PLEDGE AND SECURITY AGREEMENT (Common Stock)
Exhibit
10.3
(Common
Stock)
This
Pledge and Security Agreement
(this “Agreement") is made effective as of November 30, 2007 ("Effective Date"),
by and between RICK’S CABARET INTERNATIONAL, INC., a Texas
corporation (“Pledgor”), and the Sellers identified on the
signature pages hereto (each, a “Seller” and collectively, the “Sellers”) and
XXXXXXX XXXXXXX and XXXXXX XXXXXXXX, as agents for the Sellers
(in such capacity, together with its successors in such capacity, the
“Agent”).
RECITALS:
WHEREAS,
Pledgor and Sellers have
entered into a Stock Purchase Agreement dated November 30, 2007 (the “Purchase
Agreement”), pursuant to which Pledgor will acquire 100% of the issued and
outstanding common stock (the “Stellar Stock”) of Stellar Management
Corporation, a Florida corporation (“Stellar”) and 100% of the issued and
outstanding common stock (the “MGSO Stock”) of Miami Gardens Square One, Inc., a
Florida corporation (“MGSO”) which owns and operates an adult entertainment
cabaret known as “Tootsie’s Cabaret” located at 000 XX 000xx Xxxxxx,
Xxxxx
Xxxxxxx, Xxxxxxx 00000 (“Tootsie’s”) ; and
WHEREAS,
pursuant to the Purchase Agreement and as part of the Purchase Price thereunder,
Pledgor will pay $25,000,000 for the MGSO Stock and the Stellar Stock,
$10,000,000 of which amount is payable and evidenced by a series of 14% Secured
Promissory Notes in the aggregate original principal amount of $10,000,000
bearing interest at the rate of fourteen percent (14%) per annum payable
to
Sellers (the “Notes”) pursuant to which the principal amount will be payable in
a lump sum payment on the three (3) year anniversary of the Notes as more
fully
described in the Purchase Agreement; and
WHEREAS,
the Notes provide that the
Pledgor shall pledge and grant a security interest in the Collateral (as
hereinafter defined) as security for the Obligations (as hereinafter defined)
under the Notes; and
WHEREAS,
as part of the Purchase Price
for the MGSO Stock and Stellar Stock, this Agreement shall have been executed
and delivered by Pledgor; and
WHEREAS,
Pledgor has determined that Pledgor's execution, delivery and performance
of
this Agreement may reasonably be expected to provide substantial benefit
to
Pledgor, directly or indirectly, and to be in the best interests of
Pledgor.
NOW,
THEREFORE, FOR VALUE RECEIVED, the sufficiency of which is acknowledged by
the
parties, the parties hereto agree as follows:
ARTICLE
I
Security
Interest and Pledge
Section
1.01. Defined
Terms and
Related Matters.
(a) Capitalized
terms used and not otherwise defined herein that are defined in the Notes
shall
have the meanings specified therein. Capitalized terms used and not
otherwise defined herein or in the Notes that are defined in the Purchase
Agreement shall have the meanings specified therein. Terms defined in
the singular include the plural and terms defined in the plural include the
singular.
(b) The
words "hereof", "herein" and "hereunder" and words of similar import when
used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(c) Unless
otherwise defined herein or in the Purchase Agreement, the terms defined
in
Articles 8 and 9 of the Uniform Commercial Code as enacted in the State of
Florida as in effect from time to time (the "Code"), are used herein as therein
defined.
(d) "Pledged
Securities" means (i) 2,000 shares of common stock of MGSO which represents
100% of the issued and outstanding common stock of MGSO; and (ii) 100 shares
of
the common stock of Stellar which represents 100% of the issued and outstanding
common stock of Stellar, all of which Pledgor acquired pursuant to the Purchase
Agreement.
Section
1.02 Security
Interest and
Pledge. Subject to the terms of this
Agreement, Pledgor hereby pledges and delivers to the Sellers, and hereby
grants
to the Sellers, pro rata as listed in Schedule “A” to the Purchase
Agreement, a lien on and security interest in and to all of Pledgor's rights,
titles, interests and privileges in and with respect to the Pledged Securities,
whether now owned or hereafter acquired, including, without limitation: (a)
the
MGSO Stock and the Stellar Stock; (b) all certificates or instruments
representing Pledged Securities and all proceeds, income and profits thereon,
and all interest, dividends and other payments, property, revenues, and
distributions with respect thereto; (c) all proceeds received or receivable
by
Pledgor in cash, stock or otherwise, from any recapitalization,
reclassification, merger, dissolution, liquidation or other termination of
the
existence of MGSO or Stellar relating to the Pledged Securities; and (d)
all
other proceeds or assets received or receivable by Pledgor in respect of
its
status as the owner of the MGSO Stock or the Stellar Stock with respect to
the
Pledged Securities (all such property, collectively, the
"Collateral").
Section
1.03. Obligations
Secured. This Agreement secures: (a)
all obligations under the Notes, including the full and prompt payment of
the
principal of, interest on, and all other amounts due with respect to the
Notes
from time to time outstanding, as and when such amounts shall become due
and
payable, whether by lapse of time, upon redemption, prepayment or purchase,
by
extension or by acceleration or declaration or otherwise; (b) the full and
prompt payment, performance and observance by Pledgor of all obligations,
covenants, conditions and agreements contained in this Agreement; and (c)
the
full and prompt payment, upon demand by the Sellers, of all costs and expenses
(including, without limitation, reasonable attorneys' fees), if any, as shall
have been expended or incurred by the Sellers in the protection or enforcement
of any right or privilege under the Notes or this Agreement, or in the
protection or enforcement of any rights, privileges or liabilities thereunder
(all such obligations, covenants, conditions and agreements described in
the
foregoing clauses (a), (b) and (c) being hereinafter collectively referred
to as
the "Obligations”.
