Pledge Agreement - Rascals International Inc., Rodmar Holdings LLC and Marod Holdings LLC
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 6th day of
November, 2002, by RASCALS INTERNATIONAL INC., a Delaware corporation
(hereinafter called "Pledgor", whether one or more), in favor of RODMAR
HOLDINGS LLC and MAROD HOLDINGS LLC., jointly and severally New Jersey
Limited Liability Companies ("Secured Parties"). Pledgor hereby agrees with
Secured Parties as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the meanings indicated below:
(a) The term "Code" shall mean the Uniform Commercial Code as in effect
in the State of New Jersey on the date of this Agreement or as it may hereafter
be amended from time to time.
(b) The term "Collateral" shall mean all property specifically described
on Schedule "1" attached hereto and made a part hereof. The term Collateral,
as used herein, shall also include (i) all certificates, instruments and/or
other documents evidencing the foregoing, (ii) all renewals, replacements and
substitutions of all of the foregoing, (iii) all Additional Property (as
hereinafter defined), and (iv) all PRODUCTS and PROCEEDS of all of the
foregoing. The designation of proceeds does not authorize Pledgor to sell,
transfer or otherwise convey any of the foregoing property.
(c) The term "Documents" shall mean the Note, this Agreement, The Loan
Agreement and all other instruments and documents evidencing, securing,
governing, guaranteeing and/or pertaining to the Indebtedness.
(d) The term "Indebtedness" shall mean (i) that certain Promissory Note
(the "Note") dated of even date herewith in the original principal amount of
$451,170 executed by Pledgor and payable to the order of Secured Parties
together with any additional Promissory Notes (the "additional Notes")
executed by Pledgor from time to time pursuant to the Loan Agreement and
payable to the order of Secured Parties; (ii) all accrued but unpaid interest
on any of the indebtedness described in (i) above, (iii) all obligations
owing to Secured Parties under any documents evidencing, securing, governing
and/or pertaining to all or any part of the indebtedness described in (i) and
(ii) above, (iv) all costs and expenses incurred by Secured Parties in
connection with the collection and administration of all or any part of the
indebtedness and obligations described in (i), (ii) and (iii) above or the
protection or preservation of, or realization upon, the collateral securing
all or any part of such indebtedness and obligations, including without
limitation all reasonable attorneys' fees, and (v) all renewals, extensions,
modifications and rearrangements of the indebtedness and obligations described
in (i), (ii), (iii) and (iv) above.
(e) The term "Obligated Party" shall mean any party other than Pledgor
who secures, guarantees and/or is otherwise obligated to pay all or any portion
of the Indebtedness.
(f) The term "HUB" shall mean Hudson United Bank., a New Jersey
Corporation, and any successors to the interest of same in the Collateral.
(g) The term "HUB Agreement" shall mean the Mortgage Agreement between
the Pledgor and HUB, and any documents executed and delivered pursuant thereto.
All words and phrases used herein which are expressly defined in Title 12A
Section 12A:1-201 New Jersey Permanent Statutes, Chapter 8 or Chapter 9 of
the Code shall have the meaning provided for therein. Other words and phrases
defined elsewhere in the Code shall have the meaning specified therein except
to the extent such meaning is inconsistent with a definition in Section
12A:1-201, Chapter 8 or Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness, Pledgor, for value
received, hereby grants to Secured Parties a continuing security interest in
the Collateral.
3. Additional Property. Collateral shall also include the following
property (collectively, the "Additional Property") which Pledgor becomes
entitled to receive or shall receive in connection with any other Collateral:
(a) any stock certificate, including without limitation, any certificate
representing a stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation, conversion,
sale of assets, combination of shares, stock split or spin-off; (b) any
option, warrant, subscription or right, whether as an addition to or in
substitution of any other Collateral; (c) any dividends or distributions of
any kind whatsoever, whether distributable in cash, stock or other property;
(d) any interest, premium or principal payments; and (e) any conversion or
redemption proceeds; provided, however, that until the occurrence of an Event
of Default (as hereinafter defined), Pledgor shall be entitled to all cash
dividends and all interest paid on the Collateral (except interest paid on
any certificate of deposit pledged hereunder) free of the security interest
created under this Agreement. All Additional Property received by Pledgor
shall be received in trust for the benefit of Secured Parties. All Additional
Property and all certificates or other written instruments or documents
evidencing and/or representing the Additional Property that is received by
Pledgor, together with such instruments of transfer as Secured Parties may
request, shall immediately be delivered to or deposited with Secured Parties
and held by Secured Parties as Collateral under the terms of this Agreement,
subject to any superior rights of HUB thereto. If the Additional Property
received by Pledgor shall be shares of stock or other securities, such shares
of stock or other securities shall be duly endorsed in blank or accompanied
by proper instruments of transfer and assignment duly executed in blank with,
if requested by Secured Parties, signatures guaranteed by a member or member
organization in good standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to Secured Parties.
