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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 29, 1997
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UNITED LEISURE CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-6106 13-2652243
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(State or other jurisdiction (Commission file No.) (I.R.S. Employee
of incorporation or organization) Identification No.)
18081 MAGNOLIA AVE., FOUNTAIN VALLEY, CALIFORNIA 92708
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(Address of principal executive offices)
(Zip code)
(714) 837-1200
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(Registrant's telephone number including area code)
(Former name or former address, if changed since last report) Not applicable
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Item 2. Acquisition or Disposition of Assets.
On July 29, 1997, United Hotel & Casino, LLC, a Delaware
limited liability company (the "LLC") in which United Leisure Corporation (the
"Company") holds a 50% membership interest, acquired, in fee simple,
approximately 8.5 acres of partially developed land on the Las Vegas Strip in
Las Vegas, Nevada (the "Property"). The Property is located at 3025 Las Vegas
Boulevard and currently contains a shopping center consisting of several
retailers and The Silver City Casino. Upon the acquisition of the Property the
Company became the lessor of the premises on which the shopping center and the
Silver City Casino are located. The Silver City Casino is owned and operated by
Circus Circus, and it is anticipated that Circus Circus will continue to conduct
its casino operations on the Property. The LLC currently intends to continue to
lease the existing shopping center on the Property, but in the future the LLC
may determine to further develop the Property. The Company has the right to
appoint one member of the three member Management Committee of the LLC. The
other membership interests in the LLC are owned by a limited liability company
controlled by Michael Pashaie (30%) ("Pashaie") and a limited liability company
owned and controlled by James Showghy (20%) ("Showghy"), neither of which
persons is an affiliate of or related to the Company.
The aggregate purchase price for the Property was
approximately $23,200,000, which was paid by a cash payment of approximately
$5,590,000, by a one-year note being carried by the seller of the Property in
the amount of $1,250,000 and by assumption of a first deed of trust on the
Property by the LLC in the principal amount of approximately $16,360,000. Of the
cash down payment, Pashaie and Showghy contributed approximately $1,790,000 to
the LLC as an additional capital contribution and the Company contributed
approximately $3,800,000 to the LLC as an additional capital contribution. The
Company, Pashaie and Showghy had agreed to make their respective additional
capital contributions in connection with the acquisition of the Property
pursuant to the Operating Agreement of the LLC dated as of January 22, 1997.
The $23.2 million purchase price for the Property was arrived
at through arms' length negotiations with the seller, Silver City Holdings,
Inc., an unrelated third party. The sale of the Property was contingent on the
lender on the property, American Realty Trust, Inc., consenting to the
assumption of the existing first deed of trust on the property by the LLC. The
lender originally refused to consent to the assumption of the indebtedness and
the LLC brought an action for a declaratory judgment against the lender to cause
it to consent to the assignment and assumption of the deed of trust. The action
was subsequently dismissed when the lender consented to the assignment and
assumption of the existing deed of trust to the LLC.
The Company obtained the $3,800,000 to make the additional
capital contribution in part from its working capital and in part from two
different loans as discussed below.
Concurrently with the closing of the LLC's purchase of the
Property, Westminster Capital, Inc. ("Westminster"), an unrelated third party,
made a loan of
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$1,900,000 (the "Westminster Loan") to the Company to enable it to meet its
additional $3,800,000 capital contribution obligation. The loan was evidenced by
a Secured Convertible Promissory Note (the "Note") made by the Company and by
Harry Shuster and Nita Shuster, the spouse of Harry Shuster. Harry Shuster is
the Chairman of the Board, President and Chief Executive Officer of the Company
and currently serves as a member of the Management Committee of the LLC. The
Westminster Loan bears interest at the rate of 15% per annum and is due on the
earlier to occur of (i) the demand of the Holder (which demand may not be made
until July 29, 1998 unless there is a sooner event of default) or (ii) July 29,
1999 (the "Maturity Date"). The holder of the Note has the right, at any time
prior to the Maturity Date, to convert the entire outstanding principal balance
of the Note into a 25% membership interest in the LLC, which would leave the
Company with a 25% membership interest in the LLC after such conversion. The
Note may be prepaid by the Company at any time after July 29, 1998. One-half of
any cash distributions which may be made by the LLC to the Company prior to the
repayment of the Note are required to be paid to Westminster as a prepayment on
the Note.
The Westminster Loan is secured by, among other things, a
stock pledge agreement pursuant to which the Company has pledged 408,333 of the
941,666 shares it owns in Grand Havana Enterprises, Inc. ("Grand Havana"), an
affiliated public company of which Harry Shuster is the Chairman of the Board,
President and Chief Executive Officer. So long as there is no default on the
Westminster Loan, the Company has the right to vote these shares and to receive
dividends and distributions thereon. As additional security, the Company has
granted a security interest to Westminster, pursuant to a Security Agreement
dated as of July 29, 1997, in the Company's 50% membership interest in the LLC
and in the receivables and certain indebtedness due to the Company from Grand
Havana (approximately $775,000 in principal amount at June 29, 1997). In
addition, Harry Shuster and Nita Shuster provided certain of their personal
assets as security with respect to the Westminster Loan.
As additional consideration for Westminster making the
Westminster Loan the Company granted Westminster a three-year warrant to
purchase 150,000 shares of the common stock of the Company exercisable at a per
share price equal to the lesser of $.40 or 75% of the average of the last trade
prices for the ten trading days immediately preceding the exercise of the
warrants. Upon receipt by the Company of notice that the warrants are being
exercised, the Company has agreed to register, at the expense of the Company,
the shares of common stock underlying the warrants. In addition, Grand Havana,
pursuant to the terms of an Amendment dated July 15, 1997, to an Agreement dated
September 10, 1996, between Grand Havana and the Company, granted Westminster,
as designee of the Company, a three-year warrant to purchase 150,000 shares of
the common stock of Grand Havana exercisable at a per share price equal to the
lesser of $.75 or 75% of the average of the last trade prices for the ten
trading days immediately preceding the exercise of the warrants. Pursuant to the
July 15, 1997 Agreement, Grand Havana agreed to grant to the Company or its
designee a three-year warrant on the foregoing terms in consideration for the
Company allowing Grand Havana to forego the requirement that it replace the
collateral
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the Company pledged to support a letter of credit for Grand Havana out of the
membership fees that Grand Havana receives from certain of its Grand Havana Room
private membership cigar clubs. Grand Havana has also agreed to register the
shares of its common stock underlying its warrants upon exercise of such
warrants by Westminster.
On July 28, 1997, Harvey Bibicoff, an individual, loaned to
the Company $900,000 (the "Bibicoff Loan"). The Bibicoff Loan is evidenced by a
promissory note, bears interest at the rate of 10% per annum and is due and
payable on September 28, 1997. The Bibicoff Loan is secured by 300,000 shares of
the common stock of Grand Havana Enterprises, Inc. owned by the Company (the
"Bibicoff Pledged Shares"). The Company retains the right to vote the Bibicoff
Pledged Shares and to receive dividends and distributions on the Bibicoff
Pledged Shares unless and until there is an event of default under the
promissory note. In addition, Mr. Bibicoff has piggyback registration rights
with respect to the Bibicoff Pledged Shares and, in the event of a default under
the promissory note, demand registration rights with respect to the Bibicoff
Pledged Shares. The Bibicoff Loan has been individually guaranteed by Harry
Shuster and Nita Shuster, his spouse. Mr. Shuster is the Chairman of the Board,
President and Chief Executive Officer of the Company and of Grand Havana. Mr.
Bibicoff is a director of Grand Havana, an affiliate of the Company.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements. The financial statements required to be
included in this Form 8-K will be filed by amendment to this Form 8-K not later
than 60 days after the date of the filing of this report.
(b) Pro Forma Financial Information. The pro forma financial
information required to be included in this report on Form 8-K will be filed by
amendment to this Form 8-K not later than 60 days after the filing of this
report.
(c) Exhibits. The exhibits to this report are listed in the Exhibit
Index set forth elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
UNITED LEISURE CORPORATION
Dated: August 11, 1997 By: /s/ Harry Shuster
-------------------------------------
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
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<S> <C> <C>
10.1 Operating Agreement for United Hotel &
Casino, LLC., a Delaware limited liability
company, dated as of January 22, 1997
(Incorporated by reference from Exhibit 10.38 for
the Company's Annual Report on Form 10-KSB
for its fiscal year ended December 31, 1997)
10.2 Secured Convertible Promissory Note dated July
29, 1997 for $1,900,000 made by the Company
and Harry and Nita Shuster to Westminster
Capital, Inc.
10.3 Security Agreement dated July 29, 1997 by and
between the Company and Westminster Capital,
Inc.
10.4 Secured Promissory Note dated July 28, 1997 in
the principal amount of $900,000 made by the
Company to Harvey Bibicoff
10.5 Pledge Agreement dated July 28, 1997 by and
between the Company and Harvey Bibicoff
10.6 Pledge Agreement dated July 29, 1997 by and
between the Company and Westminster Capital,
Inc.
</TABLE>
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Exhibit 10.2
SECURED CONVERTIBLE PROMISSORY NOTE
$1,900,000 July 29, 1997
Beverly Hills, California
FOR VALUE RECEIVED, the undersigned UNITED LEISURE CORPORATION, a
Delaware Corporation, and HARRY SHUSTER and NITA SHUSTER, individually and as
Trustees udt dated July 5, 1985 (collectively, "Maker"), promises to pay to the
order of WESTMINSTER CAPITAL, INC., a Delaware Corporation ("Holder", which term
shall include any subsequent holder of this Note), at 9665 Wilshire Boulevard,
Mezzanine, Beverly Hills, California 90212 (or at such other place as Holder
shall designate in writing) in lawful money of the United States of America, the
principal sum of One Million Nine Hundred Thousand Dollars ($1,900,000) together
with interest on the Outstanding Principal Balance (as defined herein) at the
rate (the "Interest Rate") described below.
1. Interest Rate. Except as otherwise provided herein, the Interest
Rate shall be fifteen percent (15%) per annum. Interest shall be calculated
based on a three hundred sixty (360) day year and based on the actual number of
days in the applicable calendar month.
2. Outstanding Principal Balance. All references to the "Outstanding
Principal Balance" shall mean the sum of One Million Nine Hundred Thousand
Dollars ($1,900,000), less any principal repaid by Maker to Holder.
3. Payments. The Outstanding Principal Balance and all accrued interest
thereon shall be due and payable on the earlier to occur of (a) the demand of
Holder, or (b) July 29, 1999 (the "Maturity Date"). Provided, however, that
except upon the occurrence of an Event of Default (as defined herein), or in the
case of a Mandatory Prepayment (as defined herein), Holder may not demand any
such payment of the Outstanding Principal Balance, or any portion thereof, or
any accrued interest thereon, until July 29, 1998, and provided further that any
demand for payment must include the entire Outstanding Principal Balance and all
accrued interest thereon.
4. Application of Payments. All payments on this Note shall be applied
first to the payment of any sums advanced by Holder pursuant to the Loan
Documents (as defined herein), together with interest thereon from the date of
advance until repaid at the Default Rate (as defined herein), then to the
payment of accrued but unpaid interest, and then to the reduction of the
Outstanding Principal Balance.
5. Prepayment Rights. Maker may not prepay the Outstanding Principal
Balance, or any part thereof, prior to July 29, 1998. Commencing on July 29,
1998, Maker may prepay all or any portion of the Outstanding Principal Balance,
at any time, without premium or penalty, provided that all accrued interest
thereon is paid at the time of such prepayment.
