EXHIBIT 10.62
EXECUTION COPY
PLEDGE AND GUARANTEE AGREEMENT
This PLEDGE AND GUARANTEE AGREEMENT (this "Agreement") dated as of October
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14, 1999 is made by NEWRIDERS, INC., a Nevada corporation (the "Obligor"), in
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favor of SIENA CAPITAL PARTNERS, L.P., a California limited partnership (such
limited partnership, and its successors and assigns, "Siena").
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The Securities Purchase Agreement dated as of October 14, 1999 (as amended,
modified or supplemented and in effect from time to time, the "Securities
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Purchase Agreement") between Paisano Publications, Inc., a California
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corporation (the "Company"), and Siena provides, inter alia, for the issuance by
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the Company to Siena of an Increasing Rate Secured Promissory Note in the
principal amount of US$275,000 and for the issuance by the Obligor to Siena of
warrants to purchase common stock of the Obligor. It is a condition to the
obligations of Siena under the Securities Purchase Agreement that the Obligor
shall have executed and delivered, and granted the Liens provided for, in this
Agreement.
To induce Siena to enter into, and to extend credit under, the Securities
Purchase Agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Obligor has agreed to
pledge and grant a security interest in the Collateral as security for the
Secured Obligations. Accordingly, the Obligor agrees with Siena as follows:
Section 1. Definitions. Unless otherwise defined, all capitalized terms
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used in this Agreement that are defined in the Securities Purchase Agreement
(including those terms incorporated by reference) shall have the respective
meanings assigned to them in the Securities Purchase Agreement. In addition, the
following terms shall have the following meanings under this Agreement:
"Basic Documents" shall mean the Securities Purchase Agreement, the Note,
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the Warrants, the Warrant Agreement, the other Securities, this Agreement and
any other document, instrument or agreement evidencing any of the Secured
Obligations, as the same may be amended, modified or supplemented and in effect
from time to time.
"Collateral" shall have the meaning assigned to that term in Section 3.01.
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"Guaranteed Obligations" shall mean any and all obligations of the Company
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arising under or in connection with the Securities Purchase Agreement, the Note,
or other Basic Documents.
"LLC Collateral" shall have the meaning assigned to that term in Section
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3.01(a).
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"M&B Restaurants" shall mean M&B Restaurants, L.C., a Texas limited
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liability company, and any successor thereto.
"Pledged LLC Interest" shall have the meaning assigned to that term in
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Section 3.01(a).
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"Secured Obligations" shall mean any and all obligations of the Company,
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the Obligor and/or any other person (other than Siena) arising under or in
connection with the Securities Purchase Agreement, the Note, the Warrants, the
Warrant Agreement, the other Securities, this Agreement or any other agreement
or guaranty securing any such obligations.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
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effect in the State of California from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
Section 2. Guarantee.
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2.01 Guarantee. Subject to the limitation set forth in Section 2.08, the
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Obligor hereby guarantees to Siena the timely payment in full when due (whether
at stated maturity, by acceleration or otherwise) and performance of the
Guaranteed Obligations in each case strictly in accordance with their terms. The
Obligor hereby further agrees that if the Company shall fail to pay in full when
due (whether at stated maturity, by acceleration or otherwise) all or any part
of the Guaranteed Obligations, the Obligor will immediately pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of all or any part of the Guaranteed Obligations,
the same will be timely paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal. The obligations of the Obligor under this Section 2 are irrevocable and
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unconditional in nature and are made with respect to any Guaranteed Obligations
now existing or in the future arising. The Obligor's liability under this
Agreement shall continue until full satisfaction of all Guaranteed Obligations.
The obligations of the Obligor constitute a guarantee of due and punctual
payment and performance and not merely a guarantee of collection.
