EXHIBIT 99.5
PLEDGE AND SECURITY AGREEMENT
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THIS PLEDGE AND SECURITY AGREEMENT ("Agreement"), effective as of October
1, 2004, is made by and between Donini, Inc., a New Jersey corporation
("Pledgor"), and Global Capital Funding Group, L.P., a Delaware limited
partnership ("Lender").
RECITALS:
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WHEREAS, pursuant to that certain Exchange Agreement dated as of October
___, 2004, by and between Pledgor and Lender (the "Exchange Agreement"), Lender
has exchanged a Convertible Note for a Secured Promissory Note (the "Note") in
aggregate principal amount of $1,540,000 issued by Pledgor; and
WHEREAS, Lender and Pledgor have agreed to secure the Note with the
collateral set forth in this Agreement; and
WHEREAS, Pledgor desires to execute and deliver this Agreement to Lender in
order to induce Lender to purchase the Note.
AGREEMENT:
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NOW THEREFORE, in consideration of the foregoing, and to induce Lender to
purchase the Note and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Lender hereby agree as
follows:
1. Pledge. As collateral security for the payment and performance in full
of the obligations contained in the Exchange Agreement and the Note (the
"Obligations"), Pledgor hereby pledges, hypothecates, assigns, transfers, sets
over and delivers unto Lender, and hereby grants to Lender a security interest
in (i) the securities set forth in Exhibit A here to, together with the proceeds
thereof and all cash, additional securities or other property at any time and
from time to time receivable or otherwise distributable in respect of, in
exchange for, or in substitution for any and all such pledged securities (all
such pledged securities, the proceeds thereof, cash, dividends, additional
securities and other property now or hereafter pledged hereunder are hereinafter
collectively referred to as the "Pledged Securities"),
TO HAVE AND TO HOLD the Pledged Securities, together with all rights,
titles, interests, powers, privileges and preferences pertaining or incidental
thereto, unto Lender, its successors and assigns, subject to the terms,
covenants and conditions hereinafter set forth.
Upon delivery to Lender, the Pledged Securities shall be accompanied by
such other instruments or documents as Lender or its counsel may reasonably
request.
2. Obligations Secured; Release of Collateral. This Agreement is made,
and the security interest created hereby is granted to Lender, to secure prompt
payment of the Obligations and the prompt performance of each of the covenants
and duties of Pledgor under this Agreement. The security interest granted herein
shall not be terminated and the Pledged Securities shall not be released from
the security interests created hereby until all of Pledgor's obligations under
the Exchange Agreement and the Note have been fully satisfied or without written
consent of both Lender and Pledgor.
3. Representations and Warranties. Pledgor hereby represents and warrants
to Lender that (a) that Pledgor is the legal and equitable owner of the Pledged
Securities, (b) that Pledgor has the complete and unconditional authority to
pledge the Pledged Securities being pledged by it, and holds the same free and
clear of all liens, charges, encumbrances and security interests of every kind
and nature, (c) that any consent or approval of any governmental body or
regulatory authority, or of any other party, that was or is necessary to the
validity of this pledge, has been obtained, (d) that the Pledged Securities are
not subject to any limitations, restrictions, or obligations and (e) that the
Pledged Securities represent ___% of the outstanding ownership interests of the
Pledgor.
4. Registration in Nominee Name. Lender shall have the right (in its sole
and absolute discretion) to hold the Pledged Securities in its own name or in
the name of the Pledgor, endorsed or assigned in favor of Lender.
5. Voting Rights; Dividends; Etc.; General. So long as no Event of
Default (as defined below) or event which, with the giving of notice or the
lapse of time, or both, would become an Event of Default shall have occurred and
be continuing:
(a) Voting Rights. The Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged Securities
or any part thereof for any purpose not inconsistent with the terms of this
Agreement; provided, however, that the Pledgor shall not exercise or
refrain from exercising any such right if, in the Lender's judgment, such
action would have a material adverse effect on the value of the Pledged
Securities or any part thereof; and, provided further, that the Pledgor
shall give the Lender at least five (5) days' written notice of the manner
in which it intends to exercise, or the reasons for refraining from
exercising, any such right.
(b) Dividends. The Pledgor shall be entitled to receive dividends
and other payments in respect of the Pledged Securities; provided, however,
that any and all:
(i) dividends or other distributions paid in cash, cash
equivalents or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Securities;
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(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Securities in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus; and
(iii) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Securities,
shall be, and shall be forthwith delivered to the Lender, and shall, if received
by the Pledgor, be received in trust for the benefit of the Lender, be
segregated from the other property or funds of the Pledgor, and be forthwith
delivered to the Lender as Pledged Securities in the same form as so received
(with any necessary endorsement).
(c) Other. The Lender shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purposes of
enabling the Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to subsection (i) above and to receive the
dividends or other payments which it is authorized to receive and retain
pursuant to subsection (ii) above.
6. Remedies Upon Default. In the event Pledgor fails to uphold an of its
obligations set forth in the Exchange Agreement or the Note, Lender shall have
all of the rights, privileges and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of New Jersey, and without limiting
the foregoing, Lender may (a) collect any and all amounts payable in respect of
the Pledged Securities and exercise any and all rights, privileges, options and
remedies of the holder and owner thereof, and (b) sell, transfer and/or
negotiate the Pledged Securities, or any part thereof, at public or private
sale, for cash, upon credit or for future delivery as Lender shall deem
appropriate, including without limitation, at Lender's option, the purchase of
all or any part of said securities at any public sale by Lender. Upon
consummation of any sale, Lender shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Pledged Securities so sold.