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6. Modifications. From time to time, without affecting the obligation
of Maker to pay the Outstanding Principal Balance or to observe the covenants of
Maker contained herein, without affecting the guaranty of any person for payment
of this Note, and without giving notice to or obtaining the consent of Maker or
any guarantor of this Note, Holder may, at the option of Holder, extend the time
for payment of the Outstanding Principal Balance or any part thereof, reduce the
payments hereunder, release any person liable hereunder, accept a renewal or
extension of this Note, join in any extension or subordination agreement,
release any security given herefor, take or release other or additional
security, or agree in writing with Maker to modify the Interest Rate or any
other provision of this Note.
7. Events of Default. Time is of the essence hereof Upon the occurrence
of any of the following events (the "Events of Default"), payment of the entire
Outstanding Principal Balance and accrued interest on this Note shall, at the
option of Holder, be accelerated and shall be immediately due and payable upon
demand, irrespective of the limitations of Paragraph 3 hereof In such event,
Holder shall have the right, in addition to all other rights and remedies
hereunder or under the Loan Documents, to foreclose or to require foreclosure of
any or all liens, pledges or other security interests securing the payment
hereof:
(a) Failure of Maker to pay the Outstanding Principal Balance
or any part thereof, or any accrued interest thereon, within fifteen
(15) days after demand is made therefor by Holder.
(b) Default by Maker in the performance of any other
obligation of Maker under this Note, which is not cured within ten (10)
days after notice is given by Holder to Maker; or
(c) Default by Maker under any provision of any of the Loan
Documents, which is not cured within any applicable grace period
specified therein.
8. Security. The payment of this Note is secured by, among other
things, (a) a certain stock pledge agreement of even date herewith executed by
United Leisure Corporation in favor of Holder (the "ULC Pledge Agreement")
liening and encumbering certain personal property of United Leisure Corporation,
as more particularly described therein, (b) a certain stock pledge agreement of
even date herewith executed by Harry and Nlta Shuster in favor of Holder (the
"Shuster Pledge Agreement") liening and encumbering certain personal property of
Harry and Nlta Shuster, as more particularly described therein, (c) a certain
security agreement of even date herewith executed by United Leisure Corporation
and Holder (the "Security Agreement") liening and encumbering certain personal
property of United Leisure Corporation, as more particularly described therein,
and (d) a certain deed of trust of even date herewith executed by Harry and Nlta
Shuster, Trustees udt dated July 5, 1985 in favor of Holder (the "Deed of
Trust") liening and encumbering certain real property situated in Las Angeles
County, California, as more particularly described therein. The ULC Pledge
Agreement, the Shuster Pledge Agreement, the Security Agreement, the Deed of
Trust, and all other documents securing or relating to
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the indebtedness evidenced by this Note are collectively referred to herein as
the "Loan Documents".
9. Governing Law. Maker, and each endorser, cosigner and guarantor of
this Note, acknowledges and agrees that this Note is made and is intended to be
paid and performed in the State of California and the provisions hereof will be
construed in accordance with the laws of the State of California and, to the
extent that federal law may preempt the applicability of state laws, federal
law. Maker, and each endorser, cosigner and guarantor of this Note further agree
that upon the occurrence of an Event of Default, this Note may be enforced in
any court of competent jurisdiction in the State of California, and they do
hereby submit to the jurisdiction of such courts regardless of their residence.
10. Remedies Cumulative; Waiver. The remedies of Holder, as provided
herein or in the Loan Documents, shall be cumulative and concurrent, and may be
pursued singularly, successively or together, in the sole discretion of Holder,
and may be exercised as often as occasion therefor shall arise. No act of
omission or commission of Holder, including specifically any failure to exercise
any right, remedy or recourse, shall be deemed to be a waiver or release of the
same; such waiver or release to be affected only through a written document
executed by Holder and then only to the extent specifically recited therein.
Without limiting the generality of the preceding sentence, acceptance by Holder
of any payment with knowledge of the occurrence of an Event of Default by Maker
shall not be deemed a waiver of such Event of Default, and acceptance by Holder
of any payment in an amount less than the amount then due hereunder or under the
Loan Documents shall be an acceptance on account only and shall not in any way
affect the existence of an Event of Default hereunder or under any of the Loan
Documents. A waiver or release with reference to any one Event of Default shall
not be construed as continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to a subsequent Event of Default.
11. Notices. Any notice, request, demand or other communication
required or permitted hereunder or required by law shall be in writing and shall
be given by delivery of the same in person to the intended addressee, or by
depositing same with an overnight courier service (such as Federal Express) for
delivery to the intended addressee at its address set forth in this Paragraph
11, or by depositing same in the United States maiL postage prepaid, certified
mail, return-receipt requested, sent to the intended addressee as follows:
Maker: UNITED LEISURE CORPORATION
1990 Westwood Boulevard, Penthouse
Los Angeles, California 90025
HARRY SHUSTER and NITA SHUSTER,
individually and as Trustees udt
dated July 5, 1985 1430 Loma Vista
Beverly Hills, California 90210
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Holder: WESTMINSTER GAPITAL, INC.
9665 Wilshire Boulevard, Suite M-10
Beverly Hills, California 90212
Attention: William Belzberg, President
The address of any party to this Note may be changed by written notice of such
other address given in accordance herewith at least ten (10) days in advance of
the date upon which such change of address shall be effective. Notices sent by
overnight courier service shall be deemed delivered on the business day
following the date of deposit with such service. Notices sent by certified mail
shall be deemed delivered on the earlier of the date of delivery shown on the
return-receipt, or on the second business day after mailing.
12. No Usury Intended. All agreements between Maker and Holder are
expressly limited so that in no contingency or event whatsoever, whether by
reason of: error of fact or law; payment, prepayment or advancement of the
proceeds hereof; acceleration of maturity of the Outstanding Principal Balance,
or otherwise, shall the amount paid or agreed to be paid to Holder hereof for
the use, forbearance or retention of the money to-be advanced hereunder,
including any charges collected or made in connection with the indebtedness
evidenced by this Note which may be treated as interest under applicable law, if
any, exceed the maximum legal limit (if any such limit is applicable) under
United States federal law or state law (to the extent not preempted by federal
law, if any), now or hereafter governing the interest payable in connection with
such agreements. If, from any circumstances whatsoever, fulfillment of any
provision hereof at the time performance of such provision shall be due shall
involve transcending the limit of validity (if any) prescribed by law which a
court of competent jurisdiction may deem applicable hereto, then ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any circumstances, Holder shall ever receive as interest an amount which
would exceed the maximum legal limit (if any such limit is applicable), such
amount which would be excessive interest shall be applied to the reduction of
the Outstanding Principal Balance due hereunder and not to the payment of
interest or, if necessary, rebated to Maker. This provision shall control every
other provision of all agreements between Maker and Holder.
13. Purpose of Loan. Maker certifies that the loan evidenced by this
Note is obtained for business or commercial purposes and that the proceeds
thereof shall not be used for personaL family, household or agricultural
purposes.
14. Fees and Costs. Maker agrees to pay or reimburse Holder,
immediately upon demand, for all legal fees incurred by Holder in connection
with the negotiation and preparation of this Note and the Loan Documents.
Additionally, in consideration of the Holder making the loan evidenced hereby to
Maker, upon funding of the loan evidenced by this Note, Maker agrees to deliver
or cause to be delivered to Holder the following: 150,000 warrants to purchase
common stock of Un;ted Leisure Corporation and 150,000 warrants to purchase
common stock of Grand Havana Enterprises, Inc, a Delaware Corporation, the forms
of which warrants shall be acceptable to Holder. Maker also agrees to pay, upon
the funding of the loan evidenced by this Note, a broker's commission to Greene
Commercial Real Estate, California Broker License No. 00617637 ("Broker") in the
amount of Nineteen
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Thousand Dollars ($19,000), and acknowledges that the loan evidenced hereby was
made and arranged by Broker.
15. Conversion Rights. Holder shall have the right, at any time prior
to the Maturity Date (provided that Holder has not demanded and received payment
in full of this Note prior to that date), to convert the entire Outstanding
Principal Balance of this Note (irrespective of the effect of any Mandatory
Payments which have been made by Maker which have reduced the Outstanding
Principal Balance) into a 28% membership interest in United Hotel & Casino LLC,
a Delaware Limited Liability Company (the "LLC"). Holder shall exercise its
conversion right by giving at least thirty (30) days' prior written notice to
Maker, and Holder and Maker shall thereafter execute all documents necessary to
effectuate such conversion, as described more fully in that certain letter
agreement of even date herewith executed by United Leisure Corporation, Holder,
and the other members of the LLC. Notwithstanding anything to the contrary in
said letter agreement, if, prior to the date of conversion, United Leisure
Corporation has contributed additional capital to the LLC, as a condition to the
right of Holder to convert, Holder shall pay to United Leisure Corporation fifty
percent (50%) of the amount of such additional capital contribution. Further, in
the event that Maker has made a prepayment of all or any part of the Outstanding
Principal Balance of this Note, other than a Mandatory Prepayment, Holder's
conversion right shall be conditioned upon Holder paying to Maker an amount
equal to One Million Nine Hundred Thousand Dollars ($1,900,000) minus the
Outstanding Principal Balance on the date of conversion. By way of example, if
the entire Outstanding Principal Balance has been prepaid, then Holder shall be
required to pay to Maker $1,900,000 to exercise its conversion right. If the
Outstanding Principal Balance on the date of conversion is $900,000 (as a result
of a prepayment of $1,000,000 of principal) then Holder shall be required to pay
to Maker $1,000,000 to exercise its conversion right, and additionally the
balance due under the Note shall be cancelled. At Holder's request, Maker and
Holder shall enter into a separate agreement to confirm the continuation of
Holder's conversion rights if the Note is paid in full after July 29, 1998, but
prior to July 29, 1999 by virtue of a voluntary prepayment by Maker. Upon the
consummation of the conversion, this Note shall be deemed paid in full, and all
security held under the Loan Documents will be immediately released.
16. Mandatory Prepayment. In the event that Maker receives any
distributions of cash from the LLC, Maker shall immediately make a payment on
this Note in the amount of fifty percent (50%) thereof (the "Mandatory
Prepayment"), which shall be applied as provided in Paragraph 4 hereof
17. Miscellaneous Provisions.
(a) Maker, and each endorser, cosigner and guarantor of this Note
expressly grants to Holder the right to release or to agree not to sue any other
person, or to suspend the right to enforce this Note against such other person
or to otherwise discharge such person; and Maker, and each endorser, cosigner
and guarantor agrees that the exercise of such rights by Holder will have no
effect on the liability of any other person, primarily or secondarily liable
hereunder. Maker, and each endorser, cosigner and guarantor of this Note waives,
to the fullest extent permitted by law, demand for payment, presentment for
payment,
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protest, notice of protest, notice of dishonor, notice of nonpayment, notice of
acceleration of maturity, diligence in taking any action to collect sums owing
hereunder, any duty or obligation of Holder to effect, protect, perfect, retain
or enforce any security for the payment of this Note or to proceed against any
collateral before otherwise enforcing this Note, and the right to plead as a
defense to the payment hereof any statute of limitations.
(b) This Note and each payment of principal and interest hereunder
shall be paid when due in lawful money of the United States, without deduction
or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without
limitation, reasonable attorneys' fees, incurred to collect this Note if this
Note is not paid when due, including, but not limited to, attorneys' fees
incurred in connection with any bankruptcy proceedings instituted by or against
Maker (including relief from stay litigation).