Secured Parties shall be deemed to have possession of any Collateral in
transit to Secured Parties or its agent.
4. Voting Rights. As long as no Event of Default shall have occurred and
be continuing hereunder, any voting rights incident to any stock or other
securities pledged as Collateral may be exercised by Pledgor; provided,
however, that Pledgor will not exercise, or cause to be exercised, any such
voting rights, without the prior written consent of Secured Parties, if the
direct or indirect effect of such vote will result in an Event of Default
hereunder.
5. Maintenance of Collateral. Other than the exercise of reasonable care
to assure the safe custody of any Collateral in Secured Parties' possession
from time to time, Secured Parties do not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the
generality of the foregoing, Secured Parties shall not have any obligation,
duty or responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or similar matters
relating to the Collateral or informing Pledgor with respect to any such
matters; (b) fix, preserve or exercise any right, privilege or option (whether
conversion, redemption or otherwise) with respect to the Collateral unless
(i) Pledgor makes written demand to Secured Parties to do so, (ii) such
written demand is received by Secured Parties in sufficient time to permit
Secured Parties to take the action demanded in the ordinary course of its
business, and (iii) Pledgor provides additional collateral, acceptable to
Secured Parties in their sole discretion; (c) collect any amounts payable in
respect of the Collateral (Secured Parties being liable to account to Pledgor
only for what Secured Parties may actually receive or collect thereon);
(d) sell all or any portion of the Collateral to avoid market loss; (e) sell
all or any portion of the Collateral unless and until (i) Pledgor makes
written demand upon Secured Parties to sell the Collateral, and (ii) Pledgor
provides additional collateral, acceptable to Secured Parties in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other
than Pledgor.
6. Representations and Warranties. Pledgor hereby represents and warrants
the following to Secured Parties:
(a) Enforceability. This Agreement and the other Documents constitute
legal, valid and binding obligations of Pledgor, enforceable in accordance
with their respective terms, except as limited by bankruptcy, insolvency
or similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may generally
be limited by equitable principles.
(b) Ownership and Liens. Pledgor has good and marketable title to the
Collateral free and clear of all liens, security interests, encumbrances
or adverse claims, except for the security interest created by this
Agreement and the security interest created by the HUB Agreement (the
"HUB Lien"). No dispute, right of setoff, counterclaim or defense exists
with respect to all or any part of the Collateral. Pledgor has not
executed any other security agreement currently affecting the Collateral
other than pursuant to the HUB Agreement and no financing statement or
other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may have been
executed or filed in favor of Secured Parties or HUB.
(c) No Conflicts or Consents. Neither the ownership, the intended use of
the Collateral by Pledgor, the grant of the security interest by Pledgor
to Secured Parties herein nor the exercise by Secured Parties of their
rights or remedies hereunder, will (i) conflict with any provision of
(A) any domestic or foreign law, statute, rule or regulation, or (B) any
agreement, judgment, license, order or permit applicable to or binding upon
Pledgor or otherwise affecting the Collateral, or (ii) result in or require
the creation of any lien, charge or encumbrance upon any assets or
properties of Pledgor or of any person. No consent, approval, authorization
or order of, and no notice to or filing with, any court, governmental
authority or third party is required in connection with the grant by Pledgor
of the security interest herein or the exercise by Secured Parties of their
rights and remedies hereunder, subject to the superior rights of HUB under
the HUB Agreement.
(d) Security Interest. Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to
Secured Parties in the manner provided herein, free and clear of any lien,
security interest or other charge or encumbrance, except the HUB Lien.