2.02 Acknowledgments, Waivers and Consents. The Obligor acknowledges that
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the obligations undertaken by it under this Agreement involve the guarantee of
obligations of persons other than the Obligor and that such obligations of the
Obligor are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and in furtherance of the foregoing, the
Obligor agrees that:
(a) Without affecting the enforceability or effectiveness of this Agreement
in accordance with its terms and without affecting, limiting, reducing,
discharging or terminating the liability of the Obligor, or the rights,
remedies, powers and privileges of Siena under this Agreement, Siena may, at any
time and from time to time and without notice or demand of any kind or nature
whatsoever: (i) amend, supplement, modify, extend, renew, waive, accelerate or
otherwise change the time for payment or performance of, or the terms of, all or
any part of the Guaranteed Obligations (including any increase or decrease in
the rate or rates of interest on all or any part of the Guaranteed
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Obligations); (ii) amend, supplement, modify, extend, renew, waive or otherwise
change, or enter into or give, any Basic Document or any agreement, security
document, guarantee, approval, consent or other instrument with respect to all
or any part of the Guaranteed Obligations, any Basic Document or any such other
instrument or any term or provision of the foregoing; (iii) accept or enter into
new or additional agreements, security documents, guarantees or other
instruments in addition to, in exchange for or relative to any Basic Document
with Borrower or other parties related to Borrower, all or any part of the
Guaranteed Obligations or any collateral now or in the future serving as
security for the Guaranteed Obligations; (iv) accept or receive (including from
any other guarantor) partial payments or performance on the Guaranteed
Obligations (whether as a result of the exercise of any right, remedy, power or
privilege or otherwise); (v) accept, receive and hold any additional collateral
for all or any part of the Guaranteed Obligations (including from any other
guarantor); (vi) release, reconvey, terminate, waive, abandon, allow to lapse or
expire, fail to perfect, subordinate, exchange, substitute, transfer, foreclose
upon or enforce any collateral, security documents or guarantees (including the
obligations of any other guarantor) for or relative to all or any part of the
Guaranteed Obligations; (vii) apply any collateral or the proceeds of any
collateral or guarantee (including the obligations of any other guarantor) to
all or any part of the Guaranteed Obligations in such manner and extent as Siena
may in its discretion determine; (viii) release any person (including any other
guarantor) from any personal liability with respect to all or any part of the
Guaranteed Obligations; (ix) settle, compromise, release, liquidate or enforce
upon such terms and in such manner as Siena may determine or as applicable law
may dictate all or any part of the Guaranteed Obligations or any collateral on
or guarantee of all or any part of the Guaranteed Obligations (including with
any other guarantor);(x) consent to the merger or consolidation of, the sale of
substantial assets by, or other restructuring or termination of the corporate
existence of the Company or any other person (including any other guarantor);
(xi) proceed against the Company, such or any other guarantor or any other
guarantor of all or any part of the Guaranteed Obligations or any collateral
provided by any person and exercise the rights, remedies, powers and privileges
of Siena under the Basic Documents or otherwise in such order and such manner as
Siena may, in its discretion, determine, without any necessity to proceed upon
or against or exhaust any collateral, right, remedy, power or privilege before
proceeding to call upon or otherwise enforce this Agreement as to any Obligor;
(xii) foreclose upon any deed of trust, mortgage or other instrument creating or
granting liens on any interest in real property by judicial or nonjudicial sale
or by deed in lieu of foreclosure, bid any amount or make no bid in any
foreclosure sale or make any other election of remedies with respect to such
liens or exercise any right of set-off; (xiii) obtain the appointment of a
receiver with respect to any collateral for all or any part of the Guaranteed
Obligations and apply the proceeds of such receivership as Siena may in its
discretion determine (it being agreed that nothing in this clause (xiii) shall
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be deemed to make Siena a party in possession in contemplation of law, except at
its option); (xiv) enter into such other transactions or business dealings with
any other guarantor, the Company, any subsidiary or affiliate of the Company or
any other guarantor of all or any part of the Guaranteed Obligations as Siena
may desire; and (xv) do all or any combination of the actions set forth in this
Section 2.02(a).