(d) If Maker shall fail to perform or cause to be performed any of the
terms, agreements or covenants of Maker contained in this Note or in any of the
Loan Documents, Holder may, in Holder's sole discretion, but without any duty to
do so and without waiving any default, perform any of such terms, agreements or
covenants, and all sums advanced or expended by Holder in the performance
thereof, together with interest thereon from the date of the respective advance
or expenditure at the Default Rate, shall be due and payable on demand and such
sums and interest thereon shall be secured by the applicable Loan Documents
securing this Note.
(e) If any provision hereof or of any of the Loan Documents is, for any
reason and to any extent, invalid or unenforceable, then neither the remainder
of the document in which such provision is contained, nor the application of the
provision to other persons, entities or circumstances, nor any of the Loan
Documents, shall be affected thereby, but instead shall be enforceable to the
maximum extent permitted by law.
(f) This Note shall be a joint and several obligation of each person
comprising Maker, and all endorsers, cosigners and guarantors hereof, and shall
be binding upon them and their respective heirs, personal representatives,
successors and assigns.
(g) This Note may not be modified or amended orally, but only by a
modification or amendment in writing signed by Holder and Maker.
(h) When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa The word "person"
as used herein shall include any individual, company, firm, association,
partnership, corporation, limited liability company, trust or other legal entity
of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for
convenience of reference only, are not to be considered a part hereof and shall
not limit to otherwise affect any of the terms hereof.
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(j) In the event that at any time any payment received by Holder
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States, or shall otherwise be deemed to be due to
any party other than Holder, then, in any such event, the obligation to make
such payment shall survive any cancellation of this Note and/or return thereof
to Maker and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Note, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof, and
the amount of such payment shall bear interest at the Default Rate from the date
of such final order until repaid hereunder.
18. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED) BY LAW,
MAKER AND EACH ENDORSER, CO-SIGNER AND GUARANTOR HEREOF HEREBY EXPRESSLY WAIVE
ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS NOTE, OR IN ANY WAY CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO
THIS NOTE, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF SUCH
PARTIES HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER
TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER PARTY TO THE WAIVER OF
ITS RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF Maker has executed this Secured Convertible
Promissory Note as of the day and year first above written.
"MAKER"
UNITED LEISURE CORPORATION, /s/ Harry Shuster
a Delaware Corporation ----------------------------------
HARRY SHUSTER,
Individually and as
Trustee udt dated July 5, 1985
By: /s/ Harry Shuster
-------------------------------
Harry Shuster, President
/s/ Nita Shuster
----------------------------------
NITA SHUSTER,
Individually and as
Trustee udt dated July 5, 1985
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Exhibit 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") is made and
entered into this 29th day of July, 1997, by and between UNITED LEISURE
CORPORATION, A DELAWARE CORPORATION ("Debtor"), and WESTMINSTER CAPITAL, INC., A
DELAWARE CORPORATION ("Secured Party").
ARTICLE 1
DEFINITIONS
The following definitions shall be applicable to both the
singular and plural forms of the defined terms:
1.1 "COLLATERAL" means (a) Debtor's Membership Interest in
United Hotel & Casino, LLC, a Delaware limited liability company, (b) the
receivable and indebtedness due to Debtor from Grand Havana Enterprises, Inc.
(fka United Restaurants, Inc.) pursuant to that certain Financing Agreement
dated February 12, 1997, and the promissory note in the stated principal amount
of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) executed by
Debtor pursuant thereto (the "Note"), and (c) all accessions and additions to
each of the foregoing, substitutions therefor, and replacements, products,
insurance proceeds and other proceeds thereof.
1.2 "EVENT OF DEFAULT" means an event described in Article 5.
<PAGE> 2
1.3 "INDEBTEDNESS" means all debts, obligations and
liabilities of Debtor to Secured Party arising under or pursuant to the Note.
1.4 "NOTE" means that Secured Convertible Promissory Note of
even date herewith executed by Debtor in favor of Secured Party in the original
stated principal amount of One Million Nine Hundred Thousand Dollars
($1,900,000).
1.5 "SECURITY AGREEMENT" means this Security Agreement,
as it may be amended from time to time.
1.6 "UNIFORM COMMERCIAL CODE" means the Uniform
Commercial Code of California.
Terms not specifically defined in this Security Agreement have
the meanings prescribed in the Uniform Commercial Code.
ARTICLE 2
GRANT OF SECURITY INTEREST
To secure the timely payment of the Indebtedness and the
performance of all obligations of the Debtor to Secured Party under the Note,
the Debtor hereby grants to Secured Party a security interest in the Collateral.
Debtor also hereby delivers the original Note to Secured Party.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Debtor represents and warrants that:
3.1 NO CONFLICT. The execution, delivery and
performance by the Debtor of this Security Agreement is not in
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conflict with any law, rule, regulation, order or directive, or any indenture,
agreement, or undertaking to which the Debtor is a party or by which the Debtor
may be bound or affected; and
3.2 TITLE. The Debtor is the lawful owner of the Collateral.
Except for the security interests created or permitted by this Security
Agreement, the Collateral is free and clear of all liens, security interests and
other encumbrances, and of all adverse claims or charges.
3.3 AUTHORITY. The execution, delivery and performance by the
Debtor of this Security Agreement has been duly authorized by all necessary
action of the Debtor's board of directors.
ARTICLE 4
COVENANTS
4.1 FINANCING STATEMENTS. During the term of this Security
Agreement and until payment of all the Indebtedness and performance of all
obligations to Secured Party, the Debtor will execute and deliver to Secured
Party, and file or record all financing statements, notices and other documents
from time to time requested by Secured Party to maintain a perfected security
interest in the Collateral in favor of Secured Party.
4.2 RESTRICTIONS ON SALE OF COLLATERAL. During the term of
this Security Agreement and until payment of all the Indebtedness and
performance of all obligations to Secured Party, the Debtor will not, without
the prior written consent of Secured Party, sell, lease, transfer, assign,
pledge, mortgage, encumber,
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<PAGE> 4
hypothecate or otherwise dispose of or abandon any or all of the
Collateral.
4.3 REPORTS. From time to time upon Secured Party's request,
the Debtor shall deliver to Secured Party such reports and information
concerning the Collateral and the business and affairs of the Debtor as Secured
Party may reasonably request, including but not limited to financial statements.
Such reports shall be in such form, for such periods, contain such information,
and shall be rendered with such frequency as Secured Party may reasonably
designate. All reports and information provided to Secured Party by the Debtor
shall be complete and accurate in all respects at the time provided.
4.4 BOOKS AND RECORDS. The Debtor shall maintain complete and
accurate books and records which contain full and correct entries of all
transactions relating to the business of the Debtor in accordance with good
accounting practices and principles consistently applied from year to year. All
such books and records shall be kept at the Debtor's chief executive office, and
the Debtor shall not remove such books and records without Secured Party's prior
written consent.
4.5 INSPECTION. Secured Party and its representatives shall
have access to all of the Debtor's books and records relating to the Collateral
at all reasonable times for the purposes of examination, inspection,
verification, copying and for any other reasonable purpose.
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4.6 NOTICE OF ADVERSE CLAIMS. The Debtor shall immediately
notify Secured Party in writing of (a) any claim, demand, right, lien, security
interest or encumbrance arising with respect to any or all of the Collateral
which may be materially adverse to Secured Party's security interest therein;
(b) any material adverse change in the value of the Collateral; (c) any material
adverse change in the Debtor's financial condition, business, properties or the
Debtor's ability to perform its obligations under this Security Agreement; and
(d) any event or condition which constitutes an Event of Default under this
Security Agreement.
ARTICLE 5
EVENTS OF DEFAULT
5.1 EVENTS OF DEFAULT. The occurrence of any of the
following events or conditions shall constitute and is hereby
defined to be an "Event of Default":
(a) Debtor fails to pay any portion of the
Indebtedness when due, or commits a default or Event of Default under the Note
or any of the "Loan Documents" described in the Note, subject to any applicable
notice and/or "grace" periods;
(b) Debtor fails to perform any other agreement or
covenant under this Security Agreement within any applicable notice and/or
"grace" periods specified therein, provided that if no notice or grace period is
therein specified, Debtor shall have ten
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<PAGE> 6
(10) days after notice thereof has been given within which to cure any such
default;
(c) All or any portion of the Collateral is seized or
levied upon by writ of attachment, garnishment, execution or otherwise, and such
seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the
benefit of its creditors, ceases to conduct its business in the ordinary course
as it is now conducted, convenes any meeting of its creditors, becomes
insolvent, admits in writing its insolvency or inability to pay its debts, or is
unable to pay or is generally not paying its debts as they become due;
(e) A receiver, trustee, custodian or agent is
appointed to take possession of all or any portion of the Collateral or all or
any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced
by Debtor under any provision of the federal Bankruptcy Code or any other
federal or state law relating to debtor rehabilitation, insolvency, bankruptcy,
liquidation or reorganization, or any such case or proceeding is involuntarily
commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Debtor sells all or substantially all of its
assets;
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(h) Any representation made by Debtor in this
Security Agreement, or in any of the other Loan Documents, shall have been
untrue or incorrect in any material respect when made.
5.2 ACCELERATION AND REMEDIES. Upon the occurrence of a
default by Debtor hereunder, Secured Party shall, in addition to all other
rights and remedies provided hereunder or any document or agreement referred to
herein, have the following rights and remedies:
(a) Uniform Commercial Code. Secured Party shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code and under all other applicable laws;
(b) Acceleration. Secured Party may declare any or
all of the obligations under the Note or this Security Agreement to be
immediately due and payable, to the extent that such obligations are not already
due and payable by their terms (and without regard to whether recovery of such
obligations may be or become barred by bankruptcy, insolvency or reorganization
law, any statute of limitation or otherwise unenforceable);
(c) Possession. Secured Party, without a breach of
the peace, may enter any of the premises of the Debtor and search for, take
possession of, remove, keep or store any or all of the Collateral. If Secured
Party seeks to take possession of any or all of the Collateral by court process,
the Debtor irrevocably and unconditionally agrees that a receiver may be
appointed by a court
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for such purpose without regard to the adequacy of the security for
the obligations under the Note or this Security Agreement;
(d) Sale of Collateral. Secured Party may sell or
dispose of the Collateral at public or private sale, in one or more sales, as a
unit or in parcels, at wholesale or retail, and at such time and place and on
such terms as Secured Party may determine. Secured Party may be the purchaser of
any or all of the Collateral at any public or private sale. Any public sale of
any or all of the Collateral may be postponed from time to time by public
announcement at the time and place last scheduled for the sale;
(e) Commercially Reasonable Sale. Without limiting
the generality of this Section 5.2, Secured Party shall conclusively be deemed
to have made a commercially reasonable disposition of any or all of the
Collateral if (i) Secured Party holds a public or private sale of such
Collateral at least (5) five days after notice is given to the Debtor of the
date fixed for any public sale or the date on or after which any private sale or
other disposition of the Collateral is to be made by Secured Party; (ii) with
respect to any public sale, the sale is held at least five (5) days after notice
is published in a newspaper of general circulation in the County of Los Angeles,
including without limitation the Los Angeles Daily Journal; and (iii) without
respect to any public disposition, the sale is held any time between the hours
of 8 a.m. and 5 p.m. in Los Angeles County at any place designated by Secured
Party. Without limiting the generality of
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this Section 5.2, it shall conclusively be deemed to be commercially reasonable
for Secured Party to direct any prospective purchaser of any or all of the
Collateral to the Debtor to ascertain all information concerning the status of
the Collateral. Secured Party's disposition of any or all of the Collateral in
any manner which differs from the procedures specified in this Section 5.2 shall
not be deemed to be commercially unreasonable;
(f) Protection of Collateral. Secured Party may
discharge claims, demands, liens, security interests, encumbrances and taxes
affecting any or all of the Collateral and take such other actions as Secured
Party determines to be necessary or appropriate to protect the Collateral and
Secured Party's security interest therein. Secured Party, without releasing the
Debtor or any other party from any of the obligations under the Note or this
Security Agreement and without any obligation to do so, may perform any such
obligations in such manner and to such extent as Secured Party determines to be
necessary or appropriate to protect the Collateral and Secured Party's security
interest therein; and
(g) Proceeds. The proceeds of any sale or disposition
of the Collateral by Secured Party shall be applied in the following order of
priority:
(i) First, to all liabilities, obligations,
costs, and expenses, including without limitation reasonable attorneys' fees and
costs, incurred by Secured Party in exercising
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<PAGE> 10
any of his rights or remedies under this Security Agreement, including without
limitation the costs and expenses of retaking, holding, and selling any or all
of the Collateral and the costs and expenses of enforcing and collecting upon
any or all of the Collateral;
(ii) Second, to the payment of the obligations
under the Note or this Security Agreement in such order and amounts as Secured
Party may determine in its sole and absolute discretion; and
(iii) Third, the surplus, if any, shall be paid
to the Debtor or any other party legally entitled thereto.
