtor to assemble the Collateral and
make its possession available to Secured Party at a place designated by Secured
Party that is reasonably convenient to both Debtor and Secured Party; or
(c) Sell, lease or otherwise dispose of any or all of
the Collateral in its then condition or following any commercially reasonably
preparation or processing in the manner set forth in Section 9504 of the Uniform
Commercial Code of California, or any applicable successor statute; or
(d) Propose to accept the Collateral after giving
notice of such proposal to Debtor and to any other person with a security
interest in the Collateral in accordance with Section 9505(2) of the Uniform
Commercial Code of California, or any applicable successor statute. Such
acceptance shall discharge the obligation of Debtor and the Corporation with
respect to the Indebtedness, provided that neither Debtor nor any other person
with a security interest in the Collateral objects in writing to such proposal
within twenty-one (21) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the
Collateral shall be applied in the manner and priority set
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forth in Section 9504 of the Uniform Commercial Code of California, or any
applicable successor statute.
7. In the event that legal action is instituted by either
party to enforce its rights under this Agreement or any obligation secured
hereby, the prevailing party in such action shall be entitled to recover from
the losing party its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or
demand and without affecting its liability hereunder or on the Indebtedness,
from time to time to:
(d) Amend or modify the terms of the Note, including, but
not limited to, any such amendment or modification which affects the
Indebtedness.
(e) Take and hold security, other than the Collateral
herein described, for the payment of the Indebtedness or any part thereof, and
exchange, enforce, waive, and release the Collateral herein described or any
part thereof or any such other security.
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(f) Apply such Collateral or other security and direct the
order or manner or sale thereof as Secured Party in its discretion may
determine.
9. In the event that any additional shares of capital stock of
GHE are issued to or acquired by Debtor deriving from the Collateral (such as
stock dividends or stock splits) during the term of this Agreement, such
additional shares shall be considered additional Collateral subject to this
Agreement, and Debtor shall immediately deliver such additional shares of
capital stock and duly executed stock powers to Pledgeholder.
10. Neither the acceptance of any partial or delinquent
payment by Secured Party nor Secured Party's failure to exercise any of his
rights or remedies on default by Debtor shall be a waiver of the default, a
modification of this Agreement or Debtor's obligations under this Agreement, or
a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to
this Agreement shall be in writing, and shall be delivered either personally, by
overnight delivery service or by U.S. certified or registered mail, postage
prepaid, return-receipt requested and addressed to the parties at their
respective addresses as they appear below their signatures hereon. Notices may
also be given by facsimile transmission to the facsimile telephone numbers which
appear below the parties' respective signatures hereon, provided that either (a)
receipt of the
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facsimile transmission is acknowledged in writing by the receiving party, which
may also be by a facsimile transmission, or (b) the transmitting party obtains a
written confirmation from its own facsimile machine showing that the entire
transmission was transmitted to the receiving party, without interruption, and a
copy of the notice is also sent by one of the other above-described methods of
service. The parties may change their addresses or facsimile telephone numbers
for notice by giving notice of such change in accordance with this section.
Notices sent by overnight delivery service shall be deemed received on the
business day following the date of deposit with the delivery service. Mailed
notices shall be deemed received upon the earlier of the date of delivery shown
on the return-receipt, or the second business day after the date of mailing.
Notices sent by facsimile transmission shall be deemed served on the date of
transmission, provided that such notices are sent during regular business hours,
otherwise on the next business day.
12. Time is hereby expressly declared to be of the
essence of this Agreement.
13. This Agreement and each of its provisions shall be binding
on the heirs, executors, administrators, successors, and assigns of each of the
parties hereto. Nothing contained in this paragraph, however, shall be deemed a
consent to the sale, assignment, or transfer of the Collateral by Debtor.
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14. This Agreement is made and entered into and shall be
interpreted in accordance with the laws of the State of California. Any action
concerning this Agreement shall be commenced in a court of competent
jurisdiction in the County of Los Angeles, State of California.
15. Upon payment in full of the Indebtedness, this Agreement
shall terminate and be of no further force or effect. Upon receipt of
satisfactory proof from both parties in writing that the Indebtedness has been
paid in full, Pledgeholder shall immediately deliver to Debtor the Collateral
and the stock powers.
16. Pledgeholder shall not be responsible for any damage or
loss to the Collateral, or any part thereof, arising from act of God, flood,
fire, or any other cause beyond the reasonable control of Pledgeholder.
17. Pledgeholder shall not be liable to either party or to
anyone else for actions taken (or omissions to act) which are within the scope
of the authority of Pledgeholder under this Agreement, provided that such
actions (or omissions to act) do not constitute bad faith, gross negligence or
wilful misconduct.
18. Pledgeholder shall not be responsible in any manner
whatsoever for any failure or inability of any of the parties hereto, or of
anyone else, to perform or comply with the provisions of this Agreement, nor for
the genuineness or accuracy of any notice received by Pledgeholder from any of
the parties hereto.
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19. In the event Pledgeholder resigns or ceases to act in such
capacity for any reason, then Debtor and Secured Party shall jointly appoint a
successor Pledgeholder. In the event that the parties fail to jointly appoint a
successor Pledgeholder within fifteen (15) days after Pledgeholder gives notice
of his intention to resign, then the resigning Pledgeholder shall have the right
to appoint a successor Pledgeholder, provided that such successor Pledgeholder
is not related by blood or marriage to Debtor or Secured Party and has no
business or social affiliation with either Debtor or Secured Party.
20. Pledgeholder shall receive no compensation for his
services hereunder. Any costs expended by Pledgeholder shall be paid by the
party at whose request such costs were incurred. Any costs expended by
Pledgeholder pursuant to this Agreement which are not at the request of either
party (including the costs of filing an interpleader action) shall be paid
equally by the parties, except as otherwise provided herein.
21. The parties, jointly and severally, agree to indemnify,
defend and hold Pledgeholder free and harmless from any and all costs, expenses
or liabilities incurred in connection with the performance of Pledgeholder's
duties hereunder, except for acts of bad faith, willful misconduct or gross
negligence.
22. Upon the request of Secured Party, from time to
time, Debtor agrees to execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, all such additional
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instruments, and agrees to perform any and all acts reasonably required to carry
into effect the provisions and intent of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
"DEBTOR" "SECURED PARTY"
UNITED LEISURE CORPORATION, A WESTMINSTER CAPITAL, INC., A
DELAWARE CORPORATION DELAWARE CORPORATION
BY /s/ XXXXX XXXXXXX BY /s/ XXXXXXX XXXXXXXX
------------------------------- ------------------------------------
XXXXX XXXXXXX, PRESIDENT XXXXXXX XXXXXXXX, PRESIDENT
ADDRESS: ADDRESS:
0000 XXXXXXXX XXXXXXXXX, 0000 XXXXXXXX XXXXXXXXX,
XXXXXXXXX XXXXXXXXX XXXXX
XXX XXXXXXX, XX 00000 XXXXXXX XXXXX, XX 00000
FAX NO.: (000) 000-0000 FAX NO.: (000) 000-0000
The undersigned has executed this Agreement to confirm his
agreement to comply with all terms and conditions hereof as Pledgeholder.
"PLEDGEHOLDER"
/s/ XXXXX XXXXXX
---------------------------------------
XXXXX X. XXXXXX
ADDRESS:
C/O XXXXXXX, XXXXXXXX, MANN,
GREENE, CHIZEVER, XXXXXXXX &
XXXXXXXX
0000 XXXXXXXX XXXXXXXXX,
XXXXXXXXX
XXXXXXX XXXXX, XX 00000
FAX NO.: (000) 000-0000
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