Section
1.04. Formalities.
(a) All
certificates and instruments representing the Pledged Securities have been,
or,
in the case of all Pledged Securities hereafter acquired, immediately upon
acquisition shall be, delivered to and shall be held by the Agent on behalf
of
the Sellers pursuant hereto in suitable form for transfer by delivery, or
accompanied by undated stock powers or other instruments of transfer or
assignment, duly executed in blank, all in form and substance satisfactory
to
the Agent.
(b) Notwithstanding
anything to the contrary contained in clause (a) above, if any Pledged
Securities (whether now owned or hereafter acquired) are uncertificated
securities, Pledgor shall promptly notify the Agent, and shall promptly,
without
the need for any request from the Agent, take all actions required to perfect
the security interest of the Sellers under applicable law (including, in
any
event, under the provisions of Article 8 or 9 of the Code, if
applicable). Pledgor further agrees to take such actions as the Agent
deems necessary or desirable to effect the foregoing and to permit the Agent
to
exercise any rights and remedies on behalf of the Sellers
hereunder.
(c) The
Agent shall have the right, at any time in its reasonable discretion and
without
notice to any Pledgor, to (i) transfer to any of its nominees any or all
of the
Collateral, subject only to the revocable rights set forth in Section 4.01
hereof and applicable law, and (ii) so long as an Event of Default shall
have
occurred and be continuing, to register any or all of the Collateral in Agent’s
or Sellers’ own names. In addition, the Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger
denominations.
(d) Pledgor
hereby authorizes the Agent, at the expense of Pledgor (including the fees
and
expenses of counsel to the Agent on behalf of the Sellers), to file one or
more
financing or continuation statements, and amendments thereto, relating to
all or
any part of the Collateral without the signature of Pledgor where permitted
by
law. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. Pledgor
understands and agrees that even though the Agent has no obligation to do
so,
with respect to any financing statement, the Agent intends to file (at the
expense of Pledgor, including the fees and expenses of counsel to the Agent
on
behalf of the Sellers) any continuation statement or amendment where failure
to
so file could reasonably be expected to result in the potential lapse of
such
financing statement at any time within three months of any such proposed
filing.
(e) Each
Seller hereby agrees to appoint Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx as its
Agent
for purposes of this Agreement. The Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for
the
negligence or misconduct of any such agents or attorneys-in-fact selected
by it
in good faith.
(f) Each
of the Sellers hereby, severally and not jointly, covenants and agrees to
reimburse, INDEMNIFY and hold the Agent harmless from and
against any and all claims, actions, judgments, damages, losses, liabilities,
costs, transfer or other taxes, and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) incurred or suffered without any bad
faith, gross negligence or willful misconduct by the Agent, arising out of
or
incident to this Agreement or the administration of the Agent’s duties
hereunder, or resulting from its actions or inactions as Agent.
ARTICLE
II
Representations
and Warranties
Section
2.01 Representations and Warranties. Pledgor
represents, warrants, and covenants to Sellers as follows:
(a) The
Pledged Securities outstanding on the date hereof: (i) are described in
Schedule A hereto; (ii) have been duly and validly issued; and (iii) are
subject to no options, warrants, calls, liens, pledges, or commitments of
any
character whatsoever relating thereto.
(b) Any
instruments of transfer or assignment relating to certificates representing
or
evidencing the Pledged Securities, executed in blank and delivered by Pledgor
to
the Agent herewith, have been duly executed by Pledgor and vest in the Sellers
the authority that they purport to confer.
(c) The
principal place of business and chief executive office of Pledgor and the
sole
location where the records of Pledgor with respect to the Collateral are
kept
are located at the address set forth on Schedule B attached
hereto. Pledgor shall not move its chief executive office, principal
place of business, or such location of records unless it shall have given
to the
Agent not less than twenty (20) days' prior written notice of its intention
so
to do, clearly describing such new location and providing such other information
in connection therewith as the Agent may reasonably request.
(d) The
jurisdiction of organization of Pledgor is as set forth on Schedule B
attached hereto. As of the date hereof, Pledgor does not have or
operate under, nor has it had or operated under, in any jurisdiction at any
time
prior to the date hereof, any name except its legal name as set forth on
the
signature pages hereto, nor has Pledgor ever been organized under the laws
of
any jurisdiction other than the jurisdiction specified on Schedule B attached
hereto. Pledgor shall not change its legal name, assume or operate in
any jurisdiction under any trade, fictitious or other name or change its
jurisdiction of organization unless (i) it shall have given to the Agent
not
less than twenty (20) days' prior written notice of its commencing to do
so,
clearly describing such new name and the jurisdictions in which such new
name
shall be used or such new jurisdiction of organization and providing such
other
information in connection therewith as the Agent may reasonably request and
(ii)
with respect to such new name or jurisdiction of organization, Pledgor shall
have taken all reasonable action, reasonably satisfactory to the Agent, to
maintain the security interest of the Sellers in the Collateral intended
to be
granted hereby at all times fully perfected and in full force and
effect.
(e) Pledgor
is the legal and beneficial owner of the Collateral free and clear of any
lien
or security interest (except the liens and security interests created herein),
and Pledgor has not sold, granted any option with respect to, assigned,
transferred or otherwise disposed of any of its rights or interests in or
to
such Collateral.
