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EXHIBIT 7.r
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated September 18, 1997, made by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an
individual residing at Del Mar Country Club, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Pledgor"), in favor of ▇▇▇▇▇▇▇▇▇ L.L.C., a New York
limited liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Pledgor and the Lender are parties to a Term Loan Agreement
dated as of the date hereof (such agreement, as amended, restated, supplemented
or otherwise modified from time to time, being hereafter referred to as the
"Term Loan Agreement");
WHEREAS, pursuant to the Term Loan Agreement, the Lender has agreed to
extend credit to the Pledgor consisting of the Term Loan (as defined in the Term
Loan Agreement) to the Pledgor in the principal amount of $20,000,000;
WHEREAS, it is a condition precedent to the making of the Term Loan by
the Lender pursuant to the Term Loan Agreement that the Pledgor shall have
executed and delivered to the Lender this Agreement providing for the pledge to
the Lender of, and the grant to the Lender of a security interest in, among
other things, 463,655 shares of common stock issued by Riviera Holdings
Corporation, 13,710,734 shares of common stock of CardioDynamics International
Corporation and all of the issued and outstanding shares of stock of Carlo
Corporation, together with other collateral hereinafter described and all
proceeds of the foregoing;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lender to make and maintain the Term Loan, the
Pledgor hereby agrees with the Lender as follows:
SECTION 1. Definitions. Terms that are not otherwise defined herein
shall have the same meanings herein as set forth in the Term Loan Agreement or
in Article 8 or 9 of the Uniform Commercial Code (the "Code") as in effect from
time to time in the State of New York. In addition, the following terms shall
have the respective meanings indicated below (such meanings to be applicable
equally to both the singular and plural forms of the terms defined):
"Entitlement Orders", "Financial Assets", "Investment Property",
"Securities Account" and "Securities Entitlement" have the meanings specified
therefor in Uniform Commercial Code - Investment Securities, 1997 N.Y. Laws Ch.
566.
"Jefferies Account" means account number ▇▇▇▇▇▇▇▇ maintained by the
Pledgor with ▇▇▇▇▇▇▇▇▇ & Company, Inc., including, without limitation, all
investments, securities and cash now or hereafter held in such account, together
with any successor or replacement accounts.
SECTION 2. Pledge and Grant of Security Interest. As collateral security
for all of the Obligations (as defined in Section 3 hereof), the Pledgor hereby
pledges and assigns, and grants a continuing security interest in, the following
(the "Collateral") to the Lender:
(a) the Jefferies Account;
(b) all Investment Property now or hereafter delivered, transferred or
assigned to, or deposited or credited to the Jefferies Account;
(c) the indebtedness described in Schedule I hereto (the "Pledged Debt")
issued by the corporation described on Schedule I (such corporation, together
with any successor corporation, being hereinafter
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referred to as the "Debt Issuer"), the promissory notes, bonds, certificates and
other instruments evidencing the Pledged Debt and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Debt (including, without , any shares of capital stock received in respect of or
in exchange for or upon conversion of any part of the Pledged Debt);
(d) the shares of capital stock listed in Schedule II hereto (the
"Pledged Shares") issued by the corporations described in such Schedule II (such
corporations, together with any successor corporations, being hereinafter
referred to collectively as the "Stock Issuers", and, together with the Debt
Issuer, the "Issuers" and individually as an "Issuer"), the certificates
representing the Pledged Shares, all options and other rights, contractual or
otherwise, in respect thereof (including, without limitation, any registration
rights) and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares, together with all certificates hereafter
delivered to the Lender, the shares of stock from time to time represented by
such certificates, all options and other rights, contractual or otherwise, in
respect thereof and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such additional shares;
(e) all cash and cash equivalents, Investment Property, Financial
Assets, capital stock or other equity interests, notes, debentures, bonds,
promissory notes or other evidences of indebtedness and all other securities
deposited from time to time in the Jefferies Account or delivered to the Lender;
(f) all books and records pertaining to the Collateral;
(g) all General Intangibles arising from or relating to the Collateral;
(h) all investment earnings and proceeds of any and all of the
foregoing; and
(i) all Securities Entitlements of the Pledgor in any and all of the
foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever such interest therein may arise or appear (whether by ownership,
security interest, claim or otherwise).