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(b) The enforceability and effectiveness of this Agreement and the
liability of the Obligor, and the rights, remedies, powers and privileges of
Siena under this Agreement shall not be affected, limited, reduced, discharged
or terminated, and the Obligor hereby expressly waives to the fullest extent
permitted by law any defense now or in the future arising, by reason of: (i) the
illegality, invalidity or unenforceability of all or any part of the Guaranteed
Obligations, any Basic Document or any agreement, security document, guarantee
or other instrument relative to all or any part of the Guaranteed Obligations;
(ii) any disability or other defense with respect to all or any part of the
Guaranteed Obligations of the Company, any other guarantor or any other
guarantor of all or any part of the Guaranteed Obligations, including the effect
of any statute of limitations that may bar the enforcement of all or any part of
the Guaranteed Obligations or the obligations of any such other guarantor; (iii)
the illegality, invalidity or unenforceability of any security or guarantee for
all or any part of the Guaranteed Obligations or the lack of perfection or
continuing perfection or failure of the priority of any lien on any collateral
for all or any part of the Guaranteed Obligations; (iv) any failure of Siena to
marshal assets in favor of the Company or any other person (including any other
guarantor), to exhaust any collateral for all or any part of the Guaranteed
Obligations, to pursue or exhaust any right, remedy, power or privilege it may
have against any other guarantor, the Company, any other guarantor of all or any
part of the Guaranteed Obligations or any other person or to take any action
whatsoever to mitigate or reduce such or any other guarantor's liability under
this Agreement, Siena not being under any obligation to take any such action
notwithstanding the fact that all or any part of the Guaranteed Obligations may
be due and payable and that the Company may be in default of its obligations
under any Basic Document; (v) any failure of Siena to give notice of sale or
other disposition of any collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property serving as
collateral for all or any part of the Guaranteed Obligations) for all or any
part of the Guaranteed Obligations to the Company, any Obligor or any other
person or any defect in, or any failure by any Obligor or any other person to
receive, any notice that may be given in connection with any sale or disposition
of any collateral; (vi) any failure of Siena to comply with applicable laws in
connection with the sale or other disposition of any collateral for all or any
part of the Guaranteed Obligations; (vii) any judicial or nonjudicial
foreclosure or sale of, or other election of remedies with respect to, any
interest in real property or other collateral serving as security for all or any
part of the Guaranteed Obligations, even though such foreclosure, sale or
election of remedies may impair the subrogation rights of any Obligor or may
preclude any Obligor from obtaining reimbursement, contribution, indemnification
or other recovery from any other guarantor, the Company, any other guarantor or
any other person and even though the Company may not, as a result of such
foreclosure, sale or election of remedies, be liable for any deficiency; (viii)
any benefits the Company, any Obligor or any other guarantor may otherwise
derive from the laws of any jurisdiction of the nature of a "one-form-of-
action," "anti-deficiency" or "security-first" rule; (ix) any act or omission of
Siena or any other person that directly or indirectly results in or aids the
discharge or release of the Company or any other guarantor of all or any part of
the Guaranteed Obligations or any security or guarantee for all or any part of
the
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Guaranteed Obligations by operation of law or otherwise; (x) any law which
provides that the obligation of a surety or Obligor must neither be larger in
amount nor in other respects more burdensome than that of the principal or which
reduces a surety's or Obligor's obligation in proportion to the principal
obligation; (xi) the possibility that the obligations of the Company to Siena
may at any time and from time to time exceed the aggregate liability of the
Obligor under this Agreement; (xii) any counterclaim, set-off or other claim
which the Company or any other guarantor has or alleges to have with respect to
all or any part of the Guaranteed Obligations; (xiii) any failure of Siena to
file or enforce a claim in any bankruptcy or other proceeding with respect to
any person; (xiv) the election by Siena, in any bankruptcy proceeding of any
person, of the application or nonapplication of Section 1111(b)(2) of the
Bankruptcy Code; (xv) any extension of credit or the grant of any Lien under
Section 364 of the Bankruptcy Code; (xvi) any use of cash collateral under
Section 363 of the Bankruptcy Code; (xvii) any agreement or stipulation with
respect to the provision of adequate protection in any bankruptcy proceeding of
any person; (xviii) the avoidance of any Lien in favor of Siena for any reason;
(xix) any bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, liquidation or dissolution proceeding commenced by or against any person,
including any discharge of, or bar or stay against collecting, all or any part
of the Guaranteed Obligations (or any interest on all or any part of the
Guaranteed Obligations) in or as a result of any such proceeding; (xx) any
action taken by Siena that is authorized by this Section 2.02 or otherwise in
this Agreement or by any other provision of any Basic Document or any omission
to take any such action; or (xxi) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
Obligor.
(c) The Obligor expressly waives, for the benefit of Siena, all set-offs
and counterclaims and all presentments, demands for payment or performance,
notices of nonpayment or nonperformance, protests, notices of protest, notices
of dishonor and all other notices or demands of any kind or nature whatsoever
with respect to the Guaranteed Obligations, and all notices of acceptance of
this Agreement or of the existence, creation, incurring or assumption of new or
additional Guaranteed Obligations. The Obligor further expressly waives the
benefit of any and all statutes of limitation and any and all laws providing for
the exemption of property from execution or for valuation and appraisal upon
foreclosure, to the maximum extent permitted by applicable law.
(d) The Obligor represents and warrants to Siena that it has established
adequate means of obtaining financial and other information pertaining to the
business, operations and condition (financial and otherwise) of the Company and
its properties on a continuing basis and that such Obligor is now and will in
the future remain fully familiar with the business, operations and condition
(financial and otherwise) of the Company and its properties. The Obligor further
represents and warrants that it has reviewed and approved each of the Basic
Documents and is fully familiar with the transaction contemplated by the Basic
Documents and that it will in the future remain fully familiar with such
transaction and with any new Basic Documents and the transactions contemplated
by such Basic Documents. The Obligor hereby expressly waives and relinquishes
any
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duty on the part of Siena to disclose to such or any other guarantor any matter
of fact or other information related to the business, operations or condition
(financial or otherwise) of the Company or its properties or to any Basic
Document or the transactions undertaken pursuant to, or contemplated by, any
such Basic Document, whether now or in the future known by Siena.