(f) Except
as set forth in Exhibit 2.01(f), no effective financing statement or other
document similar in effect covering all or any part of Pledgor's portion
of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Sellers relating to this Agreement, and Pledgor has
not
authorized the filing of any such financing statement or other
document. Pledgor will not, without the prior written consent of the
Agent, authorize or authenticate any such financing statements after the
date
hereof, and there will not ever be on file in any public office, any enforceable
financing statement or statements covering any or all of the Collateral,
except
financing statements filed or to be filed in favor of the Sellers.
(g) No
consent, authorization, approval or other action by, and no notice to or
filing
with, any governmental authority or any other Person is required: (i) for
the
valid execution, delivery and performance by Pledgor of this Agreement; (ii)
for
the pledge by Pledgor of a security interest in the Collateral or for the
granting, perfection and maintenance of the liens and security interests
created
hereby and the first priority nature of such liens and security interests
(other
than the timely and proper filing of financing statements and continuation
statements related thereto); or (iii) for the exercise by the Agent of the
voting or other rights provided for in this Agreement or the remedies in
respect
of Pledgor's portion of the Collateral pursuant to this Agreement (except
as may
be required in connection with such disposition by laws affecting the offering
and sale of securities generally).
(h) This
Agreement has been duly authorized, executed and delivered by Pledgor and
constitutes a legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by equitable principles (regardless of whether enforcement
is
sought in equity or at law).
(i) The
execution, delivery and performance of this Agreement is not in conflict
with
and does not violate any instrument or agreement to which Pledgor is a party
or
by which Pledgor is bound.
(j) Pledgor
covenants and agrees that it will defend the Sellers’ right, title and security
interest in and to the Collateral and the proceeds thereof against the claims
and demands of all persons whomsoever, and Pledgor covenants and agrees that
it
will have like title to and right to pledge any other property at any time
hereafter pledged by Pledgor to the Sellers as Collateral hereunder and will
likewise defend the right thereto and the security interest therein of the
Sellers.
(k) Except
as permitted by the Agent, Pledgor will not sell, assign, or otherwise dispose
of, grant any option with respect to, or pledge, grant a security interest
in or
otherwise encumber any of the Collateral or any interest therein, or suffer
any
of the same to exist, and any sale, assignment, option, pledge, security
interest or other encumbrance or disposition of any nature whatsoever made
in
violation of this covenant shall be a nullity and of no force and effect,
and
upon demand of the Agent, shall forthwith be canceled or satisfied by an
appropriate instrument in writing.
The
representations and warranties set forth in this Section 2.01 shall survive
the
execution and delivery of this Agreement.
ARTICLE
III
Affirmative
and Negative Covenants
Pledgor
covenants and agrees with
Sellers that until the Obligations are satisfied and performed in
full:
Section
3.01. Encumbrances. Pledgor
shall not create, permit, or suffer to exist, and shall defend the Collateral
against, any lien, security interest, or other encumbrance on the Collateral
except the pledge and security interest of Sellers hereunder and the pledge
and
security interests referenced in Section 1.02 above, and shall defend Pledgor's
rights in the Collateral and Sellers’ security interest in the
Collateral against the claims of all persons or entities
whatsoever.
Section
3.02. Sale of
Collateral. Pledgor shall not sell,
assign, or otherwise dispose of the Collateral or any part thereof, or attempt
to sell, assign, or otherwise dispose of the Collateral or any part thereof,
without the prior written consent of the Agent.
Section
3.03. Further
Assurances.
(a) At
any time and from time to time, upon the request of the Agent, and at the
sole
expense of Pledgor, Pledgor shall promptly execute and deliver all such further
instruments and documents and take such further action as the Agent may deem
necessary or desirable to preserve and perfect its security interest in the
Collateral and carry out the provisions and purposes of this Agreement,
including, without limitation, the execution and/or filing of such financing
statements as the Agent may require (and any such filing is hereby authorized
by
Pledgor). A carbon, photographic, or other reproduction of this
Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as
a
financing statement.
(b) In
addition to
performing its obligations under Section 3.03 (a) above, Pledgor will, upon
acquiring any additional Pledged Securities, promptly (and in any event within
ten business days) deliver to the Agent a Supplement to Pledge Agreement,
duly
executed by the Pledgor, in substantially the form of Annex A hereto
(each, a "Supplement to Pledge Agreement"), identifying such additional Pledged
Securities. Pledgor hereby authorizes the Agent to attach each
Supplement to Pledge Agreement to this Agreement and agrees that all additional
Pledged Securities listed on any Supplement to Pledge Agreement (including
any
schedules(s) thereto) delivered to the Agent shall for all purposes hereunder
constitute Collateral.
Section
3.04. Obligations. Pledgor
shall duly and punctually pay and perform the Obligations, including
without limitation, the obligations of Pledgor under this
Agreement.
Section
3.05. Notification. Pledgor
shall promptly notify the Agent of any lien, security interest, encumbrance
or
claim made or threatened against the Collateral.
Section
3.06. Compliance
with
Laws. Pledgor shall comply with all
applicable laws, rules, regulations, and orders of any court or governmental
authority.
ARTICLE
IV
Rights
of Sellers and Pledgor
Section
4.01. Voting
Rights. So long as no Event of Default (as
hereinafter defined) shall have occurred and be continuing and this Agreement
is
in force and effect, Pledgor shall be entitled to exercise any voting and
other
consensual rights relating or pertaining to the Collateral or any part
thereof provided, however, that no vote shall be cast or consent,
waiver or ratification given or action taken that would be inconsistent with
or
violate any provision of this Agreement. Upon the occurrence and
during the continuance of an Event of Default, at the sole option of the
Agent,
all voting rights shall thereupon become vested in the Sellers or their
assignee, who shall thereupon have the sole right to exercise or to assign
the
right to exercise such voting and other consensual rights.