SECTION 3. Security for Obligations. The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"Obligations"):
(a) the prompt payment by the Pledgor, as and when due and payable, of
all amounts from time to time owing by the Pledgor to the Lender in respect of
the Term Loan Agreement, the Note and all other Loan Documents, including,
without limitation, principal of and interest on the Term Loan (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of the Pledgor whether or not a claim for post filing interest is
allowed in such proceedings) and all fees, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under the Term Loan
Agreement and any other Loan Document; and
(b) the due performance and observance by the Pledgor of all of his
other obligations from time to time existing in respect of this Agreement, the
Term Loan Agreement and the other Loan Documents to which he is a party.
SECTION 4. Establishment of Collateral Accounts; Delivery of the
Collateral.
(a) Establishment of Collateral Accounts. The Pledgor has established
and will maintain with Jefferies & Company, Inc. the Jefferies Account. Subject
to the rights of the Pledgor under Section 7(a) hereof and the other terms and
conditions of this Agreement, (A) the Jefferies Account shall be under the sole
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dominion and control of the Lender, (B) the Lender shall have the sole right to
make withdrawals from the Jefferies Account and to exercise rights with respect
to the cash and investments from time to time on deposit or held therein and (C)
the Lender shall have the sole right to provide Entitlement Orders to Jefferies
& Company, Inc. with respect to the Jefferies Account. The Collateral shall be
held by Jefferies & Company, Inc. in the Jefferies Account pursuant to the terms
hereof and the letter regarding Acknowledgment of Bailment for Pledged
Securities (the "Jefferies Consent"), dated September 18, 1997 from the Lender
and consented and agreed to by Jefferies & Company, Inc. and the Pledgor. All
promissory notes, bonds, certificates and instruments in the Jefferies Account
shall be held by Jefferies on behalf of the Lender pursuant hereto and the
Jefferies Consent and shall be in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Lender.
(b) Delivery of Collateral. (i) On or prior to the execution and
delivery of this Agreement, all promissory notes, bonds and other instruments
currently evidencing the Pledged Debt and all certificates representing the
Pledged Shares shall be registered in the name of the Lender or delivered to the
Lender and the Pledgor will take all action required to perfect the security
interest of the Lender in all uncertificated or book-entry securities
constituting Collateral. All other promissory notes, bonds, certificates and
instruments constituting Collateral from time to time or required to be pledged
to the Lender pursuant to the terms of this Agreement or the Term Loan
Agreement, and all uncertificated or book-entry securities constituting
collateral from time to time (the "Additional Collateral") shall, in the case of
certificates and instruments, be registered in the name of the Lender or
delivered to the Lender promptly upon the receipt thereof by or on behalf of the
Pledgor and, in the case of uncertificated or book-entry securities, the Pledgor
shall take such action as may be required to perfect the security interest of
the Lender. All such promissory notes, bonds, certificates and instruments shall
be held by or on behalf of the Lender pursuant hereto and shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment or undated stock powers executed in blank,
all in form and substance satisfactory to the Lender. Upon receipt by Pledgor of
the Additional Collateral, a Pledge Amendment, duly executed by the Pledgor, in
substantially the form of Schedule III hereto (a "Pledge Amendment") shall be
delivered to the Lender, in respect of the Additional Collateral which are to be
pledged pursuant to this Agreement, which Pledge Amendment shall from and after
delivery thereof constitute part of Schedules I and II. The Pledgor hereby
authorizes the Lender to attach each Pledge Amendment to this Agreement and
agrees that all promissory notes, bonds, certificates or instruments listed on
any Pledge Amendment delivered to the Lender shall for all purposes hereunder
constitute Collateral and the Pledgor shall be deemed upon delivery thereof to
have made the representations and warranties set forth in Section 5 with respect
to such Additional Collateral.