(e) The Obligor intends that its rights and obligations shall be those
expressly set forth in this Agreement and that its obligations shall not be
affected, limited, reduced, discharged or terminated by reason of any principles
or provisions of law which conflict with the terms of this Agreement.
2.03 Understanding With Respect to Waivers and Consents. The Obligor
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warrants and agrees that each of the waivers and consents set forth in this
Agreement are made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of their significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such or any other guarantor otherwise may have against the Company, Siena or any
other person or against any collateral. If, notwithstanding the intent of the
parties that the terms of this Agreement shall control in any and all
circumstances, any such waivers or consents are determined to be unenforceable
under applicable law, such waivers and consents shall be effective to the
maximum extent permitted by law.
2.04 Subrogation. The Obligor hereby agrees that, until the payment and
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satisfaction in full of all of the Guaranteed Obligations, it shall not exercise
any right, remedy, power or privilege, such as any right of subrogation,
contribution or indemnity or related remedy, power or privilege, arising
(whether by contract or operation of law, including under the Bankruptcy Code)
against the Company, any other guarantor or any other guarantor of all or any
part of the Guaranteed Obligations or any collateral for all or any part of the
Guaranteed Obligations by reason of any payment or other performance pursuant to
the provisions of this Agreement and, if any amount shall be paid to such
Obligor on account of such rights, remedies, powers or privileges, it shall hold
such amount in trust for the benefit of, and pay the same over to, Siena on
account of the Guaranteed Obligations. The Obligor understands that the exercise
by Siena of any right, remedy, power or privilege that it may have under the
Basic Documents, any agreement, security document, guarantee or other instrument
relative to all or any part of the Guaranteed Obligations or otherwise may
affect or eliminate such or any other guarantor's right of subrogation or
similar recovery against the Company, any other guarantor, any other guarantors
or any collateral and that such and the other guarantors may therefore incur
partially or totally nonreimbursable liability under this Agreement.
Nevertheless, the Obligor hereby authorizes and empowers Siena to exercise, in
its or their sole discretion, any combination of such rights, remedies, powers
and privileges.
2.05 Reinstatement. The obligations of the Obligor under this Section 2
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shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of the
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Company, any other guarantor or any other person or any other application of
funds (including the proceeds of any collateral for all or any part of the
Guaranteed Obligations) in respect of all or any part of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of such
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy,
reorganization or otherwise and the Obligor agrees that it will indemnify Siena
on demand for all reasonable costs and expenses (including fees and expenses of
counsel) incurred by Siena in connection with such rescission or restoration.
2.06 Remedies. The Obligor hereby agrees that, between it and Siena, the
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obligations of the Company under the Basic Documents may be declared to be
forthwith (or may become automatically) due and payable as provided in the Basic
Documents for purposes of Section 2.01 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations becoming due
and payable as against the Company) and that, in the event of such declaration
(or such obligation being deemed due and payable), such obligations (whether or
not due and payable by the Company) shall forthwith become due and payable for
purposes of Section 2.01.
2.07 Subordination of Indebtedness of the Company; Security Interest.
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(a) The Obligor agrees that any indebtedness of the Company now or in the
future owed to such Obligor is hereby subordinated to the Guaranteed
Obligations. If Siena so requests, any such indebtedness shall be collected,
enforced and received by such Obligor as Lender for Siena and shall be paid over
to Siena in kind on account of the Guaranteed Obligations. If, after Siena's
request, such Obligor fails to collect or enforce any such indebtedness or to
pay the proceeds of such indebtedness to Siena, Siena as such Obligor's
attorney-in-fact may do such acts and sign such documents in such Obligor's name
and on such Obligor's behalf as Siena considers necessary or desirable to effect
such collection, enforcement or payment, Siena being hereby appointed such
Obligor's attorney-in-fact for such purpose.
(b) The Obligor hereby grants to Siena a security interest in any
indebtedness referred to in Section 2.07(a) and in any personal property of the
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Company in which such Obligor now has or in the future acquires any right, title
or interest. The Obligor agrees that such security interest shall be additional
security for the Guaranteed Obligations and shall be superior to any right of
such Obligor in such property until the Guaranteed Obligations have been fully
satisfied and performed.