Section
4.02. Dividends;
Distributions. Until an Event of Default occurs and is continuing,
Pledgor shall be entitled to receive, retain and use any and all dividends,
distributions and other payments paid in respect of the Collateral to the
extent
not otherwise prohibited hereby; provided, however, that any and
all
(A) dividends,
distributions and other amounts paid or payable other than in cash in respect
of, and instruments and other property (including, without limitation, capital
stock in MGSO or Stellar) received, receivable or otherwise distributed in
respect of, or in exchange for, any of the Collateral;
(B) dividends
or distributions hereafter paid or payable in cash in respect of any of the
Collateral in connection with a partial or total liquidation or dissolution;
and
(C) cash
paid, payable or otherwise distributed in redemption of, or in exchange for,
any
Pledgor's portion of the Collateral;
shall
be,
and shall be forthwith delivered to the Agent to hold as Collateral and shall,
if received by Pledgor, be received in trust for the benefit of the Sellers,
be
segregated from the other property or funds of Pledgor and be forthwith
delivered to the Agent as Collateral in the same form as so received (with
any
necessary endorsement).
4.03. Exercise
of
Rights. Upon the occurrence and during the continuance
of an Event of Default:
(i) the
Agent shall, without notice to Pledgor, transfer or register in the name
of the
Sellers or any of their nominees any or all certificates, if any, of the
Collateral held by the Agent on behalf of the Sellers hereunder, and the
Agent
may thereafter, after delivery of notice to Pledgor, exercise all voting
or
other corporate rights with respect to the Collateral (in each such case
whether
exercisable at any meeting of the issuer of that Collateral or by written
consent or otherwise) and 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 at its discretion any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization
or
other readjustment of the issuer of that Collateral or upon the exercise
by the
applicable Pledgor or the Agent of any right, privilege or option pertaining
to
any certificates of the Collateral, and in connection therewith, to deposit
and
deliver any and all of the Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions
as it
may determine, all without liability except to account for property actually
received by it, but the Agent shall have no duty to exercise any of the
aforesaid rights, privileges or options, and the Agent shall not be responsible
for any failure to do so or delay in so doing.
(ii) All
rights of the Pledgor to exercise the voting and other consensual rights
which
it would otherwise be entitled to exercise pursuant to Section 4.01 hereof
and
to receive the dividends, distributions and other payments which it would
otherwise be authorized to receive and retain pursuant to Section 4.02 hereof
shall cease, and all such rights shall thereupon become vested in the Agent
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Collateral such dividends,
distributions and other payments on behalf of the Sellers.
(iii) All
dividends, distributions or other payments which are received by Pledgor
contrary to the provisions of this Article shall be received in trust for
the
benefit of the Sellers, shall be segregated from other funds of Pledgor,
and
shall be forthwith paid over to the Agent for the benefit of the Sellers
as
Collateral in the same form as so received (with any necessary
endorsement).
(iv) Pledgor
shall execute and deliver (or cause to be executed and delivered) to the
Agent
all such instruments as the Agent may reasonably request for the purpose
of
enabling the Agent to exercise the voting and other rights to which it is
entitled to exercise on behalf of the Sellers pursuant to this Article and
to
receive the dividends, distributions or other payments which it is entitled
to
receive and retain on behalf of the Sellers pursuant to this
Article.
Section
4.04. Agent Appointed
Attorney-in-Fact. Pledgor hereby irrevocably designates,
makes, constitutes and appoints the Agent as Pledgor's attorney-in-fact,
with
full authority in the place and stead of Pledgor and in the name of Pledgor
or
otherwise, from time to time in the Agent's discretion, to take any action
and
to execute any agreement, document or instrument which the Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
(a) upon
the occurrence and during the continuance of an Event of Default, to ask,
demand, collect, xxx for, recover, compromise, receive and give acquittance
and
receipts for monies due and to become due under or in connection with the
Collateral;
(b) upon
the occurrence and during the continuance of an Event of Default, to receive,
indorse and collect any drafts or other instruments, documents and chattel
paper, in connection therewith; and
(c) upon
the occurrence and during the continuance of an Event of Default, to file
any
claims or take any action or institute any proceedings that the Agent may
deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of the Sellers with respect to any of the
Collateral.
Section
4.05. Performance
by Agent
of Pledgor's Obligations. If Pledgor
fails to perform or comply with any of the agreements contained herein and
Agent
shall cause performance of or compliance with such agreement, the expenses
of
Agent, together with interest thereon at the Default Rate (as defined in
the
Notes) shall be payable by Pledgor to Agent on demand and shall constitute
Obligations secured by this Agreement.
Section
4.06. Possession;
Reasonable
Care. The powers conferred on the Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any
duty
upon Agent to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for monies actually
received by it hereunder, the Agent shall have no duty as to any Collateral
or
as to the taking of any necessary steps to preserve rights against prior
parties
or any other rights pertaining to any Collateral. The Agent shall
hold in its possession all Collateral pledged, assigned or transferred
hereunder, except as from time to time any documents or instruments may be
required for recordation or for the purpose of enforcing or realizing upon
any
right or value thereby represented. The Agent may, from time to time,
in its sole discretion, appoint one or more agents to hold physical custody,
for
the account of the Sellers, of any or all of the Collateral. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Agent accords its own property,
it being understood that the Agent shall not have any responsibility for
(a)
ascertaining or taking action with respect to calls, conversions, warrants,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not the Agent has or is deemed to have knowledge of such matters,
or
(b) taking any necessary steps to preserve rights against any parties with
respect to any Collateral.