This Agreement creates a legal, valid and binding security interest in
favor of Secured Parties in the Collateral.
(e) Location. Pledgor's residence or chief executive office, as the case
may be, and the office where the records concerning the Collateral are
kept is located at its address set forth on the signature page hereof.
(f) Solvency of Pledgor. As of the date hereof, and after giving effect
to this Agreement and the completion of all other transactions
contemplated by Pledgor at the time of the execution of this Agreement,
(i) Pledgor is and will be solvent, (ii) the fair saleable value of
Pledgor's assets exceeds and will continue to exceed Pledgor's liabilities
(both fixed and contingent), and (iii) Pledgor is paying and will continue
to be able to pay its debts as they mature.
(g) Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All
securities pledged as Collateral have been duly authorized and validly
issued, are fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any party or of any agreement by
which Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of any securities
pledged as Collateral, except as has been disclosed to Secured Parties
in writing and under the HUB Agreement. To the best of Pledgor's
knowledge, no issuer of such securities (other than securities of a class
which are publicly traded) has any outstanding stock rights, rights to
subscribe, options, warrants or convertible securities outstanding or any
other rights outstanding entitling any party to have issued to such party
capital stock of such issuer, except as has been disclosed to Secured
Parties in writing.
(h) Subsidiaries. The shares described on Schedule 1 represent 100% of
the issued and outstanding equity securities of the companies listed
thereon.
7. Affirmative Covenants. Pledgor will comply with the covenants contained
in this Section at all times during the period of time this Agreement is
effective unless Secured Parties shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and marketable
title to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest created
by this Agreement and by the HUB Agreement. Pledgor will not permit any
dispute, right of setoff, counterclaim or defense to exist with respect
to all or any part of the Collateral. Pledgor will cause any financing
statement or other security instrument with respect to the Collateral to
be terminated, except as may exist or as may have been filed in favor of
Secured Parties or HUB. Pledgor will defend at its expense Secured
Parties' right, title and security interest in and to the Collateral
against the claims of any third party.
(b) Inspection of Books and Records. Pledgor will keep adequate records
concerning the Collateral and will permit Secured Parties and all
representatives and agents appointed by Secured Parties to inspect Pledgor's
books and records of or relating to the Collateral at any time during normal
business hours, to make and take away photocopies, photographs and printouts
thereof and to write down and record any such information.
(c) Adverse Claim. Pledgor covenants and agrees to promptly notify
Secured Parties of any claim, action or proceeding affecting title to the
Collateral, or any part thereof, or the security interests created hereunder
and, at Pledgor's expense, defend Secured Parties' security interest in the
Collateral against the claims of any third party. Pledgor also covenants and
agrees to promptly deliver to Secured Parties a copy of all written notices
received by Pledgor with respect to the Collateral, including without
limitation, notices received from the issuer of any securities pledged
hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Secured Parties any
certificates, documents or instruments representing or evidencing the
Collateral, with Pledgor's endorsement thereon and/or accompanied by proper
instruments of transfer and assignment duly executed in blank with, if
requested by Secured Parties, signatures guaranteed by a member or member
organization in good standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to Secured Parties.
(e) Further Assurances. Pledgor will contemporaneously with the
execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that Secured Parties may request
in order (i) to perfect and protect the security interest created or
purported to be created hereby and the first priority of such security
interest, (ii) to enable Secured Parties to exercise and enforce its rights
and remedies hereunder in respect of the Collateral, and (iii) to otherwise
effect the purposes of this Agreement, including without limitation:
(A) executing and filing any financing or continuation statements, or any
amendments thereto; (B) obtaining written confirmation from the issuer of
any securities pledged as Collateral of the pledge of such securities, in
form and substance satisfactory to Secured Parties; (C) cooperating with
Secured Parties in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice of
Secured Parties' security interest in any securities pledged as Collateral
to any securities or financial intermediary, clearing corporation or other
party required by Secured Parties, in form and substance satisfactory to
Secured Parties; and (E) obtaining written confirmation of the pledge of any
securities constituting Collateral from any securities or financial
intermediary, clearing corporation or other party required by Secured Parties,
in form and substance satisfactory to Secured Parties.