2.08 Limitation on Guarantee. In any proceeding involving any state
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corporate law or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of the
Obligor under Section 2.01 would otherwise, taking into account the provisions
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of Section 2.09, be held or determined to be void, invalid or unenforceable or
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if the claims of Siena in respect of such obligations would be subordinated to
the claims of any other creditors on account of the Obligor's liability under
Section 2.01, then, notwithstanding any other
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provision of this Agreements to the contrary, the amount of such liability
shall, without any further action by the Obligor, Siena or any other person, be
automatically limited and reduced to the highest amount which is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.
Section 3 Collateral.
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3.01 Grant. As collateral security for the prompt payment in full when
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due (whether at stated maturity, by acceleration or otherwise) and performance
of the Secured Obligations, the Obligor hereby pledges and grants to Siena, for
the benefit of Siena, a security interest in all of the Obligor's right, title
and interest in and to the following property, whether now owned or hereafter
acquired by the Obligor and whether now existing or hereafter coming into
existence (collectively, the "Collateral"):
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(a) (i) all of the Obligor's right, title and interest in the equity of M&B
Restaurants and all other interests whatsoever in M&B Restaurants, now owned or
hereafter acquired by the Obligor, together with the certificates, if any,
listed on Annex 1 representing the same (collectively, the "Pledged LLC
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Interest");
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(ii) all shares, securities, moneys or property representing a dividend on,
or a distribution or return of capital in respect of any of the Pledged LLC
Interest, resulting from a split-up, revision, reclassification or other like
change of any of the Pledged LLC Interest or otherwise received in exchange for
any of the Pledged LLC Interest and all other rights issued to the holders of,
or otherwise in respect of, any of the Pledged LLC Interest; and
(iii) without affecting the obligations of the Obligor under any provision
prohibiting such action under any Basic Document, in the event of any
consolidation or merger in which M&B Restaurants is not the surviving entity,
all shares of each class of the equity of the successor corporation or entity
formed by or resulting from such consolidation or merger (collectively, and
together with the property described in clauses (1) and (ii) above, the "LLC
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Collateral"); and
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(b) all proceeds and products of any of the property of the Obligor
described in Section 3.01(a) above.
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3.02 Perfection. Concurrently with the execution and delivery of this
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Agreement, the Obligor shall (i) deliver to Siena all certificates, if any,
identified on Annex 1, and (ii) take all such other actions as shall be
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necessary or as Siena may request to perfect and establish the priority of the
Liens granted by this Agreement.
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3.03 Preservation and Protection of Security Interests. The Obligor
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shall:
(a) upon the acquisition after the date hereof by the Obligor of any
LLC Collateral, promptly notify Siena in writing of such acquisition and either
(x) transfer and deliver to Siena all such LLC Collateral (together with the
certificates, if any, representing such LLC Collateral duly endorsed in blank)
or (y) take such other action as Siena shall deem necessary or appropriate to
perfect, and establish the priority of, the Liens granted by this Agreement in
such LLC Collateral; and
(b) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any and
all governmental approvals and take any and all steps that may be necessary or
as Siena may request to create, perfect, establish the priority of, or to
preserve the validity, perfection or priority of, the Liens granted by this
Agreement or to enable Siena to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such Liens, including
causing any or all of the LLC Collateral to be transferred of record into the
name of Siena or its nominee (and Siena agrees that if any LLC Collateral is
transferred into its name or the name of its nominee, Siena will thereafter
promptly give to the Obligor copies of any notices and communications received
by it with respect to the LLC Collateral pledged by the Obligor).
3.04 Attorney-in-Fact. Subject to the rights of the Obligor under Section
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3.05, Siena is hereby appointed the attorney-in-fact of the Obligor for the
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purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments which Siena may deem necessary or advisable to
accomplish the purposes of this Agreement, to preserve the validity, perfection
and priority of the Liens granted by this Agreement and, following any Event of
Default, to exercise its rights, remedies, powers and privileges under this
Agreement. This appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, Siena shall be
entitled under this Agreement upon the occurrence and continuation of any Event
of Default (i) to ask, demand, collect, ▇▇▇ for, recover, receive and give
receipt and discharge for amounts due and to become due under and in respect of
all or any part of the Collateral; (ii) to receive, endorse and collect any
drafts, instruments, documents and chattel paper in connection with clause (i)
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above; (iii) to file any claims or take any action or proceeding that Siena may
deem necessary or advisable for the collection of all or any part of the
Collateral; and (iv) to execute, in connection with any sale or disposition of
the collateral under Section 6, any endorsements, assignments, bills of sale or
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other instruments of conveyance or transfer with respect to all or any part of
the Collateral.