Section
4.07. Release
of
Collateral. The Agent shall release the
Collateral upon the terms and conditions set forth in the Notes.
ARTICLE
V
Default
Section
5.01. Events of
Default. Each of the following shall be
deemed an "Event of Default":
(a) an
Event
of Default occurs under terms of the Notes;
(b) Any
representation or warranty made or deemed made by Pledgor in this Agreement
or
in any certificate, report, notice, or statement furnished at any time in
connection with this Agreement or the Notes is false or misleading in any
material respect on the date when made or deemed to have been
made.
Pledge
and Security Agreement - Page
9
(c) Pledgor
shall fail to perform, observe, or comply with any covenant, agreement or
term,
other than a monetary default, contained in this Agreement and such failure
continues, without cure, for twenty (20) business days after written notice
to
Pledgor.
(d) Pledgor,
MGSO or Stellar (or any of same) shall commence a voluntary proceeding seeking
liquidation, reorganization, or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or hereafter
in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian,
or other similar official of it or a substantial part of its property or
shall
consent to any such relief or to the appointment of or taking possession
by any
such official in an involuntary case or other proceeding commenced against
it or
shall make a general assignment for the benefit of creditors or shall take
any
corporate action to authorize any of the foregoing.
(e) An
involuntary proceeding shall be commenced against Pledgor, MGSO or Stellar
seeking liquidation, reorganization, or other relief with respect to it or
its
debts under any bankruptcy, insolvency or other similar law now or hereafter
in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or a substantial part of its
property, and such involuntary proceeding shall remain undismissed and unstayed
for a period of sixty (60) days after commencement.
Section
5.02. Rights and
Remedies. Upon the occurrence of an
Event of Default, and subject to the notice and opportunity to cure (if any)
required by the Notes, the Agent shall have all of the rights and remedies
set
forth in this Agreement and the Notes, and additionally shall have the following
rights and remedies:
(i) The
Agent
may declare the Obligations or any part thereof immediately due and payable,
without demand, presentment, notice of dishonor, notice of acceleration,
notice
of intent to accelerate, notice of intent to demand, protest, or any other
notice whatsoever, all of which are hereby expressly waived by Pledgor;
provided, however, that upon the occurrence of an Event of Default under
Section
5.01(d) or Section 5.01(e) of this Agreement, the Obligations shall become
immediately due and payable without demand, presentment, notice of dishonor,
notice of acceleration, notice of intent to accelerate, notice of intent to
demand, protest, or any other notice whatsoever, all of which are hereby
expressly waived by Pledgor;
(ii) In
addition to all other rights and remedies granted to the Sellers in this
Agreement and in any other instrument or agreement securing, evidencing,
or
relating to the Obligations, the Agent shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code in force in the State
of
Florida as of the date of this Agreement. Without limiting the
generality of the foregoing, the Agent may (A) without demand or notice to
Pledgor, collect, receive, or take possession of the Collateral or any part
thereof, (B) sell or otherwise dispose of the Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at the
Agent’s offices or elsewhere, for cash or on credit, and/or (C) bid and
become a purchaser at any sale free of any right or equity of redemption
in
Pledgor, which right or equity is hereby expressly waived and released by
Pledgor. Upon the request of the Agent, Pledgor shall assemble the
Collateral and make it available to the Agent at any place designated by
the Agent. Pledgor agrees that the Agent shall not be obligated to
give more than ten (10) business days written notice of the time and place
of
any public sale or of the time after which any private sale may take place
and
that such notice shall constitute reasonable notice of such
matters. The Agent shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. The Agent
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. Any cash
held by the Agent as Collateral and all cash proceeds received by the Agent
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 Agent, be held by the
Agent
as collateral for, and/or be applied then or at any time thereafter to the
Obligations in the order and manner as Agent may elect. Any surplus
of such cash or cash proceeds held by the Agent and remaining after payment
in
full of all the Obligations shall be paid over to Pledgor or to whomever
may be
lawfully entitled to receive such surplus. Pledgor shall be liable
for all expenses of retaking, holding, preparing for sale, or the like, and
all
attorneys' fees and other expenses incurred by Agent in connection with the
collection of the Obligations and the enforcement of Sellers’ rights under this
Agreement, all of which expenses and fees shall constitute additional
Obligations secured by this Agreement. Pledgor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay the Obligations;
Pledge
and Security Agreement - Page
10
(iii) The
Agent
may cause any or all of the Collateral held by it to be transferred into
the name of the Sellers or the name or names of the Sellers’ nominee or
nominees;
(iv) The
Agent
shall be entitled to receive all cash and non-cash dividends payable in respect
of the Collateral on behalf of the Sellers;
(v) The
Agent
shall have the right, but shall not be obligated to, exercise or cause to
be
exercised all voting rights and corporate powers in respect of the
Collateral on behalf of the Sellers, and Pledgor shall deliver to the
Agent, if requested by the Agent, irrevocable proxies with respect to the
Collateral in form satisfactory to the Agent;
(vi) Pledgor
hereby acknowledges and confirms that the Agent may be unable to effect a
public
sale of any or all of the Collateral by reason of certain prohibitions contained
in the Securities Act of 1933, as amended, and applicable state securities
laws
and may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire any shares of the Collateral for their own respective
accounts for investment and not with a view to distribution or resale
thereof. Pledgor further acknowledges and confirms that any such
private sale may result in prices or other terms less favorable to Pledgor
or
other seller than if such sale were a public sale and, notwithstanding such
circumstances, agree that any such private sale shall be deemed to have been
made in a commercially reasonable manner, and the Agent shall be under no
obligation to take any steps in order to permit the Collateral to be sold
at a
public sale. The Agent shall be under no obligation to delay a sale
of any of the Collateral for any period of time necessary to permit any issuer
thereof to register such Collateral for public sale under the Securities
Act of 1933, as amended, or under applicable state securities laws, or to
delay
a sale of any of the Collateral for any other reason. Pledgor hereby
waives any claims against the Agent or Sellers arising by reason of the fact
that the price at which the Collateral may have been sold at such private
sale
was less than the price which might have been obtained at a public sale or
was
less than the Obligations even if the Agent accepts the first offer received
and
does not offer the Collateral to more than one offeree (and the Agent, the
Sellers or any affiliates of the Sellers may be the only offeree and the
purchaser of the Collateral); and
Pledge
and Security Agreement - Page
11
(vii) On
any
sale of the Collateral, the Agent is hereby authorized to comply with any
limitation or restriction compliance with which is necessary, in the view
of the Agent's counsel, in order to avoid any violation of applicable law
or in
order to obtain any required approval of the purchaser or purchasers by any
applicable governmental authority.