(ii) If the Pledgor shall receive, by virtue of the Pledgor's
being or having been an owner of any Collateral, any (A) certificated security
(including, without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spinoff or split-off), promissory note, chattel paper or other
instrument, (B) option or right, whether as an addition to, substitution for, or
in exchange for, any Collateral, or otherwise, (C) dividends payable in cash
(except such dividends permitted to be retained by the Pledgor pursuant to
Section 7(a) hereof) or in securities or other property or (D) dividends or
other distributions in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, the Pledgor shall receive such certificated security,
promissory note, chattel paper, instrument, option, right, payment or
distribution in trust for the benefit of the Lender, shall segregate it from the
Pledgor's other property and shall deliver it forthwith to the Lender in the
exact form received, with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held by the Lender as Collateral and as
further collateral security for the Obligations.
SECTION 5. Representations and Warranties. The Pledgor represents and
warrants as follows:
(a) The Pledgor has the legal capacity and right to execute, deliver and
perform this Agreement.
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(b) The execution, delivery and performance by the Pledgor of this
Agreement (i) do not and will not contravene any law or any contractual
restriction binding on or affecting the Pledgor or any of his properties; and
(ii) do not and will not result in or require the creation of any Lien upon or
with respect to any of his properties.
(c) This Agreement has been duly executed and delivered by the Pledgor
and constitutes the legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
(d) The promissory notes and bonds currently evidencing the Pledged Debt
have been, and all other promissory notes, bonds or other instruments from time
to time evidencing Pledged Debt, when executed and delivered, will have been,
duly authorized, executed and delivered by the respective makers thereof, and
all such promissory notes, bonds or other instruments are or will be, as the
case may be, legal, valid and binding obligations of such makers, enforceable
against such makers in accordance with their respective terms. The information
set forth in Schedule I hereto is accurate and complete.
(e) The Pledged Shares are fully paid and nonassessable and, to the best
of the Pledgor's knowledge, have been duly authorized and validly issued. All
other shares of stock constituting Collateral will be duly authorized and
validly issued, fully paid and nonassessable. The information set forth in
Schedule II hereto is accurate and complete.
(f) There is no action, suit or proceeding pending or, to the Pledgor's
knowledge, threatened or otherwise affecting this Agreement or any other Loan
Document or the Pledgor or the Jefferies Account before any court or other
Governmental Authority or regulatory body or arbitrator that is reasonably
likely to materially adversely affect the financial condition of the Pledgor or
the Pledgor's ability to perform his obligations hereunder, under the Term Loan
Agreement or under any other Loan Documents to which the Pledgor is a party.
(g) No authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or other regulatory body or any other
Person is required for (i) the due execution, delivery and performance by the
Pledgor of this Agreement, the Term Loan Agreement or any other Loan Document to
which the Pledgor is a party, (ii) the grant by the Pledgor, or the perfection,
of the Lien purported to be created hereby in the Collateral or (iii) the
exercise by the Lender of any of its rights and remedies hereunder, except as
may be required in connection with any sale of any Collateral by laws affecting
the offering and sale of securities generally.
(h) The Pledgor is and will be at all times the legal and beneficial
owner of the Collateral, free and clear of any lien, option or other charge or
encumbrance except for the Lien created by this Agreement. There is no financing
statement naming the Pledgor as debtor (or similar documents or instrument of
registration under the law of any jurisdiction) now on file or registered in any
public office covering any interest of the Pledgor in the Collateral except such
as may have been filed in favor of the Lender relating to this Agreement.
