EXHIBIT C
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated September 18, 1997, made by
Xxxxx X. Xxxxxxx, an individual residing at Del Mar Country Club,
0000 Xxxxxxxxx Xxxxx, Xxxxxx Xxxxx Xx, Xxxxxxxxxx 00000 (the
"Pledgor"), in favor of Xxxxxxxxx L.L.C., a New York limited
liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Pledgor and the Lender are parties to a
Term Loan Agreement dated as of the date hereof (such agreement,
as amended, restated, supplemented or otherwise modified from
time to time, being hereafter referred to as the "Term Loan
Agreement");
WHEREAS, pursuant to the Term Loan Agreement, the
Lender has agreed to extend credit to the Pledgor consisting of
the Term Loan (as defined in the Term Loan Agreement) to the
Pledgor in the principal amount of $20,000,000;
WHEREAS, it is a condition precedent to the making of
the Term Loan by the Lender pursuant to the Term Loan Agreement
that the Pledgor shall have executed and delivered to the Lender
this Agreement providing for the pledge to the Lender of, and the
grant to the Lender of a security interest in, among other
things, 463,655 shares of common stock issued by Riviera Holdings
Corporation, 13,710,734 shares of common stock of CardioDynamics
International Corporation and all of the issued and outstanding
shares of stock of Carlo Corporation, together with other
collateral hereinafter described and all proceeds of the
foregoing;
NOW, THEREFORE, in consideration of the premises and
the agreements herein and in order to induce the Lender to make
and maintain the Term Loan, the Pledgor hereby agrees with the
Lender as follows:
SECTION 1. Definitions. Terms that are not
otherwise defined herein shall have the same meanings herein as
set forth in the Term Loan Agreement or in Article 8 or 9 of the
Uniform Commercial Code (the "Code") as in effect from time to
time in the State of New York. In addition, the following terms
shall have the respective meanings indicated below (such meanings
to be applicable equally to both the singular and plural forms of
the terms defined):
"Entitlement Orders", "Financial Assets", "Investment
Property", "Securities Account" and "Securities Entitlement" have
the meanings specified therefor in Uniform Commercial Code -
Investment Securities, 1997 N.Y. Laws Ch. 566.
"Jefferies Account" means account number 00000000
maintained by the Pledgor with Xxxxxxxxx & Company, Inc.,
including, without limitation, all investments, securities and
cash now or hereafter held in such account, together with any
successor or replacement accounts.
SECTION 2. Pledge and Grant of Security Interest.
As collateral security for all of the Obligations (as defined in
Section 3 hereof), the Pledgor hereby pledges and assigns, and
grants a continuing security interest in, the following (the
"Collateral") to the Lender:
(a) the Jefferies Account;
(b) all Investment Property now or hereafter
delivered, transferred or assigned to, or deposited or credited
to the Jefferies Account;
(c) the indebtedness described in Schedule I hereto
(the "Pledged Debt") issued by the corporation described on
Schedule I (such corporation, together with any successor
corporation, being hereinafter referred to as the "Debt Issuer"),
the promissory notes, bonds, certificates and other instruments
evidencing the Pledged Debt and all interest, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the Pledged Debt (including, without limitation, any shares of
capital stock received in respect of or in exchange for or upon
conversion of any part of the Pledged Debt);
(d) the shares of capital stock listed in Schedule
II hereto (the "Pledged Shares") issued by the corporations
described in such Schedule II (such corporations, together with
any successor corporations, being hereinafter referred to
collectively as the "Stock Issuers", and, together with the Debt
Issuer, the "Issuers" and individually as an "Issuer"), the
certificates representing the Pledged Shares, all options and
other rights, contractual or otherwise, in respect thereof
(including, without limitation, any registration rights) and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares, together with all
certificates hereafter delivered to the Lender, the shares of
stock from time to time represented by such certificates, all
options and other rights, contractual or otherwise, in respect
thereof and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such additional
shares;
(e) all cash and cash equivalents, Investment
Property, Financial Assets, capital stock or other equity
interests, notes, debentures, bonds, promissory notes or other
evidences of indebtedness and all other securities deposited from
time to time in the Jefferies Account or delivered to the Lender;
(f) all books and records pertaining to the
Collateral;
(g) all General Intangibles arising from or
relating to the Collateral;
(h) all investment earnings and proceeds of any and
all of the foregoing; and
(i) all Securities Entitlements of the Pledgor in
any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the
Pledgor and howsoever such interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
SECTION 3. Security for Obligations. The security
interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, whether
now existing or hereafter incurred (the "Obligations"):
(a) the prompt payment by the Pledgor, as and when
due and payable, of all amounts from time to time owing by the
Pledgor to the Lender in respect of the Term Loan Agreement, the
Note and all other Loan Documents, including, without limitation,
principal of and interest on the Term Loan (including, without
limitation, all interest that accrues after the commencement of
any case, proceeding or other action relating to bankruptcy,
insolvency or reorganization of the Pledgor whether or not a
claim for post filing interest is allowed in such proceedings)
and all fees, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under
the Term Loan Agreement and any other Loan Document; and
(b) the due performance and observance by the
Pledgor of all of his other obligations from time to time
existing in respect of this Agreement, the Term Loan Agreement
and the other Loan Documents to which he is a party.