Section
5.03. Security
Interest
Absolute. All rights of the Sellers hereunder
and in and to the Collateral, and all obligations of Pledgor hereunder, shall
be
absolute and unconditional irrespective of:
(a) any
lack
of validity or enforceability of the Notes, any agreement with respect to
any of
the Obligations or any other agreement or instrument relating to any of the
foregoing;
(b) any
change in the time, manner or place of payment of, or in any other term of,
all
or any of the Obligations or any other amendment or waiver of or any consent
to
any departure from this Agreement or any other agreement or instrument;
or
(c) any
sale,
exchange, release or nonperfection of any other collateral, or any release
of
any guarantor or any person liable in any manner for the collection of any
of
the Obligations or any amendment or waiver of or consent to or departure
from
the Notes or any guaranty for all or any of the Obligations.
Section
5.04. Waiver and
Consent.
(a) Pledgor
consents and agrees that the Agent may in its absolute and sole discretion,
at
any time and from time to time, without notice or demand, and without affecting
the enforceability or security hereof: (i) create new Obligations or
supplement, modify, amend, extend, increase, decrease, renew, accelerate
or
otherwise change the Obligations or any of their terms; (ii) supplement,
modify,
amend, or waive any provision of, or enter into or give any agreement, approval
or consent with respect to the Notes; (iii) accept new or additional
instruments, documents or agreements in exchange for or relative to any of
the
Obligations or any part thereof or for the Notes; (iv) accept payments on
the
Obligations; (v) receive and hold additional security or guaranties for the
Obligations or any part thereof; (vi) release, reconvey, terminate, waive,
abandon, fail to perfect, subordinate, exchange, substitute, transfer or
enforce
any security or guarantees and apply any security and direct the order or
manner
of sale thereof; (vii) release any person from any personal liability with
respect to the Obligations or any part thereof; and (viii) settle, release
on
terms satisfactory to the Agent or by operation of applicable laws or otherwise
liquidate or enforce any Obligations and any security or guaranty in any
manner,
and consent to the transfer of any security.
Pledge
and Security Agreement - Page
12
(b) Upon
the
occurrence and during the continuance of an Event of Default, and subject
to the
notice and opportunity to cure (if any) required by the Notes, the Agent
may
enforce this Agreement independently from any other document and independently
of any other remedy, security or guaranty the Sellers at any time may have
or
hold in connection with the Obligations, and it shall not be necessary for
the
Agent to marshal assets in favor of Pledgor or any other person or to proceed
upon or against and/or exhaust my other security or remedy before proceeding
to
enforce this Agreement. Pledgor expressly agrees that the Agent may
proceed against any or all of the Collateral or guaranties for the Obligations
in such order and in such manner as Agent shall determine in Agent’s sole and
absolute discretion. The Agent may file a separate action or actions
against Pledgor, whether action is brought or prosecuted with respect to
any
other security or against any other person, or whether any other person is
joined in any such action or actions. Pledgor agrees that the Agent and other
guarantor, if any, of the Obligations ("Other Guarantor") may deal with each
other in connection with the Obligations or otherwise, or alter any contracts
or
agreements now or hereafter existing between or among any of them, in any
manner
whatsoever, all without in any way altering or affecting the security of
this
Agreement. Pledgor expressly waives the benefit of any statute(s) of
limitations affecting its liability hereunder or the enforcement of the
Obligations or the lien or security interest created or granted
herein. The Sellers’ rights hereunder shall be reinstated and
revived, and the enforceability of this Agreement shall continue, with respect
to any amount at any time paid on account of the Obligations that thereafter
shall be required to be restored or returned by the Sellers upon the bankruptcy,
insolvency or reorganization of Pledgor, MGSO or Stellar, or other any other
Person, all as though such amount had not been paid.