5.3 LIABILITY FOR DEFICIENCY. The Debtor shall at all times
remain liable for any deficiency remaining on the obligations under the Note or
this Security Agreement after any disposition of any or all of the Collateral.
ARTICLE 6
SPECIAL PROVISIONS
6.1 POWER OF ATTORNEY. The Debtor irrevocably appoints Secured
Party, with full power of substitution, as the Debtor's attorney-in-fact,
coupled with an interest, with full power, in Secured Party's own name or in the
name of the Debtor:
(a) Upon the occurrence of any Event of Default, to
endorse any checks, drafts, money orders, notes, and other instruments or
documents representing Collateral proceeds or evidencing payment on account of
any or all of the Collateral;
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<PAGE> 11
(b) Upon the occurrence of any Event of Default, to
pay or discharge claims, demands, liens, security interests, encumbrances, or
taxes affecting or threatened against any or all of the Collateral;
(c) Upon the occurrence of any Event of Default, to
receive payment of all Collateral proceeds;
(d) To commence, prosecute or defend any suit, action
or proceeding relating to any or all of the Collateral;
(e) Upon the occurrence of any Event of Default, to
sell, transfer, pledge, make any agreement with respect to, or otherwise deal
with any or all of the Collateral as though Secured Party were the owner thereof
for all purposes; and
(f) To execute any financing statement, continuation
financing statement, financing statement amendment, security agreement,
assignment, notice, or other document which Secured Party, in its sole and
absolute discretion, determines to be necessary or appropriate in order to
perfect or maintain Secured Party's security interest in the Collateral.
Debtor acknowledges that Secured Party shall have no
obligation to exercise any of the foregoing rights.
6.2 CUMULATIVE REMEDIES. Secured Party's rights and remedies
under this Security Agreement are cumulative with and in addition to all other
rights and remedies which Secured Party may have in connection with the
obligations under the Note or this Security Agreement. Secured Party may
exercise any one or more of
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his rights and remedies under this Security Agreement at Secured Party's option
and in such order as Secured Party may determine in its sole and absolute
discretion.
6.3 ACTIONS. Secured Party shall have the right, but not the
obligation, to commence, appear in, or defend any action or proceeding which
affects or which Secured Party determines may affect (a) the Collateral; (b) the
Debtor's or Secured Party's obligations under this Security Agreement; or (c)
the obligations under the Note or this Security Agreement. Whether or not the
Debtor is in default under this Security Agreement, Secured Party shall at all
times have the right to take any and all actions which Secured Party determines
to be necessary or appropriate to protect Secured Party's interest in connection
with such obligations.
ARTICLE 7
NOTICES
All notices required or permitted to be given pursuant to this
Security Agreement shall be in writing, and shall be delivered either
personally, by overnight delivery service or by U.S. certified or registered
mail, postage prepaid, return-receipt requested and addressed to the parties at
their respective addresses as they appear below the Debtor's signature hereon.
Notices may also be given by facsimile transmission to the facsimile telephone
numbers which appear below the parties' respective signatures hereon, provided
that either receipt of the facsimile transmission is acknowledged in writing by
the receiving
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party, which may also be by a facsimile transmission, or the transmitting party
obtains a written confirmation from its own facsimile machine showing that the
entire transmission was transmitted to the receiving party, without
interruption, and a copy of the notice is also sent by one of the other
above-described methods of service. The parties may change their addresses or
facsimile telephone numbers for notice by giving notice of such change in
accordance with this section. Notices sent by overnight delivery service shall
be deemed received on the business day following the date of deposit with the
delivery service. Mailed notices shall be deemed received upon the earlier of
the date of delivery shown on the return-receipt, or the second business day
after the date of mailing. Notices sent by facsimile transmission shall be
deemed served on the date of transmission, provided that such notices are sent
during regular business hours, otherwise on the next business day.
ARTICLE 8
MISCELLANEOUS
8.1 GOVERNING LAW. This Security Agreement shall be construed
in accordance with and governed by the laws of the State of California.
8.2 TIME OF ESSENCE. Time is of the essence of each provision
of this Security Agreement.
8.3 DESCRIPTIVE HEADINGS. The headings to articles and
sections of this Security Agreement are for convenience only, and
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they do not in any way limit or amplify any of the terms of this Security
Agreement and shall not be used in interpreting this Security Agreement.
8.4 ENTIRE AGREEMENT. This Security Agreement hereto contains
the entire agreement between Secured Party and the Debtor concerning the subject
matter of this Security Agreement.
8.5 SEVERABILITY. If any provision of this Security Agreement
shall be held by any court of competent jurisdiction to be unlawful, void,
voidable, or unenforceable for any reason, such provision shall be deemed
severable from and shall in no way affect the validity or enforceability of the
remaining provisions of this Security Agreement. Without limiting the generality
of the preceding sentence, if Secured Party's security interest in any or all of
the Collateral is held to be unlawful, void, voidable or unenforceable for any
reason, such defect shall in no way affect the validity or enforceability of the
remaining terms and conditions of this Security Agreement.
8.6 NO WAIVER BY SECURED PARTY. No waiver by Secured Party of
any of its rights or remedies in connection with the obligations under the Note
or this Security Agreement or of any of the terms or conditions of this Security
Agreement shall be effective unless such waiver is in writing and signed by
Secured Party. Without limiting the generality of the preceding sentence, (a) no
delay or omission by Secured Party in exercising any of his
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rights or remedies in connection with such obligations shall constitute or be
construed as a waiver of such rights and remedies; (b) no waiver by Secured
Party of any default by the Debtor this Security Agreement or consent by Secured
Party to any act or omission by the Debtor shall constitute or be construed as a
waiver of or consent to any other or subsequent default, act, or omission by the
Debtor; and (c) Secured Party's acceptance of any partial payment on account of
such obligations, including without limitation Secured Party's acceptance and
application of any Collateral proceeds to the obligations under the Note or this
Security Agreement, shall not constitute or be construed as a waiver by Secured
Party of any default by the Debtor under this Security Agreement or any other
agreement between Secured Party and the Debtor.
8.7 AMENDMENT. This Security Agreement may be modified only by
a written agreement signed by the Debtor and Secured Party.
8.8 SUCCESSORS. This Security Agreement shall be binding upon
and inure to the benefit of the Debtor and Secured Party and their respective
successors and assigns.
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8.9 TERMINATION. Upon payment in full of the indebtedness,
this Security Agreement shall automatically terminate and be of no further force
or effect and Secured Party shall execute any termination statements required to
be filed with the California Secretary of State.
IN WITNESS WHEREOF, the parties have executed this Security
Agreement as of the date first above written.
"DEBTOR" "SECURED PARTY"
UNITED LEISURE CORPORATION, A WESTMINSTER CAPITAL, INC., A
DELAWARE CORPORATION DELAWARE CORPORATION
BY /s/ HARRY SHUSTER BY: /s/ WILLIAM BELZBERG
------------------------------ -----------------------------------
HARRY SHUSTER, PRESIDENT WILLIAM BELZBERG, PRESIDENT
ADDRESS: ADDRESS:
1990 WESTWOOD BOULEVARD 9665 WILSHIRE BOULEVARD
PENTHOUSE SUITE M-10
LOS ANGELES, CA 90025 BEVERLY HILLS, CA 90212
FAX NO.: (310) 474-7475 FAX NO.: (310) 271-6274
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Exhibit 10.4
SECURED PROMISSORY NOTE
$900,000 LAS VEGAS, NEVADA JULY 28, 1997
FOR VALUE RECEIVED, the undersigned maker, United Leisure Corporation,
a Delaware corporation ("Maker"), promises to pay to Harvey Bibicoff, an
individual, or order ("Holder") (as used herein, the word "Holder" shall mean
the payee or any endorsee of this Note who is in possession of it) at 4101
Clarinda Drive, Tarzana, California 91356, or such other place as Holder may
designate from time to time in writing, the principal sum of Nine Hundred
Thousand Dollars ($900,000), with interest on the unpaid principal balance from
time to time outstanding from the date hereof at the rate of ten percent (10%)
per annum, all due and payable on the earlier to occur of (a) the closing of the
initial public offering of 800,000 shares of the Common Stock of United Film
Distributors, Inc., a Delaware corporation, for which a registration statement
on Form SB-2 (File No.333-29071) under the Securities Act of 1933, as amended
has been filed with the Securities and Exchange Commission; or (b) September 28,
1997 (such earlier date to be referred to as the "Maturity Date").
If the interest payable hereunder shall at any time exceed the maximum
rate of interest permitted by law in respect of this Note, the interest payable
hereunder shall be reduced to that maximum legal rate permitted in respect of
this Note.
Maker's obligations under this Note are guaranteed by Harry Shuster and
Nita Shuster (collectively, "Guarantor") pursuant to the terms of that certain
Guaranty dated July 28, 1997 (the "Guaranty"). Guarantor's obligations are
secured by a continuing security interest in certain collateral as described in
that certain Guarantor Pledge Agreement (the "Guarantor Pledge Agreement").
This Note is secured by a continuing security interest in certain
collateral as described in that certain Pledge Agreement dated July 28, 1997
(the "Pledge Agreement").
Holder may, without notice to Maker and without affecting the liability
of Maker, accept additional or substitute security for this Note, or release any
security or any party liable for this Note, or extend or renew this Note.
Maker, at any time, or from time to time, may prepay principal on this
Note, in whole or in part, prior to the Maturity Date without penalty or bonus.
Each payment shall be credited first to late charges, fees or other sums (except
principal and interest) to be paid by Maker to Holder hereunder; second to
accrued and unpaid interest, and third, the balance, if any, to principal.
Interest shall cease on principal so credited.
The occurrence of any of the following events shall constitute a
Default under this Note:
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(a) The failure of Maker to pay any installment of principal
or interest on this Note as the same becomes due and payable.
(b) The occurrence of a default under the Pledge Agreement the
Guaranty, or the Guarantor Pledge Agreement.
(c) The breach by Maker or failure of Maker to perform any
obligation, covenant, condition, representation or warranty contained
in this Note or the Pledge Agreement.
(d) Any involuntary lien or liens of any kind or character
which shall attach the assets or property of Maker (except for taxes
due but not in default), or any judgment or judgments entered against
Maker that would or might materially adversely affect the business or
assets of Maker.