3.05 Special Provisions Relating to LLC Collateral.
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(a) So long as no Event of Default shall have occurred and be continuing,
the Obligor shall have the right to exercise all voting, consensual and other
powers of ownership pertaining to the LLC Collateral for all purposes not
inconsistent with the terms of any Basic Document, provided that the Obligor
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agrees that it will not vote the LLC Collateral in any manner that is
inconsistent with the terms of any Basic Document; and Siena shall, at the
Obligor's expense, execute and deliver to the Obligor or cause to be executed
and delivered to the Obligor all such proxies, powers of attorney, dividend and
other orders and other instruments, without recourse, as the Obligor may
reasonably request for the purpose of enabling the Obligor to exercise the
rights and powers which it is entitled to exercise pursuant to this Section
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3.05(a).
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(b) If any Event of Default shall have occurred and be continuing, and
whether or not Siena exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other right, remedy, power or
privilege available to it under applicable law, this Agreement or any other
Basic Document, all dividends and other distributions on the LLC Collateral
shall be paid directly to Siena and retained by it as part of the LLC
Collateral, subject to the terms of this Agreement, and, if Siena shall so
request, the Obligor agrees to execute and deliver to Siena appropriate
additional dividend, distribution and other orders and instruments to that end,
provided that if such Event of Default is cured, any such dividend or
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distribution paid to Siena prior to such cure shall, upon request of the Obligor
(except to the extent applied to the Secured Obligations), be returned by Siena
to the Obligor.
3.06 Rights and Obligations.
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(a) No reference in this Agreement to proceeds or to the sale or other
disposition of Collateral shall authorize the Obligor to sell or otherwise
dispose of any Collateral except to the extent otherwise expressly permitted by
the terms of any Basic Document.
(b) Neither Siena nor any person shall be required to take steps necessary
to preserve any rights against prior parties to any part of the Collateral.
3.07 Termination. When all Secured Obligations shall have been paid in
-----------
full, this Agreement shall terminate, and Siena shall forthwith cause to be
assigned, transferred and delivered, against receipt but without any recourse,
warranty or representation whatsoever, any remaining Collateral and money
received in respect of the Collateral, to or on the order of the Obligor.
Section 4 Representations and Warranties. As of the date hereof, the
------------------------------
Obligor represents and warrants to Siena as follows:
(a) The Company is a wholly owned subsidiary of the Obligor and the Obligor
is the sole beneficial owner of the Collateral in which it purports to ▇▇▇▇▇ ▇
▇▇▇▇ pursuant to this Agreement,
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and such Collateral is free and clear of all Liens and of any other right in
favor of any other person (other than Siena). The Liens granted by this
Agreement in favor of Siena for the benefit of Siena have attached and
constitute a perfected security interest in all of such Collateral prior to all
other Liens.
(b) All information with respect to the Collateral set forth in any
schedule, certificate or other writing at any time heretofore or hereafter
furnished by the Obligor to Siena, and all other written information heretofore
or hereafter furnished by the Obligor to Siena is and will be true and correct
in all material respects as of the date furnished.
(c) The Pledged LLC Interest identified in Annex 1 are duly authorized,
-------
validly existing, fully paid and nonassessable, and none of such Pledged LLC
Interest is subject to any contractual restriction, or any restriction under the
organizational documents or operating agreement of the M&B Restaurants, upon the
transfer of such Pledged LLC Interest (except for any such restriction contained
in any Basic Document). The Pledged LLC Interest identified on Annex 1
-------
constitutes one hundred percent of the issued and outstanding shares of equity
of any class of M&B Restaurants on the date hereof, and Annex 1 correctly
-------
identifies, as of the date hereof, M&B Restaurants as the issuer of such Pledged
LLC Interest, the respective value of the interests comprising such Pledged LLC
Interest and the registered owners of the stock evidenced by each such
certificate, if any. The Obligor represents and warrants that it owns 100% of
the equity of M&B Restaurants.
Section 5 Covenants.
---------
5.01 Books and Records. The Obligor shall:
-----------------
(a) keep full and accurate books and records relating to the Collateral and
stamp or otherwise ▇▇▇▇ such books and records in such manner as Siena may
reasonably require in order to reflect the Liens granted by this Agreement; and
(b) permit representatives of Siena, upon reasonable notice, at any time
during normal business hours to inspect and make abstracts from its books and
records pertaining to the Collateral, permit representatives of Siena to be
present at the Obligor's place of business to receive copies of all
communications and remittances relating to the Collateral and forward copies of
any notices or communications received by the Obligor with respect to the
Collateral, all in such manner as Siena may request.