(i) This Agreement creates a valid security interest in favor of the
Lender in the Collateral, as security for the Obligations. Jefferies & Company,
Inc. having credited to the Jefferies Account all certificates, instruments and
cash constituting Collateral from time to time, the execution and delivery of
the Jefferies Consent, the Lender's having possession of the Pledged Shares and
all other certificates, instruments and cash constituting Collateral and the
Lender having control over all other Collateral from time to time collectively
result in the perfection of such security interest. Such security interest is,
or in the case of Collateral in which the Pledgor obtains rights after the date
hereof, will be, a perfected, first priority security interest. All action
necessary or desirable to perfect and protect such security interest has been
duly taken, except for the Lender's and/or Jefferies & Company, Inc.'s having
possession of certificates, instruments and cash constituting Collateral
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after the date hereof or the Lender's and/or ▇▇▇▇▇▇▇▇▇ & Company, Inc.'s having
control over all other Collateral arising after the date hereof.
SECTION 6. Covenants as to the Collateral. So long as any of the
Obligations shall remain outstanding, unless the Lender shall otherwise consent
in writing:
(a) Records. The Pledgor will keep adequate records concerning the
Collateral and permit the Lender or any agents or representatives of the Lender
at any reasonable time and from time to time to examine and make copies of and
abstracts from such records.
(b) Notices. The Pledgor will, at the expense of the Pledgor, promptly
deliver to the Lender a copy of each material notice or other material
communication received by it in respect of any of the Collateral, together with
a copy of any reply by the Pledgor thereto.
(c) Defend Title. The Pledgor will, at the reasonable request of the
Lender and at the expense of the Pledgor, defend his right, title and interest
in and to the Collateral against the claims of any Person.
(d) Further Assurances. The Pledgor will, at the expense of the Pledgor,
at any time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that may be necessary or
desirable or that the Lender may reasonably request in order (i) to perfect and
protect the security interest created or purported to be created hereby (whether
pursuant to laws, rules, regulations or general practices currently in effect or
adopted subsequent to the date hereof); (ii) to enable the Lender to exercise
and enforce its rights and remedies hereunder in respect of the Collateral; or
(iii) to otherwise effect the purposes of this Agreement, including, without
limitation: (A) at the request of the Lender, marking conspicuously each of the
records of the Pledgor pertaining to the Collateral with a legend, in form and
substance satisfactory to the Lender, indicating that such Collateral is subject
to the security interest created hereby; (B) if any Collateral shall be
evidenced by a certificated security, promissory note or other instrument or
chattel paper, delivering and pledging to the Lender hereunder such certificated
security, note, instrument or chattel paper duly indorsed and accompanied by
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Lender; (C) delivering to the Lender irrevocable proxies in
respect of the Collateral and executing and filing such financing or
continuation statements, or amendments thereto, as may be necessary or desirable
or that the Lender may request in order to perfect and preserve the security
interest created or purported to be created hereby; and (D) furnishing to the
Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail.
(e) Transfers and Other Restrictions. The Pledgor will not (i) sell,
assign (by operation of law or otherwise), exchange or otherwise dispose of any
of the Collateral (except as permitted by Section 7(a) hereof); or (ii) create
or suffer to exist any (A) Lien upon or with respect to any of the Collateral
except the Lien created by this Agreement or (B) contractual restriction on the
transferability of any of the Collateral.
(f) Issuance of Additional Securities. In the case of Collateral issued
by Carlo, the Pledgor will not permit the issuance of (i) any additional shares
of any class of capital stock of any such Person, (ii) any securities
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such shares of capital stock or (iii) any warrants, options, contracts
or other commitments entitling any Person to purchase or otherwise acquire any
such shares of capital stock.
(g) Other Actions. The Pledgor will not take or fail to take any action
that would in any manner impair the value or enforceability of the Lender's
security interest in the Collateral.