(e) The filing by Maker or Guarantor of a petition commencing
a voluntary case under the federal bankruptcy laws, or commencing any
proceeding under any other federal or state bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute, whether now or hereafter in effect; or the
filing by Maker or Guarantor of a petition with or application to any
court or tribunal for the appointment of a custodian, receiver,
liquidator? assignee, trustee, sequestrator, or other similar person
for it or any substantial part of its assets; or the making of a
general assignment or general arrangement by Maker or Guarantor for the
benefit of creditors; or the admission by Maker or Guarantor in writing
of its inability to meet its debts as such debts become due; or the
entry of a decree or order for relief by a court having jurisdiction-
in the premises in respect of the Maker or Guarantor in an involuntary
case under the federal bankruptcy laws or any other federal or state
bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect, which order remains unstayed and in
effect for thirty (30) consecutive days or more; or the entry of a
decree or order for relief by a court having jurisdiction in the
premises appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar person for the Maker or
Guarantor or for any substantial part of its assets which order remains
unstayed and in effect for thirty (30) consecutive days or more; or the
taking of or failing to take any act which indicates Maker's or
Guarantor's consent to, approval of or acquiescence in any such
petition, application, proceeding or order; or the occurrence of an
involuntary sale or transfer of a substantial part of the assets of
Maker or Guarantor including, without limitation, a sale pursuant to an
attachment or execution, a pledgee's sale or other sale by any secured
creditor, a tax lien sale, a transfer to or sale by any trustee in
bankruptcy, guardian, conservator, or any other person who may succeed
by operation of law or otherwise to any or all of Maker's or
Guarantor's assets.
(f) Any transfer, sale, assignment or additional encumbrance
of the collateral described in the Pledge Agreement or the Guarantor
Pledge Agreement.
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(g) The sale, transfer, merger, or consolidation of Maker by
any means whatsoever, any reorganization or recapitalization of Maker,
or the sale or other disposal of all or a substantial portion of the
assets of Maker to any party prior to payment in full to Holder of all
sums due under this Note.
Upon the occurrence of a Default, as defined above, the Holder shall
have, his option, the right without further notice or demand, which Maker hereby
expressly waives, to declare the unpaid principal and all accrued interest
thereon immediately due and payable and to exercise any other rights and
remedies that the Holder may have.
Failure to exercise the foregoing option on the happening of one or
more events of Default shall not constitute a waiver of the right to exercise
such option at any subsequent time in respect of the same event or any other
event of Default. The acceptance of the Holder of any payment hereunder which is
less than the payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver by the Holder of any right to declare a
Default hereunder or to pursue any remedy available at law or in equity.
The rights and remedies of the Holder of this Note shall not be
exhausted by the exercise of any of the rights or remedies of the Holder
pursuant to this Note, the Pledge Agreement or any other agreement between Maker
and Holder (whether or not there are additional parties to such agreement), or
by any action or proceeding or any number of successive actions or proceedings,
unless and until this Note shall be fully paid and discharged. All rights and
remedies afforded to the Holder of this Note pursuant hereto, under the Pledge
Agreement or under any other agreement at any time in effect between Maker and
Holder (whether or not there are additional parties to such agreement) shall be
separate and cumulative and in addition to any and all rights and remedies
available to the Holder of this Note at law and equity or otherwise, and no one
of such rights or remedies, whether exercised or not, shall be deemed to be an
exclusion of any right or remedy available and shall in no way limit or
prejudice any other right or remedy.
If for any reason Maker fails to pay any interest or principal under
this Note when due, then all amounts not paid when due shall bear interest at
the rate of the lesser of (i) four percent (4%) per annum in excess of the Prime
Rate or (ii) the maximum rate of interest permitted by law.
The undersigned Maker hereby (i) waives diligence, presentment, protest
and demand and also notice of protest, demand, nonpayment and dishonor of this
Note, (ii) waive the right to assert any statute of limitations defense in
respect of this Note; and (iii) expressly agrees that, without in any way
affecting the liability of Maker hereunder, the Holder hereof may extend the
Maturity Date or the time for payment of any sum due hereunder, accept
additional security, release any party liable hereunder and release any security
now or hereafter securing this Note.
The provisions of this Note shall inure to the benefit of the
successors-in-interest, administrators and assigns of the Holder hereof and
shall be binding upon the heirs, executors, administrators,
successors-in-interest and assigns of Maker.
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If any Default occurs hereunder, the undersigned Maker promises to pay
all costs of enforcement and collection, including, without limitation,
attorneys' fees, and all expenses in connection with the protection or
realization of the collateral securing this Note or the enforcement of any
guaranty hereof, incurred by the Holder hereof on account of such enforcement
and collection, whether or not such enforcement and collection includes filing a
lawsuit, and whether or not such lawsuit, if filed, is prosecuted to judgment.
Such costs and expenses shall include without limitation all costs, attorneys'
fees and expenses incurred by the Holder hereof in connection with other similar
proceedings involving the undersigned, or involving any unreleased Endorser or
guarantor hereof, which in any way affect the exercise by the Holder hereof of
its rights and remedies under this Note or under any trust deed, security
agreement or other agreement securing or pertaining to this Note.
Maker shall have no right of setoff, recoupment, counter claim or
deduction with respect to any amount owing hereunder with regard to any claim
Maker may assert against Holder, all of which rights Holder hereby expressly
waives.
All notices and other communications hereunder shall be given as
follows:
To Maker:
United Leisure Corporation
1990 Westwood Boulevard
Penthouse
Los Angeles, CA 90025
Attn: Harry Shuster
To Holder:
Harvey Bibicoff
4101 Clarinda Drive
Tarzana, CA 91356
All such notices and communications shall be deemed to have been given and made
upon the date of delivery (if delivered personally) or if mailed and sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed as specified in this paragraph, on the third business day after
deposit in a regularly maintained receptacle for the deposit of United States
mail. Any party may change its address by written notice in accordance with this
paragraph.
The terms and provisions of this Note shall be construed and enforced
under the laws of the State of Nevada. If any term or provision of this Note or
any application of such provision is determined by a court of competent
jurisdiction to be illegal, invalid or unenforceable for any reason whatsoever,
such illegality, invalidity or unenforceability shall not affect the balance of
the terms and provisions of this Note, which terms and provisions shall remain
in full force and effect, to the fullest extent possible. Maker's obligations
under this Note may only be altered or terminated by a written instrument
executed by Maker and the Holder of this Note at the time enforcement of any
discharge is sought.
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Holder shall have the right, without consent of Maker, to sell, assign,
pledge, hypothecate, transfer, negotiate or grant participations in any part of,
or any interest in, Holder's rights, benefits and/or obligations under this
Note.
All amounts payable hereunder shall be denominated and paid in U.S.
dollars and made in any coin and currency of the United States of America which
on the date or respective date of payment is legal tender for the payment of
public and private debts.
"MAKER"
UNITED LEISURE CORPORATION,
a Delaware corporation
By: /s/ Harry Shuster
----------------------------------
HARRY SHUSTER
Its: President
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Exhbiit 10.5
PLEDGE AGREEMENT
1. IDENTIFICATION.
This Pledge Agreement (the "Agreement"), dated for identification
purposes only July 28, 1997, is made by United Leisure Corporation, a Delaware
corporation ("Obligor") for the benefit of Harvey Bibicoff, an individual
("Secured Party").
2. RECITALS.
2.1. Secured Party has loaned certain funds (the "Loan") to Obligor, as
evidenced by that Secured Promissory Note dated July 28, 1997, in the original
principal amount of Nine Hundred Thousand Dollars ($900,000) executed by Obligor
as maker for the benefit of Secured Party as holder (the "Note").
2.2. Harry Shuster, the President and majority shareholder of Obligor,
and his wife Nita Shuster (together, "Guarantors") have guaranteed Obligor's
obligations under the Note pursuant to the terms of that certain Secured
Guaranty dated July 28, 1997 (the "Guaranty"). Guarantors' obligations under
Secured Guaranty are secured by a pledge of certain collateral described in that
certain Guarantor Pledge Agreement dated July 28, 1997 (the "Guarantor Pledge
Agreement").
2.3. In order to induce Secured Party to make the Loan, and as security
for Obligor's performance of its obligations under the Note (collectively, the
"Obligations"), Obligor has agreed to assign and pledge to Secured Party certain
issued and outstanding shares of common stock owned by Obligor, on the terms and
conditions hereinafter set forth.
3. GRANT OF SECURITY INTEREST IN COLLATERAL.
As security for the Obligations, Obligor hereby grants, pledges,
assigns and transfers to Secured Party a lien on, and a continuing security
interest in:
3.1. 300,000 shares of Common Stock of Grand Havana Enterprises, Inc.,
a Delaware corporation, owned by Obligor, and all benefits and entitlements
evidenced thereby (the "Securities"), and all other securities, instruments and
other property issued or accepted in substitution for or in addition to any of
the foregoing, and all dividends, interest, cash, instruments, securities and
any other property at any time received, receivable or otherwise distributed in
respect of or in exchange for any of the foregoing; and
3.2. All proceeds ("Proceeds") of the sale, collection, exchange or
other disposition of the Securities, whether voluntary or involuntary, including
without limitation, all rights to payment with respect to any cause of action
affecting or relating to the Securities (the Securities and Proceeds shall
hereinafter be referred to collectively as the "Collateral").
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Obligor shall make appropriate entries upon its financial statements and books
and records disclosing Secured Party's security interest in the Collateral.
4. REPRESENTATIONS AND WARRANTIES OF OBLIGOR.
Obligor represents and warrants the following:
4.1. Obligor owns, and has the right and power to grant a lien on, and
a security interest in, the Collateral, and has obtained all necessary third
party consents in order to grant such security interest.
4.2. Obligor has all of the requisite power and authority to enter into
this Agreement, and to perform his obligations under this Agreement and all
other documents and instruments contemplated by this Agreement or relating
hereto.
4.3. Obligor is, and as to any substitute or additional Collateral
shall be, the sole owner of the Collateral and all of the Collateral is and
shall be free from liens, encumbrances, claims, setoffs, repurchase or other
options or charges and demands of any kind or character.
4.4. All statements made by Obligor in this Agreement are true and
complete in all material respects, and shall be true, complete and correct at
the time of the effective date of each additional agreement or instrument
contemplated by this Agreement, and shall be continuing and shall remain true,
correct and in full force and effect until such time as the Obligations are
paid, performed and/or satisfied in full and any amounts owed by Obligor to
Secured Party pursuant to the Note have been paid in full.
5. TRANSFER OF COLLATERAL: FURTHER ACTION BY OBLIGOR;
COVENANTS.
5.1. The parties acknowledge that the stock certificate representing
the Securities has been lost and/or destroyed. Obligor shall obtain a
replacement stock certificate as soon as practicable after execution of this
Agreement, and in no event later than 20 days from the date hereof, and shall
immediately thereafter deliver such certificate representing the Collateral, in
suitable form for transfer or delivery and accompanied by duly executed
instruments of transfer, and Obligor shall take such other action or issue or
cause to be issued such other instructions as may be required to perfect Secured
Party's security interest in the Collateral.
5.2. Obligor shall furnish to Secured Party, promptly upon receipt
thereof, copies of all material notices, requests and other documents received
by Obligor relating to the Collateral.
5.3. Obligor shall not take or permit to be taken any action in
connection with any Collateral which would impair the value of the interest or
rights of Obligor or of Secured Party therein or thereunder.