SECTION 4. Establishment of Collateral Accounts;
Delivery of the Collateral.
(a) Establishment of Collateral Accounts. The
Pledgor has established and will maintain with Jefferies &
Company, Inc. the Jefferies Account. Subject to the rights of
the Pledgor under Section 7(a) hereof and the other terms and
conditions of this Agreement, (A) the Jefferies Account shall be
under the sole dominion and control of the Lender, (B) the Lender
shall have the sole right to make withdrawals from the Jefferies
Account and to exercise rights with respect to the cash and
investments from time to time on deposit or held therein and (C)
the Lender shall have the sole right to provide Entitlement
Orders to Jefferies & Company, Inc. with respect to the Jefferies
Account. The Collateral shall be held by Jefferies & Company,
Inc. in the Jefferies Account pursuant to the terms hereof and
the letter regarding Acknowledgment of Bailment for Pledged
Securities (the "Jefferies Consent"), dated September 18, 1997
from the Lender and consented and agreed to by Jefferies &
Company, Inc. and the Pledgor. All promissory notes, bonds,
certificates and instruments in the Jefferies Account shall be
held by Jefferies on behalf of the Lender pursuant hereto and the
Jefferies Consent and shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance
satisfactory to the Lender.
(b) Delivery of Collateral. (i) On or prior to the
execution and delivery of this Agreement, all promissory notes,
bonds and other instruments currently evidencing the Pledged Debt
and all certificates representing the Pledged Shares shall be
registered in the name of the Lender or delivered to the Lender
and the Pledgor will take all action required to perfect the
security interest of the Lender in all uncertificated or book-
entry securities constituting Collateral. All other promissory
notes, bonds, certificates and instruments constituting
Collateral from time to time or required to be pledged to the
Lender pursuant to the terms of this Agreement or the Term Loan
Agreement, and all uncertificated or book-entry securities
constituting collateral from time to time (the "Additional
Collateral") shall, in the case of certificates and instruments,
be registered in the name of the Lender or delivered to the
Lender promptly upon the receipt thereof by or on behalf of the
Pledgor and, in the case of uncertificated or book-entry
securities, the Pledgor shall take such action as may be required
to perfect the security interest of the Lender. All such
promissory notes, bonds, certificates and instruments shall be
held by or on behalf of the Lender pursuant hereto and shall be
delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or
assignment or undated stock powers executed in blank, all in form
and substance satisfactory to the Lender. Upon receipt by
Pledgor of the Additional Collateral, a Pledge Amendment, duly
executed by the Pledgor, in substantially the form of Schedule
III hereto (a "Pledge Amendment") shall be delivered to the
Lender, in respect of the Additional Collateral which are to be
pledged pursuant to this Agreement, which Pledge Amendment shall
from and after delivery thereof constitute part of Schedules I
and II. The Pledgor hereby authorizes the Lender to attach each
Pledge Amendment to this Agreement and agrees that all promissory
notes, bonds, certificates or instruments listed on any Pledge
Amendment delivered to the Lender shall for all purposes
hereunder constitute Collateral and the Pledgor shall be deemed
upon delivery thereof to have made the representations and
warranties set forth in Section 5 with respect to such Additional
Collateral.