(c) Pledgor
expressly waives any and all defenses now or hereafter arising or asserted
by
reason of (i) any disability or other defense of any Other Guarantor with
respect to the Obligations (ii) the failure of priority of any security for
the
Obligations (iii) the cessation from any cause whatsoever of the liability
of
any Other Guarantor (other than by reason of the full payment and performance
of
all Obligations, (iv) any defect in any notice that may be given in connection
with any sale or disposition of any property securing the Obligations, (v)
any
act or omission of the Agent or others that directly or indirectly results
in or
aids the discharge or release of any Other Guarantor or the Obligations or
any
other security or guaranty therefor by operation of law or otherwise, (vi)
any
law that provides that the obligation of a surety or guarantor must neither
be
larger in amount nor in other respects more burdensome than that of the
principal or that reduces a surety's or guarantor's obligation in proportion
to
the principal's obligation, (vii) any failure of the Agent to file or enforce
a
claim in any bankruptcy or other proceeding with respect to any person, (viii)
the election by the Agent, in any bankruptcy proceeding of any person, of
the
application or nonapplication of Section 1111(b)(2) of the United States
Bankruptcy Code, (ix) any extension of credit or the grant of any lien under
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, (x) any use of cash collateral
under Section 363 of the United States Bankruptcy Code, (xi) any agreement
or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any person, (xii) the avoidance of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation
or
dissolution proceeding of any Person, including any discharge of, or bar
or stay
against collecting, all or any of the Obligations in or as a result of any
such
proceeding, or (xiii) any action taken by the Agent that is authorized by
this
Section, this Agreement, or any other provision of the
Notes.
Pledge
and Security Agreement - Page
13
ARTICLE
VI
Miscellaneous
Section
6.01. Expenses;
Indemnification. Pledgor agrees to pay
on demand all costs and expenses incurred by the Agent in connection with
the
preparation, negotiation, and execution of any and all amendments,
modifications, and supplements to this Agreement. Pledgor agrees to
pay and to hold Sellers and Agent harmless from and against all excise, sales,
stamp, or other taxes and all fees payable in connection with this Agreement
or
the transactions contemplated hereby, and agree to hold the Sellers and Agent
harmless from and against any and all present or future claims or liabilities
with respect to or resulting from Pledgor performing or delaying in performing
their obligations under this Agreement.
Section
6.02. No Waiver;
Cumulative
Remedies. No failure on the part of the
Agent to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate
as
a waiver thereof, nor shall any single or partial exercise of any right,
power,
or privilege under this Agreement preclude any other or further exercise
thereof
or the exercise of any other right, power, or privilege. The rights
and remedies provided for in this Agreement are cumulative and not exclusive
of
any rights and remedies provided by law.
Section
6.03. Successors
and
Assigns. This Agreement shall be
binding upon and inure to the benefit of Pledgor and Sellers and their
respective heirs, successors, and assigns, except that Pledgor may not assign
any of its rights or obligations under this Agreement without the prior written
consent of the Agent, which written consent shall not be unreasonably
withheld. The Agent may not assign this Agreement to any assignee or
transferee. Each Seller, however, may assign its rights and
obligations under this Agreement to any assignee or transferee to which its
Notes is assigned or transferred in compliance with the terms of such
Notes.
Section
6.04. Amendment;
Entire
Agreement. This Agreement embodies the
entire agreement among the parties hereto and supersedes all prior agreements
and understandings, if any, relating to the subject matter
hereof. The provisions of this Agreement may be amended or waived
only by an instrument in writing signed by the parties hereto.
Section
6.05. Notices. Any
notice, consent, or other communication required or permitted to be given
under
this Agreement to the Agent or Sellers or Pledgor shall be in writing and
shall
be deemed to have been duly given if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid, or nationally
recognized overnight air courier guaranteeing next day delivery as
follows:
|
To
Agents:
|
Xxxxxxx
Xxxxxxx
|
|
|
Xxxxxx
Xxxxxxxx
|
||
|
000
XX 000xx
Xxxxxx, Xxxxx 000
|
||
|
Xxxxx
Xxxxxxx, Xxxxxxx 00000
|
Pledge
and Security Agreement - Page
14
|
To
Sellers:
|
Xxxxxxx
Xxxxxxx
|
|
|
000
XX 000xx
Xxxxxx, Xxxxx 000
|
||
|
Xxxxx
Xxxxxxx, Xxxxxxx 00000
|
||
|
Xxxxxx
Xxxxxxxx
|
||
|
000
XX 000xx
Xxxxxx, Xxxxx 000
|
||
|
Xxxxx
Xxxxxxx, Xxxxxxx 00000
|
||
|
To
Pledgor:
|
Rick’s
Cabaret International, Inc.
|
|
|
Attn: Xxxx
Xxxxxx, President/CEO
|
||
|
00000
Xxxxxx Xxxx
|
||
|
Xxxxxxx,
Xxxxx 00000
|
||
|
Fax: (000)
000-0000
|
Any
such
notice, consent, or other communication shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three
days after being deposited in the mail, postage prepaid, sent certified mail,
return receipt requested, if mailed; and the next day after timely delivery
to
the courier, if sent by overnight air courier guaranteeing next day
delivery. If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not
the
addressee receives it.
Section
6.06. Choice
of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida, without regard
to principles of conflict of laws. In any action between or among any
of the parties, whether arising out of this Agreement or otherwise, each
of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in Dade County,
Florida.
Section
6.07. Headings. The
headings, captions, and arrangements used in this Agreement are for convenience
only and shall not affect the interpretation of this Agreement.
Section
6.08. Survival
of
Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Agent shall affect the
representations and warranties made by Pledgor or the right of Agent to rely
upon them.
Section
6.09. Execution.
This Agreement may be executed in two or more counterparts, all of which
when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing
(or
on whose behalf such signature is executed) with the same force and effect
as if
such facsimile or “.pdf” signature page were an original thereof.
Section
6.10. Severability. 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
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.