8. Negative Covenants. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective, unless Secured Parties shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of the
Collateral, (ii) grant a lien or security interest in or execute, file or
record any financing statement or other security instrument with respect to
the Collateral to any party other than Secured Parties or HUB, or
(iii) deliver actual or constructive possession of any certificate,
instrument or document evidencing and/or representing any of the Collateral
to any party other than Secured Parties or HUB.
(b) Impairment of Security Interest. Pledgor will not take or fail to
take any action that would in any manner impair the value or enforceability
of Secured Parties' security interest in any Collateral.
(c) Dilution of Ownership. As to any securities pledged as Collateral
(other than securities of a class which are publicly traded), Pledgor will
not consent to or approve of the issuance of (i) any additional shares of
any class of securities of such issuer (unless immediately upon issuance
additional securities are pledged and delivered to Secured Parties pursuant
to the terms hereof to the extent necessary to give Secured Parties a
security interest after such issuance in at least the same percentage of
such issuer's outstanding securities as Secured Parties had before such
issuance), (ii) any instrument 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 securities, or (iii) any
warrants, options, contracts or other commitments entitling any third party
to purchase or otherwise acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Parties.
9. Rights of Secured Parties. Secured Parties shall have the rights
contained in this Section at all times during the period of time this
Agreement is effective.
(a) Power of Attorney. Pledgor hereby irrevocably appoints Secured Parties
as Pledgor's attorney-in-fact, such power of attorney being coupled with an
interest, with full authority in the place and stead of Pledgor and in the
name of Pledgor or otherwise, to take any action and to execute any instrument
which Secured Parties may from time to time in Secured Parties' discretion
deem necessary or appropriate to accomplish the purposes of this Agreement,
including without limitation, the following action: (i) transfer any
securities, instruments, documents or certificates pledged as Collateral in
the name of Secured Parties or their nominee; (ii) use any interest, premium
or principal payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to reduce any of the
Indebtedness; (iii) exchange any of the securities pledged as Collateral for
any other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, and, in
connection therewith, to deposit and deliver any and all of such securities
with any committee, depository, transfer agent, registrar or other designated
agent upon such terms and conditions as Secured Parties may deem necessary or
appropriate; (iv) exercise or comply with any conversion, exchange, redemption,
subscription or any other right, privilege or option pertaining to any
securities pledged as Collateral; provided, however, except as provided
herein, Secured Parties shall not have a duty to exercise or comply with any
such right, privilege or option (whether conversion, redemption or otherwise)
and shall not be responsible for any delay or failure to do so; and (v) file
any claims or take any action or institute any proceedings which Secured
Parties may deem necessary or appropriate for the collection and/or
preservation of the Collateral or otherwise to enforce the rights of Secured
Parties with respect to the Collateral.
(b) Performance by Secured Parties. If Pledgor fails to perform any
agreement or obligation provided herein, Secured Parties may themselves
perform, or cause performance of, such agreement or obligation, and the
expenses of Secured Parties incurred in connection therewith shall be a part
of the Indebtedness, secured by the Collateral and payable by Pledgor on
demand.
Notwithstanding any other provision herein to the contrary, Secured
Parties do not have any duty to exercise or continue to exercise any of the
foregoing rights and shall not be responsible for any failure to do so or for
any delay in doing so.
10. Events of Default. Each of the following constitutes an "Event of
Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal or neglect of
Pledgor and Obligated Party to make any payment of principal or interest on
the Indebtedness, or any portion thereof, as the same shall become due and
payable, and the continuance of such failure for five (5) days; or
(b) Non-Performance of Covenants. The failure of Pledgor or any
Obligated Party to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other
Documents, which such failure could have a material adverse effect on (i) the
financial condition of Pledgor or any Obligated Party, or (ii) the ability
of Pledgor or any Obligated Party to repay the Indebtedness or perform its
obligations under the Documents; or
(c) Default Under other Documents. The occurrence of an Event of Default
or default under any of the other Documents.