(ii) If the Pledgor shall receive, by virtue of
the Pledgor's being or having been an owner of any Collateral,
any (A) certificated security (including, without limitation, any
certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets,
combination of shares, stock split, spinoff or split-off),
promissory note, chattel paper or other instrument, (B) option or
right, whether as an addition to, substitution for, or in
exchange for, any Collateral, or otherwise, (C) dividends payable
in cash (except such dividends permitted to be retained by the
Pledgor pursuant to Section 7(a) hereof) or in securities or
other property or (D) dividends or other distributions in
connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or
paid-in surplus, the Pledgor shall receive such certificated
security, promissory note, chattel paper, instrument, option,
right, payment or distribution in trust for the benefit of the
Lender, shall segregate it from the Pledgor's other property and
shall deliver it forthwith to the Lender in the exact form
received, with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held by the Lender as
Collateral and as further collateral security for the
Obligations.
SECTION 5. Representations and Warranties. The Pledgor
represents and warrants as follows:
(a) The Pledgor has the legal capacity and right to
execute, deliver and perform this Agreement.
(b) The execution, delivery and performance by the
Pledgor of this Agreement (i) do not and will not contravene any
law or any contractual restriction binding on or affecting the
Pledgor or any of his properties; and (ii) do not and will not
result in or require the creation of any Lien upon or with
respect to any of his properties.
(c) This Agreement has been duly executed and
delivered by the Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor, enforceable against the
Pledgor in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(d) The promissory notes and bonds currently
evidencing the Pledged Debt have been, and all other promissory
notes, bonds or other instruments from time to time evidencing
Pledged Debt, when executed and delivered, will have been, duly
authorized, executed and delivered by the respective makers
thereof, and all such promissory notes, bonds or other
instruments are or will be, as the case may be, legal, valid and
binding obligations of such makers, enforceable against such
makers in accordance with their respective terms. The
information set forth in Schedule I hereto is accurate and
complete.
(e) The Pledged Shares are fully paid and
nonassessable and, to the best of the Pledgor's knowledge, have
been duly authorized and validly issued. All other shares of
stock constituting Collateral will be duly authorized and validly
issued, fully paid and nonassessable. The information set forth
in Schedule II hereto is accurate and complete.
(f) There is no action, suit or proceeding pending
or, to the Pledgor's knowledge, threatened or otherwise affecting
this Agreement or any other Loan Document or the Pledgor or the
Jefferies Account before any court or other Governmental
Authority or regulatory body or arbitrator that is reasonably
likely to materially adversely affect the financial condition of
the Pledgor or the Pledgor's ability to perform his obligations
hereunder, under the Term Loan Agreement or under any other Loan
Documents to which the Pledgor is a party.
(g) No authorization or approval or other action
by, and no notice to or filing with, any Governmental Authority
or other regulatory body or any other Person is required for
(i) the due execution, delivery and performance by the Pledgor of
this Agreement, the Term Loan Agreement or any other Loan
Document to which the Pledgor is a party, (ii) the grant by the
Pledgor, or the perfection, of the Lien purported to be created
hereby in the Collateral or (iii) the exercise by the Lender of
any of its rights and remedies hereunder, except as may be
required in connection with any sale of any Collateral by laws
affecting the offering and sale of securities generally.
(h) The Pledgor is and will be at all times the
legal and beneficial owner of the Collateral, free and clear of
any lien, option or other charge or encumbrance except for the
Lien created by this Agreement. There is no financing statement
naming the Pledgor as debtor (or similar documents or instrument
of registration under the law of any jurisdiction) now on file or
registered in any public office covering any interest of the
Pledgor in the Collateral except such as may have been filed in
favor of the Lender relating to this Agreement.
(i) This Agreement creates a valid security
interest in favor of the Lender in the Collateral, as security
for the Obligations. Jefferies & Company, Inc. having credited
to the Jefferies Account all certificates, instruments and cash
constituting Collateral from time to time, the execution and
delivery of the Jefferies Consent, the Lender's having possession
of the Pledged Shares and all other certificates, instruments and
cash constituting Collateral and the Lender having control over
all other Collateral from time to time collectively result in the
perfection of such security interest. Such security interest is,
or in the case of Collateral in which the Pledgor obtains rights
after the date hereof, will be, a perfected, first priority
security interest. All action necessary or desirable to perfect
and protect such security interest has been duly taken, except
for the Lender's and/or Jefferies & Company, Inc.'s having
possession of certificates, instruments and cash constituting
Collateral after the date hereof or the Lender's and/or Jefferies
& Company, Inc.'s having control over all other Collateral
arising after the date hereof.