Pledge
and Security Agreement - Page
15
|
Executed
as of the Effective Date above written.
|
|||
|
PLEDGOR
|
RICK’S
CABARET INTERNATIONAL, INC.
|
||
|
By:
|
/s/
Xxxx Xxxxxx
|
||
|
Xxxx
Xxxxxx, President and CEO
|
|||
|
AGENTS
|
|||
|
By:
|
/s/
Xxxxxxx Xxxxxxx
|
||
|
Xxxxxxx
Xxxxxxx, as Agent
|
|||
|
By:
|
/s/
Xxxxxx Xxxxxxxx
|
||
|
Xxxxxx
Xxxxxxxx, as Agent
|
|||
|
SELLERS
|
|||
|
/s/
Xxxxxxx Xxxxxxx
|
|||
|
Xxxxxxx
Xxxxxxx, Individually
|
|||
|
/s/
Xxxxxxx Xxxxxxx
|
|||
|
Xxxxxxx
Xxxxxxx,
Individually
|
|||
Pledge
and Security Agreement - Page
16
ACCEPTANCE
AND ACKNOWLEDGMENT
Rick’s
Cabaret International, Inc.
hereby accepts and acknowledges the Agent, on behalf of and for the benefit
of
the Sellers, as the assignee, pursuant to this Agreement, of the following
shares of common stock:
|
(a)
|
2,000
shares of common stock of Miami Square Gardens One, Inc., a Florida
corporation (“MSGO”, which represents 100% of the issued and outstanding
common stock of MSGO ; and
|
|
(b)
|
100
shares of common stock of Stellar Management Corporation, a Florida
corporation (“Stellar”), which represents 100% of the issued and
outstanding common stock of Stellar
|
which
is
owned by Rick’s Cabaret International, Inc. Further, Rick’s Cabaret
International, Inc. agrees that the interests of the Agent, on behalf of
and for
the benefit of the Sellers, shall be promptly and duly registered in the
books
and records of MSGO and Stellar.
| Rick’s Cabaret International, Inc. | ||
| By: |
/s/
Xxxx Xxxxxx
|
|
| Xxxx Xxxxxx, President/CEO | ||
Signature
Page to Pledge and Security
Agreement
Schedule
A
Pledged
Securities
|
Entity
|
Percentage of Issued and
Outstanding Shares of
Capital
Stock
|
Certificate
No(s).,
if any
|
|||||
|
Miami
Gardens Square One, Inc.
|
100.00%
|
13
|
|||||
|
Stellar
Management Corporation
|
100.00%
|
4
|
|||||
Pro
Rata Security Interest and Pledge Securities
|
Entity
|
Secured
Party
|
Pro rata
Security
Interest
|
||||
|
Miami
Gardens Square One, Inc.
|
Xxxxxx
Xxxxxxxx
|
50%
|
||||
|
Xxxxxxx
Xxxxxxx
|
50%
|
|||||
|
Stellar
Management Corporation
|
Xxxxxx
Xxxxxxxx
|
50%
|
||||
|
Xxxxxxx
Xxxxxxx
|
50%
|
|||||
Schedule
A to
PledgeAgreement
Schedule
B
Principal
Place of Business; Chief Executive Office; Location of Records;
Jurisdiction
of Organization
Principal
Place of Business, Chief Executive Office and Location of Records:
Rick’s
Cabaret International,
Inc.
00000
Xxxxxx Xxxx
Xxxxxxx,
XX 00000
Jurisdiction
of
Organization: Texas
Scedule
B Pledge Agreement
Annex
A
SUPPLEMENT
TO PLEDGE AGREEMENT
This
Supplement to Pledge Agreement, dated as of ____________ ___ 20___, is delivered
pursuant to Section __ of the Pledge Agreement referred to below.
RECITALS
A. RICK’S
CABARET INTERNATIONAL, INC., a Texas corporation (the
"Pledgor"), has executed and delivered that certain Pledge and
Security Agreement, dated as of November ___, 2007, in favor of _____________,
as Agent on behalf of all Sellers (as the same may be amended, supplemented
or
otherwise modified from time to time, including without limitation by this
and
any other Supplements to Pledge Agreement executed from time to time, the
"Agreement"). Capitalized terms used but not defined
herein have the meanings assigned to such terms in the Agreement.
B. Pursuant
to Section 3.03(b) of the Agreement, Pledgor has agreed, upon obtaining any
additional Pledged Securities, to promptly execute and deliver a Supplement
to
Pledge Agreement in order to identify such additional Pledged Securities
which
have been pledged pursuant to the Agreement.
C. The
undersigned desires to execute and deliver this Supplement to Pledge Agreement
to satisfy such requirement.
NOW,
THEREFORE, IT IS AGREED:
1. Collateral. The
undersigned agrees that the securities listed on Schedule A attached
hereto are part of the Collateral and are subject to the pledge and security
interest created by the Agreement.
2. Representations
and Warranties. The undersigned hereby certifies that the
representations and warranties set forth in Article II of the Agreement are
true
and correct as to the Pledged Securities listed on Schedule A hereto on
and as of the date hereof.
|
RICK’S
CABARET INTERNATIONAL, INC.
|
||
|
By:
|
|
|
|
Xxxx
Xxxxxx, President/CEO
|
||
Annex
A to Pledge Agreement
SCHEDULE
A TO SUPPLEMENT TO PLEDGE AGREEMENT
Pledged
Securities
|
Percentage
of Ownership
|
Class
of Interest
|
Certificate
No(s)., if any
|
Number
of Interests
|
|||||||||
Schedule
A
-- Annex A to Pledge Agreement