(d) False Representation. Any representation contained herein or in any
of the other Documents made by Pledgor or any Obligated Party is false or
misleading in any material respect; or
(e) Default to Third Party. The occurrence of any event which permits
the acceleration of the maturity of any material indebtedness owing by
Pledgor or any Obligated Party to any third party, including but not limited
to HUB, under any agreement or undertaking; or
(f) Bankruptcy or Insolvency. If Pledgor or any Obligated Party:
(i) becomes insolvent, or makes a transfer in fraud of creditors, or makes an
assignment for the benefit of creditors, or admits in writing its inability
to pay its debts as they become due; (ii) generally is not paying its debts
as such debts become due; (iii) has a receiver, trustee or custodian appointed
for, or take possession of, all or substantially all of the assets of such
party or any of the Collateral, either in a proceeding brought by such party
or in a proceeding brought against such party and such appointment is not
discharged or such possession is not terminated within sixty (60) days after
the effective date thereof or such party consents to or acquiesces in such
appointment or possession; (iv) files a petition for relief under the United
States Bankruptcy Code or any other present or future federal or state
insolvency, bankruptcy or similar laws (all of the foregoing hereinafter
collectively called "Applicable Bankruptcy Law") or an involuntary petition
for relief is filed against such party under any Applicable Bankruptcy Law
and such involuntary petition is not dismissed within sixty (60) days after
the filing thereof, or an order for relief naming such party is entered under
any Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged within
a period of sixty (60) days any attachment, sequestration or similar writ
levied upon any property of such party; or (vi) fails to pay within thirty
(30) days any final money judgment against such party; or
(g) Execution on Collateral. The Collateral or any portion thereof is
taken on execution or other process of law in any action against Pledgor; or
(h) Abandonment. Pledgor abandons the Collateral or any portion thereof;
or
(i) Action by Other Lien holder. The holder of any lien or security
interest on any of the assets of Pledgor, including without limitation, the
Collateral (without hereby implying the consent of Secured Parties to the
existence or creation of any such lien or security interest on the Collateral),
declares a default thereunder or institutes foreclosure or other proceedings
for the enforcement of its remedies thereunder; or
(j) Liquidation, Death and Related Events. If Pledgor or any Obligated
Party is an entity, the liquidation, dissolution, merger or consolidation of
any such entity or, if Pledgor or any Obligated Party is an individual, the
death or legal incapacity of any such individual; or
(k) Dilution of Ownership. The issuer of any securities (other than
securities of a class which are publicly traded) constituting Collateral
hereafter issues any shares of any class of capital stock (unless immediately
upon issuance, additional securities are pledged and delivered to Secured
Parties pursuant to the terms hereof to the extent necessary to give Secured
Parties a security interest after such issuance in at least the same
percentage of such issuer's outstanding securities as Secured Parties had
before such issuance) or any options, warrants or other rights to purchase
any such capital stock; or
(l) Bankruptcy of Issuer. (i) The issuer of any securities constituting
Collateral files a petition for relief under any Applicable Bankruptcy Law,
(ii) an involuntary petition for relief is filed against any such issuer
under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within thirty (30) days after the filing thereof, or (iii) an order
for relief naming any such issuer is entered under any Applicable Bankruptcy
Law.
11. Remedies and Related Rights. If an Event of Default shall have occurred,
and without limiting any other rights and remedies provided herein, under any
of the other Documents or otherwise available to Secured Parties, Secured
Parties may exercise one or more of the rights and remedies provided in this
Section.
(a) Remedies. Secured Parties may from time to time at its discretion,
without limitation and without notice except as expressly provided in any of
the Documents:
(i) exercise in respect of the Collateral all the rights and remedies of
a Secured Party under the Code (whether or not the Code applies to the
affected Collateral);
(ii) reduce their claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest granted hereunder by any available
judicial procedure;
(iii) sell or otherwise dispose of, at either of their offices, on the
premises of Pledgor or elsewhere, the Collateral, as a unit or in parcels,
by public or private proceedings, and by way of one or more contracts (it
being agreed that the sale or other disposition of any part of the
Collateral shall not exhaust Secured Parties' power of sale, but sales or
other dispositions may be made from time to time until all of the
Collateral has been sold or disposed of or until the Indebtedness has been
paid and performed in full), and at any such sale or other disposition it
shall not be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public sale;
(v) buy the Collateral, or any portion thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of
a type which is the subject of widely distributed standard price
quotations;
(vi) apply for the appointment of a receiver for the Collateral, and
Pledgor hereby consents to any such appointment; and
(vii) at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured Parties is
entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any notice
under the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage
prepaid, at Pledgor's address set forth on the signature page hereof, ten
(10) days prior to the date of any public sale, or after which a private
sale, of any of such Collateral is to be held. Secured Parties shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Secured Parties 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. Pledgor further acknowledges and agrees that the redemption by
Secured Parties of any certificate of deposit pledged as Collateral shall be
deemed to be a commercially reasonable disposition under Title 12A Section
12A:-610 New Jersey Permanent Statutes.