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5.4. Obligor shall promptly execute and deliver, at the expense of
Obligor, all such further notices, instruments and documents, and shall take all
such further action, as may be necessary or advisable, or as Secured Party may
request at any time or from time to time, in order to perfect, preserve and
protect the security interest granted hereunder or to enable Secured Party to
exercise and enforce its rights, remedies and powers hereunder and in order to
consummate fully all of the transactions contemplated by this Agreement.
5.5. Obligor shall, at Obligor's expense: (a) keep complete and
accurate records regarding the Collateral; (b) permit Secured Party and its
designees at all reasonable times to inspect Obligor's books and records
regarding the Collateral; (c) supply Secured Party with such information
concerning the Collateral and deliver to Secured Party such papers and
information with respect to the Collateral as Secured Party may request; (d)
immediately notify Secured Party of any event causing material loss or
depreciation in the value of the Collateral and the amount of such loss or
depreciation; and (e) defend the right, title and interest of Secured Party in,
to and under the Collateral against the claims and demands of all persons and
entities.
6. POWER OF ATTORNEY.
Obligor hereby irrevocably constitutes and appoints Secured Party as
the true and lawful attorney of Obligor, with full power of substitution, in the
place and stead of Obligor and in the name of Secured Party or Obligor or
otherwise, at any time or times, in the discretion of Secured Party, to take any
action and to execute any instrument or document which Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
6.1. To receive, endorse and collect all checks and other orders or
instruments for the payment of money made payable to Obligor representing any
payment, dividend or other distribution in respect of any Collateral and to give
full discharge for same.
6.2. To execute endorsements, assignments or other instruments of
conveyance or transfer with respect to any Collateral.
6.3. To demand, sue for, collect, receive and give acquittance for any
moneys due and to become due under or in respect of any Collateral.
6.4. To file any claims or take any action or institute any proceedings
which Secured Party may in its sole and absolute discretion deem necessary or
advisable for the collection of any or all Collateral or otherwise to enforce
the rights of Secured Party with respect thereto.
This power of attorney is coupled with an interest, is irrevocable and
shall not be affected by any subsequent disability or incapacity of Obligor.
7. PERFORMANCE BY SECURED PARTY.
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If Obligor fails to perform any covenant, agreement, duty or obligation
of Obligor under this Agreement, Secured Party may, at any time or times in his
discretion, take action to effect performance of such obligation. All expenses
of the Secured Party incurred in connection with the foregoing authorization
shall be payable by Obligor as provided in Paragraph 13.1 hereof. No
discretionary right, remedy or power granted to Secured Party under any part of
this Agreement shall be deemed to impose any obligation whatsoever on Secured
Party with respect thereto, such rights, remedies and powers being solely for
the protection of Secured Party.
8. DIVIDENDS, INTEREST AND VOTING POWER.
8.1. Prior to any Event of Default as defined in Article 9 herein, or
the occurrence of any event which after notice or a lapse of time, or both,
would constitute an Event of Default, Obligor shall be entitled:
(a) To exercise all voting power pertaining to the
Collateral for all purposes, but in a manner which is not
inconsistent with the provisions of this Agreement or any other
agreement, instrument or document evidencing or relating to any of
the Obligations, and Secured Party shall execute or cause to be
executed from time to time, at the expense of Obligor, such
proxies or other instruments as shall be reasonably requested in
writing by Obligor to enable Obligor to exercise such voting
power; and
(b) To receive and retain all dividends (other than stock
or liquidating dividends) and interest paid on Collateral.
(c) If, upon the dissolution or liquidation (in whole or
in part, whether voluntarily or involuntarily) of Grand Havana
Enterprises, Inc., as the issuer of the Collateral, any sum is
paid as a liquidating dividend on or with respect to any
Collateral, Obligor shall accept the same in trust for Secured
Party and shall deliver same immediately to Secured Party either
to be held by him as Collateral hereunder or to be applied to the
Obligations then due in such order and in such amounts as Secured
Party may elect. If any stock dividend is declared on any
Collateral, or any shares of stock or fractions thereof are issued
pursuant to any "stock split" involving any Collateral, or if any
distribution of capital is made on any Collateral or if any shares
of stock, obligations or other property are distributed on or with
respect to Collateral, whether on account of recapitalization,
bankruptcy, reorganization, merger or consolidation of the issuer,
or otherwise, the shares of stock, obligations or other property
so distributed shall be accepted by Obligor in trust for Secured
Party and shall be delivered to Secured Party to be held by him as
Collateral hereunder and all of the foregoing which are securities
or instruments shall constitute Collateral for all purposes
hereof. All cash so distributed shall be paid to Secured Party and
held or applied by him as provided in the first sentence of this
Paragraph 8. 1 .(c).
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8.2. Upon and after and during the continuation of an Event of Default,
Secured Party shall be entitled to exercise all voting power pertaining to any
Collateral and to receive and retain as Collateral hereunder or apply, as
provided in the first sentence of Paragraph 8.1.(c), to any of the Obligations
then due (whether by acceleration, demand or otherwise) any and all dividends
and interest at any time declared or paid on the Collateral.
8.3. All payments, shares of stock and other property referred to in Paragraphs
8. l.(b) and (c), if received by Obligor, shall be received by Obligor in trust
for Secured Party and shall be delivered by Obligor to Secured Party,
immediately upon receipt thereof by Obligor, duly endorsed or assigned to
Secured Party as appropriate, in the identical form received by Obligor.
9. EVENTS OF DEFAULT.
An event of default ("Event of Default") shall be deemed to have
occurred hereunder upon the occurrence of any of the following:
9.1. The failure of Obligor to pay interest and principal as and when
due under the Note.
9.2. The failure of any representation or warranty contained in the
Note, this Agreement, the Guaranty or the Guarantor Pledge Agreement or under
any instrument or agreement evidencing or constituting or granting security for
any or all of the Obligations, or a default under the Note, the Guaranty or the
Guarantor Pledge Agreement.
9.3. Any other event, of whatever nature, which would accelerate or
entitle Secured Party to accelerate the maturity of any or all of the
Obligations.
9.4. The filing by Obligor or Guarantors (or either of them) of a
petition commencing a voluntary case under the federal bankruptcy laws, or
commencing any proceeding under any other federal or state bankruptcy or
insolvency laws, or the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Obligor or Guarantors (or either
of them) in an involuntary case under the federal bankruptcy laws or any other
federal or state bankruptcy or insolvency law or statute, of any jurisdiction,
whether now or hereafter in effect, which order remains unstayed and in effect
for thirty (30) consecutive days or more.
Upon and after any Event of Default which is then continuing, any or
all of the Obligations shall become immediately due and payable at the option of
Secured Party, and Secured Party may dispose of Collateral as provided below.
10. DISPOSITION OF COLLATERAL.
Upon and after any Event of Default which is then continuing:
10.1. Secured Party may exercise his rights with respect to the
Collateral, without regard to the existence of any other security or source of
payment for the Obligations. In
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addition to other rights and remedies provided for herein or otherwise available
to him, Secured Party shall have all of the rights and remedies of a secured
party on default under the Uniform Commercial Code ("Code") then in effect in
the State of Nevada.
10.2. If any notice to Obligor of the sale or other disposition of
Collateral is required by then applicable law, five (5) days' prior notice (or,
if longer, the shortest period of time required by then applicable law) to
Obligor of the time and place of any public sale of Collateral or of the time
after which any private sale of any other intended disposition is to be made,
shall constitute reasonable notification.
10.3. If all or any part of the Collateral is sold on credit or for
future delivery, the Collateral so sold may be retained by Secured Party until
the purchase price is paid in full. Secured Party shall incur no liability in
case of the failure of the purchaser to pay for the Collateral as so sold, or of
the failure of Secured Party to make any sale of Collateral after giving notice
thereof, and in case of any such failure, such Collateral may again be sold upon
the same notice as in the case of an original sale.
10.4. All cash proceeds received by Secured Party in respect of any
sale, collection or other enforcement or disposition of Collateral, shall be
applied (after deduction of any amounts payable to the Secured Party pursuant to
Paragraph 13.1 hereof) against the Obligations in such order and in such amounts
as Secured Party shall in his sole and absolute discretion elect. Upon payment
in full of all Obligations, Obligor shall be entitled to the return of all
Collateral, including cash, which has not been used or applied toward the
payment of Obligations or used or applied to any and all costs or expenses of
Secured Party incurred in connection with the liquidation of the Collateral
(unless another person is legally entitled thereto). Any assignment of
Collateral by Secured Party to Obligor shall be without representation or
warranty of any nature whatsoever and wholly without recourse. Notwithstanding
the foregoing provisions hereof, Secured Party shall not be obligated to return
Collateral, unless Obligor furnishes to Secured Party indemnity, reasonably
satisfactory to Secured Party in his sole and absolute discretion.
11. REGISTRATION RIGHTS.
11.1. As used in this Paragraph 11, the following capitalized terms
shall have the following respective meanings:
(a) "Exchange Act" means The Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference
to a particular section thereof shall be deemed to include a reference
to the comparable section, if any, of any such similar federal statute.
(b) "Holder" means Secured Party or any permitted transferee of
Secured Party, which is a holder of the Securities.
(c) "Registrable Secunties" means the Securities.
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(d) "Registration Expenses" means any and all expenses incident
to performance of or compliance with this Paragraph 11, including
without limitation, (i) all SEC and stock exchange or National
Association of Securities Dealers registration and filing fees, (ii)
all fees and expenses of complying with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery
expenses, and (iv) the fees and disbursements of counsel for the
Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required
by or incident to such performance and compliance, but excluding
underwriting discounts and commissions and transfer taxes, if any.
(e) "Securities Act" means The Securities Act of 1933, as
amended, or any similar federal statute then in effect, and a reference
to a particular section thereof shall be deemed to include a reference
to the comparable section, if any, of any such similar federal statute.
(f) "SEC" means The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
11.2. If the Company at any time proposes to register any of its Common
Stock on any form for the general registration of securities under the
Securities Act, then the Company will at such time give prompt written notice to
all Holders of its intention to do so and of such Holders' rights under this
Paragraph 11.2. Upon the written request of such Holders made within twenty (20)
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of disposition thereof), the Company will use its best efforts
to cause the Registrable Secunties which the Company has been so requested to
register by the Holders thereof to be registered under the Securities Act;
provided, that (i) if, at any time after giving written notice of its intention
to register any secunties but prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company may at its
election, give written notice of such determination to each Holder and,
thereupon, shall be relieved of its obligation to register any Registrable
Secunties in connection with such registration, and (ii) if such registration
involves an underwritten offering, all Holders requesting to be included in such
registration must sell their Registrable Securities to the underwriters of such
offering on the same terms and conditions as apply to the Company or the Holder
for whose account securities are to be sold, as the case may be. If a
registration requested pursuant to this Paragraph 11.2 involves an underwritten
public offering, any Holder requesting to be included in such registration may
elect in writing, not later than three (3) days prior to the effectiveness of
the registration statement filed in connection with such registration, not to
register such securities in connection with such registration. The Company will
pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Paragraph 11.2. In connection
with any registration pursuant to this Paragraph 11.2 involving an underwritten
offering, if the managing underwriter or underwriters advise the Company in
writing that, in its or their opinion, the number of securities requested to be
included in such registration would have
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a material adverse effect on such offering (including, without limitation, a
significant decrease in the price at which such securities can be sold), then
the amount of Registrable Securities to be offered for the accounts of Holders
shall be reduced pro rata as to all requesting Holders on the basis of the
relative number of shares of Registrable Securities each such Holder has
requested to be included in such registration, or such Registrable Securities
shall be excluded from such registration, to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters; provided, however,
that if securities are being registered for the account of persons or entities
other than the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by Holders than the
fraction of similar reductions imposed on such other persons or entities (but
not the Company) with respect to the amount of securities they intended to
offer.