SECTION 6. Covenants as to the Collateral. So long
as any of the Obligations shall remain outstanding, unless the
Lender shall otherwise consent in writing:
(a) Records. The Pledgor will keep adequate
records concerning the Collateral and permit the Lender or any
agents or representatives of the Lender at any reasonable time
and from time to time to examine and make copies of and abstracts
from such records.
(b) Notices. The Pledgor will, at the expense of
the Pledgor, promptly deliver to the Lender a copy of each
material notice or other material communication received by it in
respect of any of the Collateral, together with a copy of any
reply by the Pledgor thereto.
(c) Defend Title. The Pledgor will, at the
reasonable request of the Lender and at the expense of the
Pledgor, defend his right, title and interest in and to the
Collateral against the claims of any Person.
(d) Further Assurances. The Pledgor will, at the
expense of the Pledgor, at any time and from time to time,
promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or
desirable or that the Lender may reasonably request in order (i)
to perfect and protect the security interest created or purported
to be created hereby (whether pursuant to laws, rules,
regulations or general practices currently in effect or adopted
subsequent to the date hereof); (ii) to enable the Lender to
exercise and enforce its rights and remedies hereunder in respect
of the Collateral; or (iii) to otherwise effect the purposes of
this Agreement, including, without limitation: (A) at the
request of the Lender, marking conspicuously each of the records
of the Pledgor pertaining to the Collateral with a legend, in
form and substance satisfactory to the Lender, indicating that
such Collateral is subject to the security interest created
hereby; (B) if any Collateral shall be evidenced by a
certificated security, promissory note or other instrument or
chattel paper, delivering and pledging to the Lender hereunder
such certificated security, note, instrument or chattel paper
duly indorsed and accompanied by executed instruments of transfer
or assignment, all in form and substance satisfactory to the
Lender; (C) delivering to the Lender irrevocable proxies in
respect of the Collateral and executing and filing such financing
or continuation statements, or amendments thereto, as may be
necessary or desirable or that the Lender may request in order to
perfect and preserve the security interest created or purported
to be created hereby; and (D) furnishing to the Lender from time
to time statements and schedules further identifying and
describing the Collateral and such other reports in connection
with the Collateral as the Lender may reasonably request, all in
reasonable detail.
(e) Transfers and Other Restrictions. The Pledgor
will not (i) sell, assign (by operation of law or otherwise),
exchange or otherwise dispose of any of the Collateral (except as
permitted by Section 7(a) hereof); or (ii) create or suffer to
exist any (A) Lien upon or with respect to any of the Collateral
except the Lien created by this Agreement or (B) contractual
restriction on the transferability of any of the Collateral.
(f) Issuance of Additional Securities. In the case
of Collateral issued by Carlo, the Pledgor will not permit the
issuance of (i) any additional shares of any class of capital
stock of any such Person, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or
exchangeable for, any such shares of capital stock or (iii) any
warrants, options, contracts or other commitments entitling any
Person to purchase or otherwise acquire any such shares of
capital stock.
(g) Other Actions. The Pledgor will not take or
fail to take any action that would in any manner impair the value
or enforceability of the Lender's security interest in the
Collateral.