(b) Private Sale of Securities. Pledgor recognizes that Secured
Parties may be unable to effect a public sale of all or any part of the
securities pledged as Collateral because of restrictions in applicable
federal and state securities laws and that Secured Parties may, therefore,
determine to make one or more private sales of any such securities to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and
not with a view to the distribution or resale thereof. Pledgor acknowledges
that each such private sale may be at prices and other terms less favorable
than what might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that each such private sale shall be deemed to have been
made in a commercially reasonable manner and that Secured Parties shall have
no obligation to delay the sale of any such securities for the period of time
necessary to permit the issuer to register such securities for public sale
under any federal or state securities laws. Pledgor further acknowledges and
agrees that any offer to sell such securities which has been made privately
in the manner described above to not less than five (5) bona fide offerees
shall be deemed to involve a "public sale" for the purposes of Title 12A
Section 12A:-610 New Jersey Permanent Statutes, notwithstanding that such
sale may not constitute a "public offering" under any federal or state
securities laws and that Secured Parties may, in such event, bid for the
purchase of such securities.
(c) Application of Proceeds. If any Event of Default shall have occurred,
Secured Parties may at their discretion apply or use any cash held by Secured
Parties as Collateral, and any cash proceeds received by Secured Parties in
respect of any sale or other disposition of, collection from, or other
realization upon, all or any part of the Collateral as follows in such order
and manner as Secured Parties may elect:
(i) to the repayment or reimbursement of the reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred by Secured Parties in connection with (A) the
administration of the Documents, (B) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization
upon, the Collateral, and (C) the exercise or enforcement of any of the
rights and remedies of Secured Parties hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable law
(including without limitation, Title 12A Section 12A:-608 New Jersey
Permanent Statutes or any other applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled to
receive such cash or proceeds whether by direction of a court of
competent jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the Collateral
by Secured Parties are insufficient to pay all amounts to which Secured
Parties are legally entitled, Pledgor and any party who guaranteed or is
otherwise obligated to pay all or any portion of the Indebtedness shall be
liable for the deficiency, together with interest thereon as provided in the
Documents.
(e) Non-Judicial Remedies. In granting to Secured Parties the power to
enforce its rights hereunder without prior judicial process or judicial
hearing, Pledgor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Parties to enforce its
rights by judicial process. Pledgor recognizes and concedes that non-judicial
remedies are consistent with the usage of trade, are responsive to commercial
necessity and are the result of a bargain at arm's length. Nothing herein is
intended to prevent Secured Parties or Pledgor from resorting to judicial
process at either party's option.
(f) Other Recourse. Pledgor waives any right to require Secured
Parties to proceed against any third party, exhaust any Collateral or other
security for the Indebtedness, or to have any third party joined with Pledgor
in any suit arising out of the Indebtedness or any of the Documents, or
pursue any other remedy available to Secured Parties. Pledgor further waives
any and all notice of acceptance of this Agreement and of the creation,
modification, rearrangement, renewal or extension of the Indebtedness.
Pledgor further waives any defense arising by reason of any disability or
other defense of any third party or by reason of the cessation from any cause
whatsoever of the liability of any third party. Until all of the Indebtedness
shall have been paid in full, Pledgor shall have no right of subrogation and
Pledgor waives the right to enforce any remedy which the Secured Parties have
or may hereafter have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever now or hereafter
held by Secured Parties. Pledgor authorizes Secured Parties, and without
notice or demand and without any reservation of rights against Pledgor and
without affecting Pledgor's liability hereunder or on the Indebtedness, to
(i) take or hold any other property of any type from any third party as
security for the Indebtedness, and exchange, enforce, waive and release any
or all of such other property, (ii) apply such other property and direct the
order or manner of sale thereof as Secured Parties may in their discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle or
release any of the Indebtedness or other security for the Indebtedness,
(iv) waive, enforce or modify any of the provisions of any of the Documents
executed by any third party, and (v) release or substitute any third party.