Each such purchaser at any such sale shall hold the property sold absolutely,
free from any claim or right on the part of the Pledgor, and the Pledgor hereby
waives (to the extent permitted by law) all rights of redemption, stay or
appraisal that Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereinafter enacted. Pledgor hereby
expressly waives notice to redeem and notice of the time, place and manner of
such sale.
7. Payment of Lender's Fees. Pledgor agrees to reimburse Lender, upon
demand, for all expenses, including without limitation Lender's attorneys' fees,
in connection with the administration and enforcement of this Agreement, and
agrees to indemnify Lender and hold it harmless from and against any and all
liability incurred by it hereunder or in connection herewith, unless such
liability shall be due to willful misconduct or gross negligence on the part of
Lender.
8. No Waiver. No failure on the part of Lender to exercise, and no delay
in
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exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by Lender preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. All remedies are cumulative and are not
exclusive of any other remedies provided by law.
9. Limitation of Lender Liability. Except in the case of their wilful
misrepresentation or gross negligence, neither Lender nor its officers,
employees, agents, representatives, or nominees shall be liable for any loss
incurred by Pledgor arising out of any act or omission of Lender, its officers,
employees, agents, representatives or nominees, with respect to the care,
custody or preservation of the Pledged Securities.
10. Binding Agreement. This Agreement and the terms, covenants and
conditions hereof shall be binding upon and inure to the benefit of the parties
hereto and to all holders of the Obligations and their respective successors and
assigns.
11. Governing Law; Amendments. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New Jersey
applicable to contracts to be wholly performed in such state. This Agreement may
not be amended or modified, nor may any of the Pledged Securities be released
except in a writing signed by the parties hereto. Time is of the essence with
respect to the obligations of Pledgor pursuant to this Agreement.
12. Further Assurances. Pledgor agrees to do such further acts and things,
and to execute and deliver such additional conveyances, assignments, agreements
and instruments, as Lender may at any time request in connection with the
administration and enforcement of this Agreement or relative to the Pledged
Securities or any part thereof or in order to better assure and confirm unto
Lender its rights and remedies hereunder.
13. Headings. Section numbers and headings used herein are for convenience
only and are not to affect the construction of or to be taken into consideration
in interpreting this Agreement.
14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. 7.
15. Consent to Jurisdiction; Exclusive Venue. Pledgor hereby irrevocably
consents to the Jurisdiction of the United States District Court for the
District of New Jersey and of all New Jersey state courts sitting in New Jersey,
for the purpose of any litigation to which Lender may be a party and which
concerns this Agreement or the Obligations. It is further agreed that venue for
any such action shall lie exclusively with courts sitting in New Jersey, unless
Lender agrees to the contrary in writing.
16. Waiver of Trial by Jury. LENDER AND PLEDGOR HEREBY KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN
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ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT
OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT OR THE NOTE.
17. Unconditional Obligations of Pledgor. The obligations of Pledgor under
this Agreement are absolute and unconditional. The validity of this Agreement
shall not be impaired by any event whatsoever, including, but not limited to,
(a) the merger, consolidation, dissolution, cessation of business or liquidation
of Pledgor, (b) the financial decline or bankruptcy of Pledgor, (c) the failure
of any other party to guarantee or to pledge collateral as security for the
Obligations, (d) Lender's compromise or settlement with or without release of
Pledgor or any other party liable for the Obligations, (e) Lender's release of
any collateral for the Obligations, (f) Lender's failure to file suit against
Pledgor (regardless of whether the Pledgor is becoming insolvent, is about to
leave the state, or any other circumstance), (g) Lender's failure to give
Pledgor notice of default by Pledgor, (h) the unenforceability of the
Obligations against Pledgor due to bankruptcy discharge, counterclaim or for any
other reason, (i) Lender's acceleration of the Obligations at any time after a
default, (j) the extension, modification or renewal of the Obligations, (k)
Lender's failure to undertake or exercise diligence in collection efforts
against any party or property, (l) the termination of any relationship of
Pledgor with any Pledgor, . (m) any Pledgor's change of name or use of any name
other than the name used to identifyPledgor in this Agreement, or (n) Pledgor's
use of the credit extended for any purpose whatsoever.
18. Impairment of Collateral; Release of Liable Parties. Lender may, in
its sole discretion and with or without consideration, release any collateral
securing the Obligations or release any party liable therefor. The defenses of
impairment of collateral and impairment of recourse and any requirement of
diligence on Lender's part in collecting the Obligations are hereby waived.
19. Pledge as Assurance of Payment. This Agreement encumbers the Pledged
Securities to secure the payment and performance of the Obligations and not
merely to secure the collection thereof. Accordingly, Lender may enforce this
Agreement against the Pledged Securities without first instituting collection
proceedings against Pledgor.
Signature Page Follows
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IN WITNESS WHEREOF, Pledgor and Lender have executed this Agreement, or
have caused this Agreement to be duly executed by a duly authorized officer,
this 1st day of October, 2004.
WITNESS: PLEDGOR:
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______________________ DONINI, INC.
By: __________________________________________
Title:________________________________________
LENDER:
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GLOBAL CAPITAL FUNDING GROUP, L.P.
By: Its General Partner, Global Capital
Management Services, Inc.
By: /s/ LEWIS N. LESTER
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Name: Lewis N. Lester
Title: President
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EXHIBIT A
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1. 8,000,000 shares of the Common Stock of Donini, Inc.