SECTION 7. Voting Rights, Dividends, Etc. in Respect
of the Collateral; Withdrawal and Sale of Collateral.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) the Pledgor may exercise any and all
voting and other consensual rights pertaining to the Collateral
in a manner not inconsistent with the terms of this Agreement or
the other Loan Documents; provided, however, that (A) the Pledgor
will not exercise or refrain from exercising any such right, as
the case may be, if the Lender gives the Pledgor notice that, in
the Lender's judgment, such action would have an adverse effect
on the value of any Collateral and (B) the Pledgor will give the
Lender at least five days' notice of the manner in which the
Pledgor intends to exercise, or the reasons for refraining from
exercising, any such right;
(ii) Any and all dividends or interest paid or
payable in cash in respect of the Collateral shall forthwith be
paid to the Lender pursuant to Section 2.05(a) of the Term Loan
Agreement and shall, if received by the Pledgor, be received in
trust for the benefit of the Lender, shall be segregated from the
other property or funds of the Pledgor, and shall forthwith be
paid to the Lender. Any and all dividends or interest paid or
payable other than in cash in respect of the Collateral shall
forthwith be delivered to the Lender or Jefferies & Company,
Inc., as applicable, to hold as Collateral and shall, if received
by the Pledgor , be received in trust for the benefit of the
Lender, shall be segregated from the other property or funds of
the Pledgor, and shall forthwith be delivered to the Lender or
Jefferies & Company, Inc., as applicable, in the exact form
received with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held, by the Lender or by
Jefferies & Company, Inc. in the Jefferies Account, as the case
may be, as Collateral hereunder;
(iii) the Lender will execute and deliver (or
cause to be executed and delivered) to the Pledgor all such
proxies and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the
voting and other rights that the Pledgor is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the
dividends, if any, that it is authorized to receive and retain
pursuant to paragraph (ii) of this Section 7(a); and
(iv) all investments from time to time in the
Jefferies Account and the non-cash proceeds thereof shall remain
in the Jefferies Account (except for withdrawals by the Lender
after an Event of Default) and the Pledgor may not withdraw any
part of the Collateral from the Jefferies Account.
(b) Upon the occurrence and during the continuance
of an Event of Default:
(i) all rights of the Pledgor to exercise the
voting and other consensual rights that the Pledgor would
otherwise be entitled to exercise pursuant to paragraph (i) of
this Section 7(a), and to receive the dividends and interest
payments and other distributions that the Pledgor would otherwise
be authorized to receive and retain pursuant to paragraph (ii) of
this Section 7(a), shall cease, and (A) all such rights shall
thereupon become vested in the Lender, which shall thereupon have
the sole right to exercise such voting and other consensual
rights and to receive and hold as Collateral such dividends and
interest payments, and (B) the Pledgor shall execute and deliver
all such proxies and other instruments as the Lender may
reasonably request for the purpose of enabling the Lender to
exercise the voting and other rights that it is entitled to
exercise pursuant to this Section 7(b)(i);
(ii) the Lender is authorized to notify each
debtor with respect to the Pledged Debt to make payment directly
to the Lender and may collect any and all moneys due or to become
due to the Pledgor in respect of the Pledged Debt and the Pledgor
hereby authorizes each such debtor to make such payment directly
to the Lender without any duty of inquiry;
(iii) without limiting the generality of the
foregoing, the Lender may at its option exercise any and all
rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Collateral as if
it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all
of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other adjustment of any Issuer of Collateral,
or upon the exercise by any Issuer of Collateral of any right,
privilege or option pertaining to any Collateral, and, in
connection therewith, to deposit and deliver any and all of the
Collateral with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and
conditions as it may determine; and
(iv) all dividends and interest payments and
other distributions that are received by the Pledgor contrary to
the provisions of paragraph (i) of this Section 7(b) shall be
received in trust for the benefit of the Lender, shall be
segregated from the other funds of the Pledgor, and shall be
forthwith paid over to the Lender and/or Jefferies & Company,
Inc. as Collateral in the exact form received with any necessary
indorsement and/or appropriate stock powers duly executed in
blank, to be held by the Lender and/or Jefferies & Company, Inc.
as Collateral hereunder.
SECTION 8. Additional Provisions Concerning the
Collateral.
(a) The Pledgor hereby authorizes the Lender to
file, without the signature of the Pledgor where permitted by
law, one or more financing or continuation statements, and
amendments thereto, relating to the Collateral.
(b) The Pledgor hereby irrevocably appoints the
Lender the Pledgor's attorney-in-fact and proxy, with full
authority in the place and stead of the Pledgor and in the name
of the Pledgor or otherwise, from time to time in the Lender's
discretion, to take any action and to execute any instrument (at
the expense of the Pledgor) that the Lender may reasonably deem
necessary or advisable to accomplish the purposes of this
Agreement including, without limitation, (i) at any time and from
time to time, to receive, indorse and collect all instruments
made payable to the Pledgor representing any distribution in
respect of any Collateral and to give full discharge for the
same, and (ii) to receive, indorse and collect any drafts or
other instruments, documents and chattel paper representing any
dividend or other distribution in respect of the Collateral and,
in addition to the foregoing and without limitation: (A) to ask,
demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral and to receive, indorse,
and collect any drafts or other instruments, documents and
chattel paper in connection therewith; and (B) for the collection
of any of the Collateral or otherwise to enforce the rights of
the Lender with respect to any of the Collateral; provided,
however, that the Lender shall exercise such powers only during
the occurrence and continuance of an Event of Default.