(g) Dividend Rights and Interest Payments. Upon the occurrence and
during the continuance of an Event of Default:
(i) all rights of Pledgor to receive and retain the dividends and
interest payments which it would otherwise be authorized to receive and
retain pursuant to Section 3 shall automatically cease, and all such
rights shall thereupon become vested with Secured Parties which shall
thereafter have the sole right to receive, hold and apply as Collateral
such dividends and interest payments; and
(ii) all dividend and interest payments which are received by Pledgor
contrary to the provisions of clause (i) of this Subsection shall be
received in trust for the benefit of Secured Parties, shall be segregated
from other funds of Pledgor, and shall be forthwith paid over to Secured
Parties in the exact form received (properly endorsed or assigned if
requested by Secured Parties), to be held by Secured Parties as
Collateral.
12. Indemnity. Pledgor hereby indemnifies and agrees to hold harmless
Secured Parties, and its officers, directors, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred by, or
asserted against, any Indemnified Person arising in connection with the
Documents, the Indebtedness or the Collateral (including without limitation,
the enforcement of the Documents and the defense of any Indemnified Person's
actions and/or inactions in connection with the Documents). WITHOUT
LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON
WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER INDEMNIFIED PERSON, except to
the limited extent the Claims against an Indemnified Person are proximately
caused by such Indemnified Person's gross negligence or willful misconduct.
If Pledgor or any third party ever alleges such gross negligence or willful
misconduct by any Indemnified Person, the indemnification provided for in
this Section shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect of the a
lleged gross negligence or willful misconduct. The indemnification provided
for in this Section shall survive the termination of this Agreement and shall
extend and continue to benefit each individual or entity who is or has at any
time been an Indemnified Person hereunder.
13. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire agreement of
Secured Parties and Pledgor with respect to the Collateral. If the parties
hereto are parties to any prior agreement, either written or oral, relating
to the Collateral, the terms of this Agreement shall amend and supersede the
terms of such prior agreements as to transactions on or after the effective
date of this Agreement, but all security agreements, financing statements,
guaranties, other contracts and notices for the benefit of Secured Parties
shall continue in full force and effect to secure the Indebtedness unless
Secured Parties specifically releases their rights thereunder by separate
release.
(b) Amendment. No modification, consent or amendment of any provision
of this Agreement or any of the other Documents shall be valid or effective
unless the same is in writing and signed by the party against whom it is
sought to be enforced.
(c) Actions by Secured Parties. The lien, security interest and other
security rights of Secured Parties hereunder shall not be impaired by (i) any
renewal, extension, increase or modification with respect to the Indebtedness,
(ii) any surrender, compromise, release, renewal, extension, exchange or
substitution which Secured Parties may grant with respect to the Collateral,
or (iii) any release or indulgence granted to any endorser, guarantor or
surety of the Indebtedness. The taking of additional security by Secured
Parties shall not release or impair the lien, security interest or other
security rights of Secured Parties hereunder or affect the obligations of
Pledgor hereunder.
(d) Waiver by Secured Parties. Secured Parties may waive any Event
of Default without waiving any other prior or subsequent Event of Default.
Secured Parties may remedy any default without waiving the Event of Default
remedied. Neither the failure by Secured Parties to exercise, nor the delay
by Secured Parties in exercising, any right or remedy upon any Event of
Default shall be construed as a waiver of such Event of Default or as a
waiver of the right to exercise any such right or remedy at a later date.
No single or partial exercise by Secured Parties of any right or remedy
hereunder shall exhaust the same or shall preclude any other or further
exercise thereof, and every such right or remedy hereunder may be exercised
at any time. No waiver of any provision hereof or consent to any departure
by Pledgor therefrom shall be effective unless the same shall be in writing
and signed by Secured Parties and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given and
to the extent therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further notice or demand
in similar or other circumstances.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEYAND APPLICABLE FEDERAL
LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR NON-
PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW JERSEY.