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SECTION 7. Voting Rights, Dividends, Etc. in Respect of the Collateral;
Withdrawal and Sale of Collateral.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to the Collateral in a manner not inconsistent with
the terms of this Agreement or the other Loan Documents; provided, however, that
(A) the Pledgor will not exercise or refrain from exercising any such right, as
the case may be, if the Lender gives the Pledgor notice that, in the Lender's
judgment, such action would have an adverse effect on the value of any
Collateral and (B) the Pledgor will give the Lender at least five days' notice
of the manner in which the Pledgor intends to exercise, or the reasons for
refraining from exercising, any such right;
(ii) Any and all dividends or interest paid or payable in cash
in respect of the Collateral shall forthwith be paid to the Lender pursuant to
Section 2.05(a) of the Term Loan Agreement and shall, if received by the
Pledgor, be received in trust for the benefit of the Lender, shall be segregated
from the other property or funds of the Pledgor, and shall forthwith be paid to
the Lender. Any and all dividends or interest paid or payable other than in cash
in respect of the Collateral shall forthwith be delivered to the Lender or
Jefferies & Company, Inc., as applicable, to hold as Collateral and shall, if
received by the Pledgor , be received in trust for the benefit of the Lender,
shall be segregated from the other property or funds of the Pledgor, and shall
forthwith be delivered to the Lender or Jefferies & Company, Inc., as
applicable, in the exact form received with any necessary indorsement and/or
appropriate stock powers duly executed in blank, to be held, by the Lender or by
Jefferies & Company, Inc. in the Jefferies Account, as the case may be, as
Collateral hereunder;
(iii) the Lender will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights that the Pledgor is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the dividends, if
any, that it is authorized to receive and retain pursuant to paragraph (ii) of
this Section 7(a); and
(iv) all investments from time to time in the Jefferies Account
and the non-cash proceeds thereof shall remain in the Jefferies Account (except
for withdrawals by the Lender after an Event of Default) and the Pledgor may not
withdraw any part of the Collateral from the Jefferies Account.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights that the Pledgor would otherwise be entitled to exercise
pursuant to paragraph (i) of this Section 7(a), and to receive the dividends and
interest payments and other distributions that the Pledgor would otherwise be
authorized to receive and retain pursuant to paragraph (ii) of this Section
7(a), shall cease, and (A) all such rights shall thereupon become vested in the
Lender, which shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold as Collateral such dividends and
interest payments, and (B) the Pledgor shall execute and deliver all such
proxies and other instruments as the Lender may reasonably request for the
purpose of enabling the Lender to exercise the voting and other rights that it
is entitled to exercise pursuant to this Section 7(b)(i);
(ii) the Lender is authorized to notify each debtor with respect
to the Pledged Debt to make payment directly to the Lender and may collect any
and all moneys due or to become due to the Pledgor in respect of the Pledged
Debt and the Pledgor hereby authorizes each such debtor to make such payment
directly to the Lender without any duty of inquiry;
(iii) without limiting the generality of the foregoing, the
Lender may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options
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pertaining to any of the Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange, in its discretion, any and
all of the Collateral upon the merger, consolidation, reorganization,
recapitalization or other adjustment of any Issuer of Collateral, or upon the
exercise by any Issuer of Collateral of any right, privilege or option
pertaining to any Collateral, and, in connection therewith, to deposit and
deliver any and all of the Collateral with any committee, depository, transfer
agent, registrar or other designated agent upon such terms and conditions as it
may determine; and
(iv) all dividends and interest payments and other distributions
that are received by the Pledgor contrary to the provisions of paragraph (i) of
this Section 7(b) shall be received in trust for the benefit of the Lender,
shall be segregated from the other funds of the Pledgor, and shall be forthwith
paid over to the Lender and/or Jefferies & Company, Inc. as Collateral in the
exact form received with any necessary indorsement and/or appropriate stock
powers duly executed in blank, to be held by the Lender and/or Jefferies &
Company, Inc. as Collateral hereunder.
SECTION 8. Additional Provisions Concerning the Collateral.
(a) The Pledgor hereby authorizes the Lender to file, without the
signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral.
(b) The Pledgor hereby irrevocably appoints the Lender the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Lender's discretion, to take any action and to execute any instrument (at the
expense of the Pledgor) that the Lender may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement including, without
limitation, (i) at any time and from time to time, to receive, indorse and
collect all instruments made payable to the Pledgor representing any
distribution in respect of any Collateral and to give full discharge for the
same, and (ii) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper representing any dividend or other distribution in
respect of the Collateral and, in addition to the foregoing and without
limitation: (A) to ask, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral and to receive, indorse, and collect any drafts
or other instruments, documents and chattel paper in connection therewith; and
(B) for the collection of any of the Collateral or otherwise to enforce the
rights of the Lender with respect to any of the Collateral; provided, however,
that the Lender shall exercise such powers only during the occurrence and
continuance of an Event of Default.