(c) If the Pledgor fails to perform any agreement
contained herein, the Lender (immediately after giving notice to
the Pledgor) may itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Lender incurred
in connection therewith shall be payable by the Pledgor pursuant
to Section 10 hereof, together with interest from the date such
expenses are paid by the Lender until repaid in full, at the rate
for overdue principal under the Term Loan Agreement, all payable
on demand.
(d) The Lender may at any time in its discretion
(i) without prior notice to the Pledgor, transfer or register in
the name of the Lender or any of its nominees any or all of the
Collateral (it being understood that the Lender will give prompt
notice to the Pledgor immediately after any such transfer or
register), and (ii) exchange certificates or instruments
constituting Collateral for certificates or instruments of
smaller or larger denominations.
(e) Other than the exercise of reasonable care to
assure the safe custody of the Collateral while held by the
Lender hereunder, the Lender shall have no duty or liability to
preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering it or
tendering surrender of it to the Pledgor. The Lender shall be
deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that
which the Lender accords its own property, it being understood
that the Lender shall not have responsibility for
(i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters
relating to any Collateral, whether or not the Lender has or is
deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with
respect to any Collateral.
SECTION 9. Remedies Upon Event of Default. If any
Event of Default shall have occurred and be continuing:
(a) The Lender may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all of the rights and
remedies of a secured party on default under the Code then in
effect in the State of New York (whether or not the Code applies
to the affected Collateral); and without limiting the generality
of the foregoing, also may (i) without notice except as specified
below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange or broker's
board or elsewhere, at such price or prices and on such other
terms as the Lender may deem commercially reasonable. In
addition, the Lender may, at any time and from time to time, upon
the occurrence and during the continuance of an Event of Default,
direct that Jefferies & Company, Inc. immediately deliver to the
Lender all or part of the Collateral. The Lender may apply all
or part of the cash and/or other investments constituting
Collateral to the payment of all or any part of the Obligations
in such manner as the Lender may elect. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least
10 days' notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Lender shall
not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(b) The Pledgor agrees that in any sale of any
Collateral hereunder the Lender is hereby authorized to comply
with any limitation or restriction in connection with such sale
as it may be advised by counsel is necessary in order to avoid
any violation of applicable law, rule or regulation (including,
without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and
purchases to Persons who will represent and agree that they are
purchasing for their own account for investment and not with a
view to the distribution or resale of such Collateral), or in
order to obtain any required approval of the sale or of the
purchasers by any Governmental Authority or official, and the
Pledgor further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Lender be liable or
accountable to the Pledgor for any discount allowed by reason of
the fact that such Collateral is sold in compliance with any such
limitation or restriction.
(c) Notwithstanding the provisions of subsection
(b) of this Section 9, the Pledgor recognizes that the Lender may
deem it impracticable to effect a public sale of all or any part
of the Collateral and that the Lender may, therefore, determine
to make one or more private sales of any such Collateral to a
restricted group of purchasers who will be obligated to agree,
among other things, to acquire such Collateral for their own
account, for investment and not with a view to the distribution
or resale thereof. The Pledgor acknowledges that any such
private sale may be at prices and on terms less favorable to the
seller than the prices and other terms that might have been
obtained at a public sale and, notwithstanding the foregoing,
agrees that such private sales shall be deemed to have been made
in a commercially reasonable manner and that the Lender shall
have no obligation to delay sale of any such securities for the
period of time necessary to permit the Issuer of any securities
constituting Collateral to register such securities for public
sale under the Securities Act of 1933, as amended. The Pledgor
further acknowledges and agrees that any offer to sell such
securities that has been (i) publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation
in the financial community of New York, New York (to the extent
that such an offer may be so advertised without prior
registration under the Securities Act of 1933, as amended) or
(ii) made privately in the manner described above to not less
than fifteen bona fide offerees shall be deemed to involve a
"public sale" for the purposes of Section 9-504(3) of the Code
(or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that
such sale may not constitute a "public offering" under the
Securities Act of 1933, as amended, and that the Lender may, in
such event, bid for and purchase such securities.