(f) Venue. This Agreement has been entered into in the county in New
Jersey where Secured Parties' address for notice purposes is located, and it
shall be performable for all purposes in such county. Courts within the
State of New Jersey shall have jurisdiction over any and all disputes arising
under or pertaining to this Agreement and venue for any such disputes shall
be in the county or judicial district where this Agreement has been executed
and delivered.
(g) Severability. If a court of competent jurisdiction holds any
provision of this Agreement to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be illegal, invalid or
unenforceable.
(h) No Obligation. Nothing contained herein shall be construed as an
obligation on the part of Secured Parties to extend or continue to extend
credit to Pledgor.
(i) Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in
writing and given by (i) personal delivery, (ii) expedited delivery service
with proof of delivery, or (iii) telex, telecopy or facsimile sent to the
intended addressee at the address or number set forth on the signature page
hereof or to such different address or number as the addressee shall have
designated by written notice sent pursuant to the terms hereof and shall be
deemed to have been received either, in the case of personal delivery, at the
time of personal delivery, in the case of expedited delivery service, as of
the date of first attempted delivery at the address and in the manner provided
herein, or in the case of telex, telecopy or facsimile, upon receipt which
has been confirmed by telephone. Either party shall have the right to change
its address for notice hereunder to any other location within the continental
United States by notice to the other party of such new address at least thirty
(30) days prior to the effective date of such new address.
(j) Binding Effect and Assignment. This Agreement (i) creates a
continuing security interest in the Collateral, (ii) shall be binding on
Pledgor and the receivers, personal representatives, successors and assigns
of Pledgor, and (iii) shall inure to the benefit of Secured Parties and their
successors and assigns. Without limiting the generality of the foregoing,
Secured Parties may pledge, assign or otherwise transfer the Indebtedness and
their rights under this Agreement and any of the other Documents to any other
party. Pledgor's rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of Secured Parties.
(k) Termination. Upon the satisfaction in full of the Indebtedness, and
upon written request for the termination hereof delivered by Pledgor to
Secured Parties, and upon written release delivered by Secured Parties to
Pledgor, this Agreement and the security interests created hereby shall
terminate. Upon termination of this Agreement and Pledgor's written request,
Secured Parties will, at Pledgor's sole cost and expense, return to Pledgor
such of the Collateral as shall not have been sold or otherwise disposed of
or applied pursuant to the terms hereof and execute and deliver to Pledgor
such documents as Pledgor shall reasonably request to evidence such
termination.
(l) Cumulative Rights. All rights and remedies of Secured Parties
hereunder are cumulative of each other and of every other right or remedy
which Secured Parties may otherwise have at law or in equity or under any of
the other Documents, and the exercise of one or more of such rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise
of any other rights or remedies.
(m) Gender and Number. Within this Agreement, words of any gender shall
be held and construed to include the other gender, and words in the singular
number shall be held and construed to include the plural and words in the
plural number shall be held and construed to include the singular, unless in
each instance the context requires otherwise.
(n) Descriptive Headings. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the scope or
meaning of the various and several provisions hereof.
EXECUTED as of the date first written above.
Pledgor's Address: PLEDGOR:
136 Freeway Drive East RASCALS INTERNATIONAL INC.,
East Orange, NJ 07018-4000
Telecopy No.: (973) 266-7030 By:
----------------------------
Eduardo Rodriguez, President
Secured Parties' Address: RODMAR HOLDINGS, LLC
136 Freeway Drive East
East Orange, NJ 07018-4000 By:
Telecopy No.: (973) 266-7030 ---------------------------
Eduardo Rodriguez, Manager
MAROD HOLDINGS, LLC.
By:
---------------------------
Michael Margolies, Manager
SCHEDULE 1
All of Pledgor's ownership interests in the following entities, which
interest is evidenced by the shares set forth opposite its name:
1. D.E.M. Amusement, Inc., Certificate Number 7
a New Jersey corporation representing 21,000 shares of
common stock
2. Rascals Comedy Club Certificate Number 8
Stage Door Grill, Inc., representing 21,000 shares of
a New Jersey Corporation common stock