(c) If the Pledgor fails to perform any agreement contained herein, the
Lender (immediately after giving notice to the Pledgor) may itself perform, or
cause performance of, such agreement or obligation, and the expenses of the
Lender incurred in connection therewith shall be payable by the Pledgor pursuant
to Section 10 hereof, together with interest from the date such expenses are
paid by the Lender until repaid in full, at the rate for overdue principal under
the Term Loan Agreement, all payable on demand.
(d) The Lender may at any time in its discretion (i) without prior
notice to the Pledgor, transfer or register in the name of the Lender or any of
its nominees any or all of the Collateral (it being understood that the Lender
will give prompt notice to the Pledgor immediately after any such transfer or
register), and (ii) exchange certificates or instruments constituting Collateral
for certificates or instruments of smaller or larger denominations.
(e) Other than the exercise of reasonable care to assure the safe
custody of the Collateral while held by the Lender hereunder, the Lender shall
have no duty or liability to preserve rights pertaining thereto and shall be
relieved of all responsibility for the Collateral upon surrendering it or
tendering surrender of it to the Pledgor. The Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Lender accords its own property, it being understood that the
Lender shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
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relating to any Collateral, whether or not the Lender has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Collateral.
SECTION 9. Remedies Upon Event of Default. If any Event of Default shall
have occurred and be continuing:
(a) The Lender may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
of the rights and remedies of a secured party on default under the Code then in
effect in the State of New York (whether or not the Code applies to the affected
Collateral); and without limiting the generality of the foregoing, also may (i)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker's board or elsewhere, at such price or prices and on such other terms as
the Lender may deem commercially reasonable. In addition, the Lender may, at any
time and from time to time, upon the occurrence and during the continuance of an
Event of Default, direct that Jefferies & Company, Inc. immediately deliver to
the Lender all or part of the Collateral. The Lender may apply all or part of
the cash and/or other investments constituting Collateral to the payment of all
or any part of the Obligations in such manner as the Lender may elect. The
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least 10 days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) The Pledgor agrees that in any sale of any Collateral hereunder the
Lender is hereby authorized to comply with any limitation or restriction in
connection with such sale as it may be advised by counsel is necessary in order
to avoid any violation of applicable law, rule or regulation (including, without
limitation, compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchases to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchasers by any Governmental Authority or official, and the
Pledgor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Lender be liable or accountable to the Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
(c) Notwithstanding the provisions of subsection (b) of this Section 9,
the Pledgor recognizes that the Lender may deem it impracticable to effect a
public sale of all or any part of the Collateral and that the Lender may,
therefore, determine to make one or more private sales of any such Collateral to
a restricted group of purchasers who will be obligated to agree, among other
things, to acquire such Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges that
any such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms that might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that the Lender
shall have no obligation to delay sale of any such securities for the period of
time necessary to permit the Issuer of any securities constituting Collateral to
register such securities for public sale under the Securities Act of 1933, as
amended. The Pledgor further acknowledges and agrees that any offer to sell such
securities that has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act of 1933, as amended) or (ii)
made privately in the manner described above to not less than fifteen bona fide
offerees shall be deemed to involve a "public sale" for the purposes of Section
9-504(3) of the Code (or any successor or similar, applicable statutory
provision) as then in effect in the State of New York, notwithstanding that such
sale may not constitute a "public offering" under the Securities Act of 1933, as
amended, and that the Lender may, in such event, bid for and purchase such
securities.