(d) Any cash held by the Lender as Collateral and
all cash or other proceeds received by the Lender in respect of
any sale of, collection from, or other realization upon, all or
any part of the Collateral may, in the discretion of the Lender,
be held by the Lender as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to
the Lender pursuant to Section 10 hereof) in whole or in part by
the Lender against, all or any part of the Obligations in such
order as the Lender shall elect. Any surplus of such cash or
other proceeds held by the Lender and remaining after payment in
full of all of the Obligations shall be paid over to the Pledgor
or to such Person as may be lawfully entitled to receive such
surplus.
(e) The Pledgor shall (i) subject to clause (ii)
below, hold any dividends, interest or other distributions which
it receives with respect to the Collateral in trust for the
Lender, separate from all other moneys of the Pledgor, and (ii)
forthwith transfer such dividends, interest or other
distributions to the Lender. Notwithstanding the foregoing, the
Pledgor may not take any action under this Section with respect
to the Collateral that, in the Lender's judgment, (i) would in
any way affect the lien of this Agreement with respect to any
Collateral, or impair the interest or rights of the Lender
therein or (ii) would otherwise be inconsistent with the
provisions of this Agreement or the Term Loan Agreement or result
in a violation hereof or thereof.
(d) In the event that the proceeds of any such
sale, collection or realization are insufficient to pay all
amounts to which the Lender is legally entitled, the Pledgor
shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Term Loan Agreement
for interest on overdue principal thereof or such other rate as
shall be fixed by applicable law, together with the costs of
collection and the reasonable fees of any attorneys employed by
the Lender to collect such deficiency.
SECTION 10. Indemnity and Expenses.
(a) The Pledgor agrees to indemnify the Lender from
and against any and all claims, losses and liabilities
(including, without limitation, the reasonable fees, client
charges and other expenses of the Lender's counsel) growing out
of or resulting from this Agreement or the enforcement of any of
the terms hereof (including, without limitation, the sale of
Collateral pursuant to a public or private offering and each and
every document produced in furtherance thereof), except claims,
losses or liabilities resulting from the Lender's gross
negligence or willful misconduct.
(b) The Pledgor agrees to pay to the Lender on
demand the amount of any and all costs and expenses, including
the reasonable fees and other client charges of the Lender's
counsel and of any experts and agents, that the Lender may incur
in connection with (i) the administration and termination of this
Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon, any
of the Collateral (including, without limitation, fees or
commissions of any broker), (iii) the exercise or enforcement of
any of the rights of the Lender hereunder, (iv) the failure by
the Pledgor to perform or observe any of the provisions hereof,
or (v) obtaining any public information regarding any Issuer of
Collateral which the Lender, in its sole discretion, deems
prudent to obtain.
SECTION 11. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and
shall be mailed, telecopied, telexed or delivered, if to the
Pledgor, to him at the address set forth in the Term Loan
Agreement, if to the Lender, to it at its address set forth in
the Term Loan Agreement; or as to any such Person at such other
address as shall be designated by such Person in a written notice
to such other Persons complying as to delivery with the terms of
this Section 11. All such notices and other communications shall
be effective (i) if mailed, when received or three Business Days
after mailing, whichever occurs first; (ii) if telecopied, when
transmitted and the appropriate confirmation is received, (iii)
if telexed, when the appropriate answerback is received; or (iv)
if delivered, upon delivery.
SECTION 12. Miscellaneous.
(a) No amendment of any provision of this Agreement
shall be effective unless it is in writing and signed by the
Pledgor and the Lender, and no waiver of any provision of this
Agreement, and no consent to any departure by the Pledgor
therefrom, shall be effective unless it is in writing and signed
by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given.
(b) No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of the Lender provided
herein and in the other Loan Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Lender against the Pledgor
under any Loan Document are not conditional or contingent on any
attempt by the Lender to exercise any of its rights under any
other Loan Document against the Pledgor or against any other
Person.