11.3. The Company shall grant to Holder the following demand
registration rights:
(a) At any time from and after an Event of Default under this
Agreement, Holder(s) may make three (3) written requests for the
registration under the Securities Act of all or part of their
Registrable Securities (a "Demand Registration") and the Company effect
such Demand Registration. Any request for a Demand Registration shall
specify the aggregate number of the Registrable Securities proposed to
be sold and shall also specify the intended method of disposition
thereof (the "Demand Notice"). Within ten (10) days after receipt of
such request the Company will give written notice of such registration
request to all other Holders, and the Company will include in such
registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within
twenty (20) business days after the receipt by the applicable Holder of
the Company's notice. Each such request shall also specify the
aggregate number of Registrable Securities to be registered and the
intended method of disposition thereof. In any registration initiated
as a Demand Registration, the Company will pay all Registration
Expenses in connection therewith.
(b) Any other person entitled to participate in a Demand
Registration (an "Other Shareholder") and the Company shall be
permitted to register equity securities of the Company in any Demand
Registration or to participate in the public offering, but only as
provided in this Paragraph 11.3(b), by requesting that securities of
the same class as the Registrable Securities be included in the Demand
Registration for sale in the public offering on the following terms and
conditions:
(i) Each such Other Shareholder and/or the Company must give
written notice of such election to the Holder within twenty (20)
days of the date the Demand Notice was given to the Company, such
notice to specify the number of shares proposed to be sold by
each Other Shareholder and/or the Company in the public offering
(the "Other Shares");
(ii) Each such Other Shareholder and/or the Company must
agree to sell such Other Shares on the same basis provided in the
underwriting
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arrangements, if any, approved by the Holder and to complete and
execute in a timely manner all questionnaires, powers of
attorney, indemnities, hold-back agreements, underwriting
agreements and other documents required under the terms of such
underwriting arrangements or by the SEC or by any state
securities regulatory body;
(iii) If the managing underwriter, if any, of the public
offering determines that inclusion of all or any portion of the
Other Shares in the public offering would adversely affect the
marketability of the Common Shares to be sold in the public
offering, the number of Other Shares that may be sold by each
Other Shareholder and/or the Company in the public offering shall
be limited to each number of Other Shares that the managing
underwriter, if any, determines may be included therein without
such an adverse affect. In such event, the number of Other Shares
that may be sold in the public offering shall be allocated pro
rata among each Other Shareholder and the Company based upon the
respective number of Other Shares sought to be included in such
public offering; and
(iv) If any other Shareholder and/or the Company desires to
withdraw their Other Shares from the Demand Registration, they
may do so only at the reasonable discretion of the managing
underwriter, if the Demand Registration contemplates an
underwritten offering.
11.4. Whenever the Company is required to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Agreement, the Company will, as expeditiously as possible:
(a) prepare and, in any event within ninety (90) days after the
end of the period within which request for registration may be given to
the Company (provided, however, if such registration involves an
underwritten offering, all Holders requesting to be included in such
registration must sell their Registrable Securities to the underwriters
of such offering on the same terms and conditions as apply to the
Company or the Holder for whose account the securities are to be sold,
as the case may be), file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective, provided,
however, that the Company may discontinue any registration of its
securities which is being effected pursuant to Paragraph 11.2 herein at
any time prior to the effective date of the registration statement
relating thereto. The Company will promptly notify each seller of such
Registrable Securities and confirm such advice in writing (i) when such
registration statement becomes effective, (ii) when any post-effective
amendment to such registration statement becomes effective and (iii) of
any request by the SEC for any amendment or supplement to such
registration statement or any prospectus relating thereto or for
additional information;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement as may be necessary to keep such
registration statement
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effective for a period of not less than six (6) months and to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the seller or sellers of Registrable Securities set
forth in such registration statement. If at any time the SEC should
institute or threaten to institute any proceedings for the purpose of
issuing a stop order suspending the effectiveness of any such
registration statement, the Company will promptly notify each seller of
such Registrable Securities and will use all reasonable efforts to
prevent the issuance of any such stop order or to obtain the withdrawal
thereof as soon as possible;
(c) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and summary
prospectus) in conformity with the requirements of the Securities Act,
and such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities by such
seller;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such securities
or blue sky laws of any State of the United States as the managing
underwriter, if any, shall reasonably request, and do any and all other
acts and things which may be reasonably necessary or advisable to
enable each seller and underwriter, if any, to consummate the
disposition in such jurisdictions of the Registrable Securities owned
by such seller, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
Paragraph 11.4.(d), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to list such Registrable Securities on
any securities exchange on which the Common Stock is then listed, if
such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange, and to
provide a transfer agent and registrar for such Registrable Securities
covered by such registration statement not later than the effective
date of such registration statement; and
(f) promptly notify each seller of any such Registrable Secunties
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Paragraph 11.4(b) of the
Company becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and at the
request of any such seller promptly prepare and furnish to such seller
a reasonable number of copies of an amended or
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supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing.
(g) The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish the Company
in writing such information and documents regarding such seller and the
distribution of such securities as may be required to be disclosed in
the registration statement in question by the rules and regulations
under the Securities Act or under any other applicable securities or
blue sky laws of the jurisdictions referred to in Paragraph 11.4(d).
(h) Each Holder of Registrable Securities agrees by acquisition
of such Registrable Securities that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Paragraph 11.4.(f), such Holder will forthwith discontinue disposition
of Registrable Securities under such registration statement until such
Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Paragraph 11.4.(f), and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event
the Company shall give any such notice, the period mentioned in
Paragraph 11.4.(b) shall be extended by the number of days during the
period from and including the date of the giving of such notice
pursuant to Paragraph 11.4.(f) to and including the date when each
seller of Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended
prospectus contemplated by Paragraph 11.4.(f).
11.5. The Company agrees to indemnify and hold harmless Holder(s) from
and against any and all losses, claims, damages and liabilities (including any
investigation, legal or other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted) to which Holder(s) may become subject under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or any amendment or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) any
violation by the Company of the Securities Act or the Exchange Act, or other
federal or state law applicable to the Company and relating to any action or
inaction required of the Company in connection with such registration, and shall
reimburse Holder(s) for any legal or other expenses incurred by Holder(s) in
connection with investigating or defending any such loss, claim, damage or
liability; provided, however, that the Company shall not be liable to a selling
shareholder in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue statement or alleged
omission made in such Registration
11
<PAGE> 12
Statement, preliminary Prospectus, Prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such selling shareholder specifically for use therein. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such selling shareholder.
12. WAIVER.
12.1. Obligor waives and agrees not to assert or take advantage of (a)
any right to require Secured Party to proceed against any other person, firm or
corporation or to proceed against or exhaust any security held by him at any
time or to pursue any other remedy in his power before proceeding against
Obligor; (b) the defense of the statute of limitations or any related defense
including without limitation, laches, in any action hereunder for the collection
of any of the Obligations; (c) any defense based upon any legal disability of
Obligor or any discharge or limitation of the liability of Obligor to Secured
Party, whether consensual or arising by operation of law or any bankruptcy,
reorganization, receivership, insolvency or debtor-relief proceeding, or from
any other cause; (d) the failure of Secured Party to file or enforce a claim
against the estate (either in administration, bankruptcy, or other proceeding)
of any other or others; (e) presentment, demand, protest and notice, of any
action or non-action on the part of the Secured Party under this or any other
instrument, or any other person whomsoever, in connection with any of the
Obligations or evidence of indebtedness hereby secured, including but not
limited to notice of the existence, creation or incurring of any new or
additional indebtedness or obligation on the part of Obligor or any endorser or
creditor of Obligor or on the part of any other person whomsoever; (f) any
defense based upon an election of remedies by Secured Party, including without
limitation an election to proceed by nonjudicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of
Obligor; (g) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; (h) any defense based on
any borrowing or grant of a security interest under Section 364 of the Federal
Bankruptcy Code; and (i) any defense based upon or arising out of any defense
which Obligor may have to the payment of the indebtedness hereby secured.
12.2. No exercise or nonexercise by the Secured Party of any right
hereby given him, no dealing by the Secured Party with Obligor or any other
person, and no change, impairment or suspension of any right or remedy of the
Secured Party shall in any way affect any of the obligations of Obligor
hereunder or any Collateral furnished by Obligor or give Obligor any recourse
against the Secured Party.
13. MISCELLANEOUS.
13.1. Expenses. Obligor shall pay to Secured Party, on demand, the
amount of any and all reasonable expenses, including, without limitation,
attorneys' fees, legal expenses and brokers' fees, which Secured Party may incur
in connection with (a) sale, collection or other enforcement or disposition of
Collateral; (b) exercise or enforcement of any of the rights, remedies or powers
of Secured Party hereunder or with respect to any or all of the Obligations; or
(c) failure by Obligor to perform and observe any agreements of Obligor
12
<PAGE> 13
contained herein which are performed by Secured Party. The expenses set forth in
this paragraph are hereby deemed included in the Obligations.
13.2. Waivers. Amendment and Remedies. No course of dealing by Secured
Party and no failure by Secured Party to exercise, or delay by Secured Party in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
Secured Party. No amendment, modification or waiver of any provision of this
Agreement and no consent to any departure by Obligor therefrom, shall, in any
event, be effective unless contained in a writing signed by Secured Party, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. The rights, remedies and powers of
Secured Party, not only hereunder, but also under any instruments and agreements
evidencing or securing the Obligations and under applicable law are cumulative,
and may be exercised by Secured Party from time to time in such order as Secured
Party may elect.
13.3. Notices. All demands, notices and other communications hereunder shall be
in writing and shall be deemed effective when delivered in hand, or three (3)
days after mailed, by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
To Obligor:
Harry Shuster c/o
1990 Westwood Boulevard, Penthouse
Los Angeles, CA 90025
With a copy to:
Richman, Lawrence, Mann, Greene, Chizever, Friedman & Phillips
9601 Wilshire Boulevard, Penthouse
Beverly Hills, CA 90210
Attn: Gerald M. Chizever, Esq.
To Secured Party:
Harvey Bibicoff
4101 Clarinda Drive
Tarzana, CA 91356
With a copy to:
Greenberg Glusker Fields Claman & Machtinger LLP
1900 Avenue of the Stars, Suite 2200
Los Angeles, CA 90067
Attn: Jill A. Cossman, Esq.
13
<PAGE> 14
Any party may change his address by written notice in accordance with this
paragraph.
13.4. Term: Binding Effect. This Agreement shall (a) remain in full
force and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon Obligor, and the heirs, legal representatives,
successors in title and assigns of Obligor; and (c) inure to the benefit of
Secured Party and his successors and assigns.
13.5. Captions. The captions of Paragraphs, Articles and Sections in
this Agreement have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other
significance whatsoever.
13.6. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada, except to the
extent that the perfection of the security interest granted hereby in respect of
any item of Collateral may be governed by the law of another jurisdiction. If
any provision of this Agreement, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect.
Witness the execution of this Security Agreement, this 28th day of
July, 1997.
"OBLIGOR"
UNITED LEISURE CORPORATION,
a Delaware corporation
By: /s/ Harry Shuster
--------------------------------------
Harry Shuster, President
The undersigned hereby acknowledges and agrees to the provisions of Paragraph 11
of the foregoing Guarantor Pledge Agreement.