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(d) Any cash held by the Lender as Collateral and all cash or other
proceeds received by the Lender in respect of any sale of, collection from, or
other realization upon, all or any part of the Collateral may, in the discretion
of the Lender, be held by the Lender as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the Lender
pursuant to Section 10 hereof) in whole or in part by the Lender against, all or
any part of the Obligations in such order as the Lender shall elect. Any surplus
of cash or other proceeds held by the Lender and remaining after payment in full
of all of the Obligations shall be paid over to the Pledgor or to such Person as
may be lawfully entitled to receive such surplus.
(e) The Pledgor shall (i) subject to clause (ii) below, hold any
dividends, interest or other distributions which it receives with respect to the
Collateral in trust for the Lender, separate from all other moneys of the
Pledgor, and (ii) forthwith transfer such dividends, interest or other
distributions to the Lender. Notwithstanding the foregoing, the Pledgor may not
take any action under this Section with respect to the Collateral that, in the
Lender's judgment, (i) would in any way affect the lien of this Agreement with
respect to any Collateral, or impair the interest or rights of the Lender
therein or (ii) would otherwise be inconsistent with the provisions of this
Agreement or the Term Loan Agreement or result in a violation hereof or thereof.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Lender is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Term Loan Agreement for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees of any
attorneys employed by the Lender to collect such deficiency.
SECTION 10. Indemnity and Expenses.
(a) The Pledgor agrees to indemnify the Lender from and against any and
all claims, losses and liabilities (including, without limitation, the
reasonable fees, client charges and other expenses of the Lender's counsel)
growing out of or resulting from this Agreement or the enforcement of any of the
terms hereof (including, without limitation, the sale of Collateral pursuant to
a public or private offering and each and every document produced in furtherance
thereof), except claims, losses or liabilities resulting from the Lender's gross
negligence or willful misconduct.
(b) The Pledgor agrees to pay to the Lender on demand the amount of any
and all costs and expenses, including the reasonable fees and other client
charges of the Lender's counsel and of any experts and agents, that the Lender
may incur in connection with (i) the administration and termination of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral (including,
without limitation, fees or commissions of any broker), (iii) the exercise or
enforcement of any of the rights of the Lender hereunder, (iv) the failure by
the Pledgor to perform or observe any of the provisions hereof, or (v) obtaining
any public information regarding any Issuer of Collateral which the Lender, in
its sole discretion, deems prudent to obtain.
SECTION 11. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed, telecopied, telexed or
delivered, if to the Pledgor, to him at the address set forth in the Term Loan
Agreement, if to the Lender, to it at its address set forth in the Term Loan
Agreement; or as to any such Person at such other address as shall be designated
by such Person in a written notice to such other Persons complying as to
delivery with the terms of this Section 11. All such notices and other
communications shall be effective (i) if mailed, when received or three Business
Days after mailing, whichever occurs first; (ii) if telecopied, when transmitted
and the appropriate confirmation is received, (iii) if telexed, when the
appropriate answerback is received; or (iv) if delivered, upon delivery.
SECTION 12. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor and the Lender, and no waiver
of any provision of this Agreement, and no consent to any departure by the
Pledgor therefrom, shall be effective unless it is in writing and signed by the
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Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No failure on the part of the Lender to exercise, and no delay in
exercising, any right hereunder or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Lender provided herein and in the other
Loan Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Lender against the Pledgor
under any Loan Document are not conditional or contingent on any attempt by the
Lender to exercise any of its rights under any other Loan Document against the
Pledgor or against any other Person.
(c) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
portions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the Obligations
have been satisfied in full; and (ii) be binding on the Pledgor and his heirs,
executors, administrators, successors and assigns and shall inure, together with
all rights and remedies of the Lender hereunder, to the benefit of the Lender
and its successors, transferees and assigns. The Lender may assign or transfer,
as collateral or otherwise, any or all of its interest hereunder and under the
other Loan Documents. None of the rights or obligations of the Pledgor hereunder
may be assigned or otherwise transferred without the prior written consent of
the Lender.