(c) Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
(d) This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full
force and effect until the Obligations have been satisfied in
full; and (ii) be binding on the Pledgor and his heirs,
executors, administrators, successors and assigns and shall
inure, together with all rights and remedies of the Lender
hereunder, to the benefit of the Lender and its successors,
transferees and assigns. The Lender may assign or transfer, as
collateral or otherwise, any or all of its interest hereunder and
under the other Loan Documents. None of the rights or
obligations of the Pledgor hereunder may be assigned or otherwise
transferred without the prior written consent of the Lender.
(e) Upon the satisfaction in full of the
Obligations after the termination of the Term Loan Agreement (i)
this Agreement and the security interest created hereby shall
terminate and all rights to the Collateral shall revert to the
Pledgor, and (ii) the Lender will, upon the Pledgor's request and
at the Pledgor's expense, (A) return to the Pledgor such of the
Collateral held by the Lender, and instruct Jefferies & Company,
Inc. to return to the Pledgor such of the Collateral held in the
Jefferies Account as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof and (B)
execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination.
(f) This Agreement shall be governed by and
construed in accordance with the law of the State of New York,
except as required by mandatory provisions of law and except to
the extent that the perfection and the effect of perfection or
non-perfection of the security interest created hereby, or
remedies hereunder, in respect of any particular Collateral are
governed by the law of a jurisdiction other than the State of New
York.
(g) Section headings in this Agreement are included
herein for the convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(h) This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and
the same instrument.
SECTION 13. Security Interest Absolute. All rights of
the Lender, all security interests and all obligations of the
Pledgor hereunder shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of the
Term Loan Agreement or of any Loan Document or any other
agreement, instrument or document relating thereto, (ii) any
change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any
other amendment or waiver of or consent to any departure from the
Term Loan Agreement or any Loan Document or any other agreement,
instrument or document relating thereto, (iii) any exchange or
release of, or non-perfection of any lien on, any collateral for
any of the Obligations, or any release or amendment or waiver of
or consent to departure from any guaranty, for all or any of the
Obligations or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Pledgor
in respect of any of his obligations under the Term Loan
Agreement or the other Loan Documents, or the Pledgor in respect
of any of the Obligations.
SECTION 14. OTHER AGREEMENTS. THIS WRITTEN AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
SECTION 15. CONSENT TO JURISDICTION. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PLEDGOR HEREBY
IRREVOCABLY ACCEPTS FOR HIMSELF IN RESPECT OF HIS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PLEDGOR AT
HIS ADDRESS FOR NOTICES CONTAINED IN SECTION 7.01 OF THE TERM
LOAN AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS
AFTER SUCH MAILING. THE PLEDGOR HEREBY IRREVOCABLY APPOINTS THE
SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR
SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGOR IN ANY OTHER
JURISDICTION.
SECTION 16. WAIVER OF JURY TRIAL, ETC. THE PLEDGOR
AND THE LENDER EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY
AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER
AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, AND AGREES THAT ANY SUCH
ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY. THE PLEDGOR HEREBY WAIVES ANY RIGHT HE
MAY HAVE TO CLAIM OR RECOVER IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE PLEDGOR CERTIFIES THAT NO OFFICER, REPRESENTATIVE,
AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF ANY ACTION,
PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING
WAIVERS. THE PLEDGOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT.
IN WITNESS WHEREOF, the Pledgor has executed and delivered this
Agreement as of the date first above written.
XXXXX X. XXXXXXX
Acknowledged and Consented to:
XXXXXXXXX L.L.C.
By:______________________________
Name:
Title:
SCHEDULE I
TO
PLEDGE AGREEMENT
Pledged Debt
Description and Original
Name of Payee Date of Instrument Principal Amount
------------- ------------------ ----------------
Borrower Promissory Note dated $21,371,194.35
December 31, 1996 made
by Carlo Corporation
to the Borrower
SCHEDULE II
TO
PLEDGE AGREEMENT
Pledged Shares
Name of Number of Certificate
Issuer/Payee Shares/Amount Class/Description Numbers
------------ ------------- ----------------- -----------
Riviera Holdings 463,655 Common *
Corporation
Carlo Corporation 1,000 Common 1
CardioDynamics 13,699,734 Common C0898
International C0661
Corporation C0409
C0507
CardioDynamics 11,000 Common *
International
Corporation
--------------------
* Held through Jefferies & Company, Inc.
*