5.02 Removals, Etc. Without at least 30 days' prior written notice to
-------------
Siena, the Obligor shall not (i) maintain any of its books and records with
respect to the Collateral at any office or maintain its principal place of
business at any place, other than at the address initially indicated for
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notices to it under Section 7 or (ii) change its name from the name shown on the
---------
signature pages to this Agreement.
5.03 Sales and Other Liens. Without the prior written consent of Siena,
---------------------
the Obligor shall not dispose of any Collateral, create, incur, assume or suffer
to exist any Lien upon any Collateral or file or suffer to be on file or
authorize to be filed, in any jurisdiction, any financing statement or like
instrument with respect to all or any part of the Collateral in which Siena is
not named as the sole secured party.
5.04 Further Assurances. The Obligor agrees that, from time to time upon
------------------
the written request of Siena, the Obligor will execute and deliver such further
documents and do such other acts and things as Siena may reasonably request in
order fully to effect the purposes of this Agreement.
Section 6 Remedies.
--------
6.01 Events of Default, Etc. If any Event of Default shall have occurred
----------------------
and be continuing:
(a) Siena in its discretion may, in its name or in the name of the
Obligor or otherwise, demand, ▇▇▇ for, collect or receive any money or property
at any time payable or receivable on account of or in exchange for all or any
part of the Collateral, but shall be under no obligation to do so;
(b) Siena in its discretion may, upon ten business days' prior
written notice to the Obligor of the time and place, with respect to all or any
part of the Collateral which shall then be or shall thereafter come into the
possession, custody or control of Siena or any of its agents, sell, lease or
otherwise dispose of all or any part of such Collateral, at such place or places
as Siena deems best, for cash, for credit or for future delivery (without
thereby assuming any credit risk) and at public or private sale, without demand
of performance or notice of intention to effect any such disposition or of time
or place of any such sale (except such notice as is required above or by
applicable statute and cannot be waived), and Siena or any other person may be
the purchaser, lessee or recipient of any or all of the Collateral so disposed
of at any public sale (or, to the extent permitted by law, at any private sale)
and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Obligor, any such demand, notice and right or equity being
hereby expressly waived and released. Siena may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned; and
(c) Siena shall have, and in its discretion may exercise, all of the
rights, remedies, powers and privileges with respect to the Collateral of a
secured party under the Uniform Commercial Code
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(whether or not the Uniform Commercial Code is in effect in the jurisdiction
where such rights, remedies, powers and privileges are asserted) and such
additional rights, remedies, powers and privileges to which a secured party is
entitled under the laws in effect in any jurisdiction where any rights,
remedies, powers and privileges in respect of this Agreement or the Collateral
may be asserted, including the right, to the maximum extent permitted by law, to
exercise all voting, consensual and other powers of ownership pertaining to the
Collateral as if Siena were the sole and absolute owner of the Collateral (and
the Obligor agrees to take all such action as may be appropriate to give effect
to such right).
6.02 Deficiency. If the proceeds of, or other realization upon, the
----------
Collateral by virtue of the exercise of remedies under Section 6.01 are
------------
insufficient to cover the costs and expenses of such exercise and the payment in
full of the other Secured Obligations, the Obligor shall remain liable for any
deficiency.
6.03 Private Sale.
------------
(a) Siena shall incur no liability as a result of the sale, lease or
other disposition of all or any part of the Collateral at any private sale
pursuant to Section 6.01 conducted in a commercially reasonable manner. The
------------
Obligor hereby waives any claims against Siena arising by reason of the fact
that the price at which the Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if Siena accepts
the first offer received and does not offer the Collateral to more than one
offeree.
(b) The Obligor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933 and applicable state securities laws,
Siena may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things, to
acquire the Collateral for their own account, for investment and not with a view
to distribution or resale. The Obligor acknowledges that any such private sales
may be at prices and on terms less favorable to Siena than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that Siena shall have no obligation
to engage in public sales and no obligation to delay the sale of any Collateral
for the period of time necessary to permit the respective Issuer of such
Collateral to register it for public sale.
6.04 Application of Proceeds. Except as otherwise expressly provided in
-----------------------
this Agreement and except as provided below in this Section 6.04, the proceeds
------------
of, or other realization upon, all or any part of the Collateral by virtue of
the exercise of remedies under Section 6.01, and any other cash at the time held
------------
by Siena under Section 3 or this Section 6, shall be applied by Siena:
--------- ---------
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First, to the payment of the costs and expenses of such exercise of
-----
remedies, including reasonable out-of-pocket costs and expenses of Siena, the
fees and expenses of its agents and counsel and all other expenses incurred and
advances made by Siena in that connection;
Next, to the payment in full of the remaining Secured Obligations equally
----
and ratably in accordance with their respective amounts then due and owing or as
Siena may otherwise agree; and
Finally, to the payment to the Obligor, or its respective successors or
-------
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining.