(e) Upon the satisfaction in full of the Obligations after the
termination of the Term Loan Agreement (i) this Agreement and the security
interest created hereby shall terminate and all rights to the Collateral shall
revert to the Pledgor, and (ii) the Lender will, upon the Pledgor's request and
at the Pledgor's expense, (A) return to the Pledgor such of the Collateral held
by the Lender, and instruct Jefferies & Company, Inc. to return to the Pledgor
such of the Collateral held in the Jefferies Account as shall not have been sold
or otherwise disposed of or applied pursuant to the terms hereof and (B) execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance with
the law of the State of New York, except as required by mandatory provisions of
law and except to the extent that the perfection and the effect of perfection or
non-perfection of the security interest created hereby, or remedies hereunder,
in respect of any particular Collateral are governed by the law of a
jurisdiction other than the State of New York.
(g) Section headings in this Agreement are included herein for the
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
(h) This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
SECTION 13. Security Interest Absolute. All rights of the Lender, all
security interests and all obligations of the Pledgor hereunder shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Term Loan Agreement or of any Loan Document or any other
agreement, instrument or document relating thereto, (ii) any change in the time,
manner or place of payment of, or in any other term in respect of, all or any of
the Obligations, or any other amendment or waiver of or consent to any departure
from the Term Loan Agreement or any Loan Document or any other agreement,
instrument or document relating thereto, (iii) any exchange or release of, or
non-perfection of any lien on, any collateral for any of the Obligations, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Obligations or (iv) any other circumstance which might
otherwise constitute a defense available
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to, or a discharge of, the Pledgor in respect of any of his obligations under
the Term Loan Agreement or the other Loan Documents, or the Pledgor in respect
of any of the Obligations.
SECTION 14. OTHER AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
SECTION 15. CONSENT TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR HIMSELF IN RESPECT OF HIS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PLEDGOR
AT HIS ADDRESS FOR NOTICES CONTAINED IN SECTION 7.01 OF THE TERM LOAN AGREEMENT,
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. THE
PLEDGOR HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW
YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE PLEDGOR IN ANY OTHER JURISDICTION.
SECTION 16. WAIVER OF JURY TRIAL, ETC. THE PLEDGOR AND THE LENDER EACH
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER
AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE PLEDGOR
HEREBY WAIVES ANY RIGHT HE MAY HAVE TO CLAIM OR RECOVER IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
PLEDGOR CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE
LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN
THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE
FOREGOING WAIVERS. THE PLEDGOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
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IN WITNESS WHEREOF, the Pledgor has executed and delivered this
Agreement as of the date first above written.
/s/
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Acknowledged and Consented to:
▇▇▇▇▇▇▇▇▇ L.L.C.
By: /s/
--------------------------------
Name:
Title:
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SCHEDULE I
TO
PLEDGE AGREEMENT
Pledged Debt
Description and Original
Name of Payee Date of Instrument Principal Amount
------------- ------------------ ----------------
Borrower Promissory Note dated December 31, $21,371,194.35
1996 made by Carlo Corporation to the
Borrower
Borrower Promissory Note dated ________ __, $__________
199__ made by R&E Gaming Corp. to
the Borrower
14
SCHEDULE II
TO
PLEDGE AGREEMENT
Pledged Shares
Number of
Name of Issuer/Payee Shares/Amount Class/Description Certificate Numbers
-------------------- ------------- ----------------- -------------------
Riviera Holdings Corporation 463,655 Common *
Carlo Corporation 1,000 Common 1
CardioDynamics International 13,699,734 Common C0898
Corporation
C0661
C0409
C0507
CardioDynamics International
Corporation
11,000 Common *
--------
* Held through Jefferies & Company, Inc.
*
15
SCHEDULE III
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, is delivered pursuant to
Section 4 of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement, dated
September 18, 1997, as it may heretofore have been or hereafter may be amended
or otherwise modified or supplemented from time to time, and that the shares
listed on this Pledge Amendment shall be and become part of the Collateral
referred to in said Pledge Agreement and shall secure all of the Obligations
referred to in said Pledge Agreement.
Number of
---------
Shares/Amount
-------------
Name of Issuer/Payee Class/Description Certificate No(s)
-------------------- ----------------- -----------------
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