GRAND HAVANA ENTERPRISES, INC.,
a Delaware corporation
By: /s/ Harry Shuster
--------------------------------
Its: President
----------------------
14
<PAGE> 1
Exhibit 10.6
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into
this 29th day of July, 1997, by and between WESTMINSTER CAPITAL, INC., A
DELAWARE CORPORATION ("Secured Party"), and UNITED LEISURE CORPORATION, A
DELAWARE CORPORATION ("Debtor").
RECITALS
A. On or about July 29, 1997, Debtor executed a certain
Secured Convertible Promissory Note (the "Note") in the stated principal amount
of One Million Nine Hundred Thousand Dollars ($1,900,000) in favor of Secured
Party. The indebtedness of Debtor to Secured Party under the Note is hereinafter
referred to as the "Indebtedness".
B. It is the purpose and intent of the parties hereto
to secure the payment by Debtor to Secured Party of the
Indebtedness by a pledge of certain collateral, according to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest
in and to 408,333 shares of the common stock of Grand Havana Enterprises, Inc.
("GHE"), a Delaware corporation, which are presently registered in the name of
Debtor, evidenced by share certificate numbers UR1300 and UR1301 ("Collateral")
and does
<PAGE> 2
hereby deliver to and deposit the Collateral with Bruce R. Greene, as
pledgeholder ("Pledgeholder"), together with a duly executed stock power and a
voting proxy.
During the term hereof, and subject to the provisions of this
Agreement, Pledgeholder shall hold and retain the Collateral in trust, for the
purpose of perfecting the security interest herein granted to Secured Party, and
for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the
Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the
Collateral and that there is no lien or charge against, or encumbrance or
security interest in, or adverse claim to, the Collateral, or any portion
thereof, other than the security interest created pursuant to this Agreement. So
long as there is any Indebtedness whatsoever owing to Secured Party, Debtor
agrees to keep the Collateral free and clear of any and all liens, encumbrances,
security interests (other than the security interest of Secured Party), adverse
claims or interests.
4. As long as Debtor is not in default hereunder, any and all
cash dividends or other property (but not stock dividends) which may be received
by Pledgeholder during the term of this Agreement which derives form the
Collateral shall be remitted to Debtor, and Debtor shall retain all voting
rights associated with the Collateral. Any such cash dividends or other property
so
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<PAGE> 3
received by Pledgeholder after the occurrence of a default hereunder shall be
held by Pledgeholder as additional Collateral, and after the occurrence of such
default Secured Party shall have all voting rights associated with the
Collateral.
5. Debtor shall be in default under this Agreement upon the
happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness
when due, or commits a default or Event of Default under the Note or any of the
"Loan Documents" described in the Note, subject to any applicable notice and/or
"grace" periods;
(b) Debtor fails to perform any other agreement or covenant
under this Agreement within any applicable notice and/or "grace" periods
specified therein, provided that if no notice or grace period is therein
specified, Debtor shall have ten (10) days after notice thereof has been given
within which to cure any such default;
(c) All or any portion of the Collateral is seized or
levied upon by writ of attachment, garnishment, execution or otherwise, and such
seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of
its creditors, ceases to conduct its business in the ordinary course as it is
now conducted, convenes any meeting of its creditors, becomes insolvent, admits
in writing its insolvency or
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<PAGE> 4
inability to pay its debts, or is unable to pay or is generally not paying its
debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to
take possession of all or any portion of the Collateral or all or any
substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by
Debtor under any provision of the federal Bankruptcy Code or any other federal
or state law relating to debtor rehabilitation, insolvency, bankruptcy,
liquidation or reorganization, or any such case or proceeding is involuntarily
commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Debtor sells all or substantially all of its assets;
(h) Any representation made by Debtor in this Agreement, or
in any of the other Loan Documents, shall have been untrue or incorrect in any
material respect when made.
Upon such default, Secured Party may, at its option, declare
all Indebtedness to be immediately due and payable. Additionally, Secured Party
shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party
shall have all the rights and remedies afforded a secured party under Division 9
of the Uniform Commercial Code of California and may, in connection therewith,
also:
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<PAGE> 5
(a) Take possession of the Collateral without
judicial process, provided that this can be done without breach of the peace, or
by legal action; or
(b) Require Debtor to assemble the Collateral and
make its possession available to Secured Party at a place designated by Secured
Party that is reasonably convenient to both Debtor and Secured Party; or
(c) Sell, lease or otherwise dispose of any or all of
the Collateral in its then condition or following any commercially reasonably
preparation or processing in the manner set forth in Section 9504 of the Uniform
Commercial Code of California, or any applicable successor statute; or
(d) Propose to accept the Collateral after giving
notice of such proposal to Debtor and to any other person with a security
interest in the Collateral in accordance with Section 9505(2) of the Uniform
Commercial Code of California, or any applicable successor statute. Such
acceptance shall discharge the obligation of Debtor and the Corporation with
respect to the Indebtedness, provided that neither Debtor nor any other person
with a security interest in the Collateral objects in writing to such proposal
within twenty-one (21) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the
Collateral shall be applied in the manner and priority set
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<PAGE> 6
forth in Section 9504 of the Uniform Commercial Code of California, or any
applicable successor statute.
7. In the event that legal action is instituted by either
party to enforce its rights under this Agreement or any obligation secured
hereby, the prevailing party in such action shall be entitled to recover from
the losing party its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or
demand and without affecting its liability hereunder or on the Indebtedness,
from time to time to:
(d) Amend or modify the terms of the Note, including, but
not limited to, any such amendment or modification which affects the
Indebtedness.
(e) Take and hold security, other than the Collateral
herein described, for the payment of the Indebtedness or any part thereof, and
exchange, enforce, waive, and release the Collateral herein described or any
part thereof or any such other security.
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<PAGE> 7
(f) Apply such Collateral or other security and direct the
order or manner or sale thereof as Secured Party in its discretion may
determine.
9. In the event that any additional shares of capital stock of
GHE are issued to or acquired by Debtor deriving from the Collateral (such as
stock dividends or stock splits) during the term of this Agreement, such
additional shares shall be considered additional Collateral subject to this
Agreement, and Debtor shall immediately deliver such additional shares of
capital stock and duly executed stock powers to Pledgeholder.
10. Neither the acceptance of any partial or delinquent
payment by Secured Party nor Secured Party's failure to exercise any of his
rights or remedies on default by Debtor shall be a waiver of the default, a
modification of this Agreement or Debtor's obligations under this Agreement, or
a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to
this Agreement shall be in writing, and shall be delivered either personally, by
overnight delivery service or by U.S. certified or registered mail, postage
prepaid, return-receipt requested and addressed to the parties at their
respective addresses as they appear below their signatures hereon. Notices may
also be given by facsimile transmission to the facsimile telephone numbers which
appear below the parties' respective signatures hereon, provided that either (a)
receipt of the
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<PAGE> 8
facsimile transmission is acknowledged in writing by the receiving party, which
may also be by a facsimile transmission, or (b) the transmitting party obtains a
written confirmation from its own facsimile machine showing that the entire
transmission was transmitted to the receiving party, without interruption, and a
copy of the notice is also sent by one of the other above-described methods of
service. The parties may change their addresses or facsimile telephone numbers
for notice by giving notice of such change in accordance with this section.
Notices sent by overnight delivery service shall be deemed received on the
business day following the date of deposit with the delivery service. Mailed
notices shall be deemed received upon the earlier of the date of delivery shown
on the return-receipt, or the second business day after the date of mailing.
Notices sent by facsimile transmission shall be deemed served on the date of
transmission, provided that such notices are sent during regular business hours,
otherwise on the next business day.
12. Time is hereby expressly declared to be of the
essence of this Agreement.
13. This Agreement and each of its provisions shall be binding
on the heirs, executors, administrators, successors, and assigns of each of the
parties hereto. Nothing contained in this paragraph, however, shall be deemed a
consent to the sale, assignment, or transfer of the Collateral by Debtor.
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<PAGE> 9
14. This Agreement is made and entered into and shall be
interpreted in accordance with the laws of the State of California. Any action
concerning this Agreement shall be commenced in a court of competent
jurisdiction in the County of Los Angeles, State of California.
15. Upon payment in full of the Indebtedness, this Agreement
shall terminate and be of no further force or effect. Upon receipt of
satisfactory proof from both parties in writing that the Indebtedness has been
paid in full, Pledgeholder shall immediately deliver to Debtor the Collateral
and the stock powers.
16. Pledgeholder shall not be responsible for any damage or
loss to the Collateral, or any part thereof, arising from act of God, flood,
fire, or any other cause beyond the reasonable control of Pledgeholder.
17. Pledgeholder shall not be liable to either party or to
anyone else for actions taken (or omissions to act) which are within the scope
of the authority of Pledgeholder under this Agreement, provided that such
actions (or omissions to act) do not constitute bad faith, gross negligence or
wilful misconduct.
18. Pledgeholder shall not be responsible in any manner
whatsoever for any failure or inability of any of the parties hereto, or of
anyone else, to perform or comply with the provisions of this Agreement, nor for
the genuineness or accuracy of any notice received by Pledgeholder from any of
the parties hereto.
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<PAGE> 10
19. In the event Pledgeholder resigns or ceases to act in such
capacity for any reason, then Debtor and Secured Party shall jointly appoint a
successor Pledgeholder. In the event that the parties fail to jointly appoint a
successor Pledgeholder within fifteen (15) days after Pledgeholder gives notice
of his intention to resign, then the resigning Pledgeholder shall have the right
to appoint a successor Pledgeholder, provided that such successor Pledgeholder
is not related by blood or marriage to Debtor or Secured Party and has no
business or social affiliation with either Debtor or Secured Party.
20. Pledgeholder shall receive no compensation for his
services hereunder. Any costs expended by Pledgeholder shall be paid by the
party at whose request such costs were incurred. Any costs expended by
Pledgeholder pursuant to this Agreement which are not at the request of either
party (including the costs of filing an interpleader action) shall be paid
equally by the parties, except as otherwise provided herein.
21. The parties, jointly and severally, agree to indemnify,
defend and hold Pledgeholder free and harmless from any and all costs, expenses
or liabilities incurred in connection with the performance of Pledgeholder's
duties hereunder, except for acts of bad faith, willful misconduct or gross
negligence.
22. Upon the request of Secured Party, from time to
time, Debtor agrees to execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, all such additional
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<PAGE> 11
instruments, and agrees to perform any and all acts reasonably required to carry
into effect the provisions and intent of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.
"DEBTOR" "SECURED PARTY"
UNITED LEISURE CORPORATION, A WESTMINSTER CAPITAL, INC., A
DELAWARE CORPORATION DELAWARE CORPORATION
BY /s/ HARRY SHUSTER BY /s/ WILLIAM BELZBERG
------------------------------- ------------------------------------
HARRY SHUSTER, PRESIDENT WILLIAM BELZBERG, PRESIDENT
ADDRESS: ADDRESS:
1990 WESTWOOD BOULEVARD, 9665 WILSHIRE BOULEVARD,
PENTHOUSE MEZZANINE SUITE
LOS ANGELES, CA 90025 BEVERLY HILLS, CA 90212
FAX NO.: (310) 474-7475 FAX NO.: (310) 271-6274
The undersigned has executed this Agreement to confirm his
agreement to comply with all terms and conditions hereof as Pledgeholder.
"PLEDGEHOLDER"
/s/ BRUCE GREENE
---------------------------------------
BRUCE R. GREENE
ADDRESS:
C/O RICHMAN, LAWRENCE, MANN,
GREENE, CHIZEVER, FRIEDMAN &
PHILLIPS
9601 WILSHIRE BOULEVARD,
PENTHOUSE
BEVERLY HILLS, CA 90210
FAX NO.: (310) 274-2831
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