As used in this Section 6, "proceeds" of Collateral shall mean cash,
--------- --------
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer of,
or account debtor or other guarantor on, any of the Collateral.
Section 7 Miscellaneous.
-------------
7.01 Waiver. No failure on the part of Siena or any person to exercise
------
and no delay in exercising, and no course of dealing with respect to, any right,
remedy, power or privilege under this Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Agreement preclude any other
or further exercise of any such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
7.02 Notices. All notices and communications to be given under this
-------
Agreement shall be given or made in writing to the intended recipient at the
address specified below or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, upon
receipt, in each case, given or addressed as provided in this Section 7.02:
------------
To the Obligor:
Paisano Publications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: J. ▇▇▇▇▇▇ Fabregas
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
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Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
To Siena:
Siena Capital Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy of any notice to:
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
7.03 Expenses, Etc. The Obligor agrees to pay or to reimburse Siena for
-------------
all costs and expenses (including reasonable attorney's fees and expenses) that
may be incurred by Siena in any effort to enforce any of the provisions of this
Agreement or any of the obligations of the Obligor in respect of the Collateral
or in connection with (a) the preservation of the Lien of, or the rights of
Siena under this Agreement or (b) any actual or attempted sale, lease,
disposition, exchange, collection, compromise, settlement or other realization
in respect of, or care of, the Collateral, including all such costs and expenses
(and reasonable attorney's fees and expenses) incurred in any bankruptcy,
reorganization, workout or other similar proceeding.
7.04 Amendments, Etc. Any provision of this Agreement may be modified,
---------------
supplemented or waived only by an instrument in writing duly executed by the
Obligor and Siena. Any such modification, supplement or waiver shall be for such
period and subject to such conditions as shall be specified in the instrument
effecting the same and shall be binding upon Siena, each holder of any of the
Secured Obligations and the Obligor, and any such waiver shall be effective only
in the specific instance and for the purposes for which given.
7.05 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the Obligor, Siena and each holder of any of the Secured
Obligations and their respective successors and permitted assigns. The Obligor
shall not assign or transfer its rights under this Agreement without the prior
written consent of Siena.
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7.06 Survival. All representations and warranties made in this Agreement
--------
or in any certificate or other document delivered pursuant to or in connection
with this Agreement shall survive the execution and delivery of this Agreement
or such certificate or other document (as the case may be) or any deemed
repetition of any such representation or warranty.
7.07 Agreements Superseded. This Agreement supersedes all prior
---------------------
agreements and understandings, written or oral, among the parties with respect
to the subject matter of this Agreement.
7.08 Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.09 Captions. The table of contents and captions and section headings
--------
appearing in this Agreement are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
7.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties to this Agreement may execute this Agreement
by signing any such counterpart.
7.11 Governing Law; Submission to Process. EXCEPT TO THE EXTENT THAT THE
------------------------------------
LAW OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED IN A DOCUMENT OR SECURITY,
THIS AGREEMENT AND THE SECURITIES AND ALL AMENDMENTS, SUPPLEMENTS, WAIVERS AND
CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. THE OBLIGOR HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF
CALIFORNIA AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT
IN ANY LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA
OR FEDERAL LAW. THE OBLIGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
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THE OBLIGOR SHALL APPOINT AN AGENT FOR SERVICE OF PROCESS IN CALIFORNIA AND
SHALL NOTIFY SIENA OF ANY FUTURE CHANGE THEREIN.
7.12 Waiver of Jury Trial. THE OBLIGOR AND SIENA EACH HEREBY AGREE TO
--------------------
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR ANY OTHER
AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE SECURITIES OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
OBLIGOR:
NEWRIDERS, INC.,
a Nevada corporation
By: /s/ J. ▇▇▇▇▇▇ Fabregas
----------------------------------------
Name: J. ▇▇▇▇▇▇ Fabregas
Title: Secretary
SIENA:
SIENA CAPITAL PARTNERS, L.P.,
a California limited partnership
By: Charleville Capital, L.P.,
a California limited partnership,
its general partner
By: Aneis Advisors, Inc.,
a California corporation,
its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: V.P.-Secretary
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ANNEX 1
PLEDGED LLC INTEREST
Certificate Registered
Issuer Nos. Owner Amount
------ ----------- ---------- ------
M&B Membership NewRiders 100%
Restaurants, L.C. Interest
Certificate #10
Annex 1 to Pledge & Guarantee Agreement
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