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EXHIBIT 10(dd)
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as
of January 10, 1997, is made by CHI-CHI'S, INC., a Delaware corporation
("Debtor"), in favor of FOOTHILL CAPITAL CORPORATION, a California corporation
("Secured Party").
RECITALS
A. Debtor and El Torito Restaurants, Inc. (individually
and collectively, jointly and severally, "Borrower"), Secured Party, and the
other parties thereto have entered into that certain Loan and Security
Agreement, dated as of the date hereof (as amended, restated, modified, renewed
or extended from time to time, the "Loan Agreement"), pursuant to which Secured
Party has agreed to make certain financial accommodations to Borrower, and
Borrower has granted to Secured Party a security interest in (among other
things) all of Borrower's general intangibles.
B. Pursuant to the Loan Agreement and as one of the
conditions precedent to the obligations of Secured Party under the Loan
Agreement, Debtor has agreed to execute and deliver this Agreement to Secured
Party for filing with the United States Patent and Trademark Office and,
subject to the last sentence of Section 3 hereof, as reasonably required by
Foothill, with any other relevant recording systems in any domestic or foreign
jurisdiction, and as further evidence of and to effectuate Secured Party's
existing security interests in the trademarks and other general intangibles
described herein.
ASSIGNMENT
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Debtor hereby agrees in favor of
Secured Party as follows:
1. Definitions; Interpretation.
(a) Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Event of Default" shall have the meaning ascribed thereto in
the Loan Agreement.
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"Lien" means any pledge, security interest, assignment, charge
or encumbrance, lien (statutory or other), or other preferential arrangement
(including any agreement to give any security interest).
"Proceeds" means whatever is receivable or received from or
upon the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Trademark Collateral, including
"proceeds" as defined at UCC Section 9306, all insurance proceeds and all
proceeds of proceeds. Proceeds shall include (i) any and all accounts, chattel
paper, instruments, general intangibles, cash and other proceeds, payable to or
for the account of Debtor, from time to time in respect of any of the Trademark
Collateral, (ii) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of Debtor from time to time with respect
to any of the Trademark Collateral, (iii) any and all claims and payments (in
any form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Trademark Collateral by any Person acting
under color of governmental authority, and (iv) any and all other amounts from
time to time paid or payable under or in connection with any of the Trademark
Collateral or for or on account of any damage or injury to or conversion of any
Trademark Collateral by any Person.
"PTO" means the United States Patent and Trademark Office and
any successor thereto.
"Secured Obligations" means all liabilities, obligations, or
undertakings owing by Debtor to Secured Party of any kind or description
arising out of or outstanding under, advanced or issued pursuant to, or
evidenced by the Loan Agreement, the other Loan Documents heretofore, herewith
or hereafter executed by Debtor, or this Agreement, irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due
or to become due, voluntary or involuntary, whether now existing or hereafter
arising, and including all interest (including interest that accrues after the
filing of a case under the Bankruptcy Code) and any and all reasonable
out-of-pocket costs, fees (including reasonable attorneys fees), and expenses
which Debtor is required to pay pursuant to any of the foregoing, by law, or
otherwise.
"Trademark Collateral" has the meaning set forth in Section 2.
"Trademarks" has the meaning set forth in Section 2.
"UCC" means the Uniform Commercial Code as in effect from time
to time in the State of California.
"United States" and "U.S." each mean the United States of
America.
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(b) Terms Defined in UCC. Where applicable and
except as otherwise defined herein, terms used in this Agreement shall have the
meanings assigned to them in the UCC.
(c) Interpretation. In this Agreement, except to
the extent the context otherwise requires:
(i) Any reference to a Section or a
Schedule is a reference to a section hereof, or a schedule hereto,
respectively, and to a subsection or a clause is, unless otherwise
stated, a reference to a subsection or a clause of the Section or
subsection in which the reference appears.
(ii) The words "hereof," "herein,"
"hereto," "hereunder" and the like mean and refer to this Agreement as
a whole and not merely to the specific Section, subsection, paragraph
or clause in which the respective word appears.
(iii) The meaning of defined terms shall
be equally applicable to both the singular and plural forms of the
terms defined.
(iv) The words "including," "includes"
and "include" shall be deemed to be followed by the words "without
limitation."
(v) References to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto.
(vi) References to statutes or
regulations are to be construed as including all statutory and
regulatory provisions consolidating, amending or replacing the statute
or regulation referred to.
(vii) Any captions and headings are for
convenience of reference only and shall not affect the construction of
this Agreement.
(viii) Capitalized words not otherwise
defined herein shall have the respective meanings assigned to them in
the Loan Agreement.
(ix) In the event of a direct conflict
between the terms and provisions of this Agreement and the Loan Agreement, it
is the intention of the parties hereto that both such documents shall be read
together and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of the Loan Agreement shall
control and
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govern; provided, however, that the inclusion herein of additional obligations
on the part of Debtor and supplemental rights and remedies in favor of Secured
Party (whether under California law or applicable federal law), in each case in
respect of the Trademark Collateral, shall not be deemed a conflict in the Loan
Agreement.
2. Security Interest.
(a) Assignment and Grant of Security Interest.
To secure the Secured Obligations, Debtor hereby grants, assigns, transfers and
conveys to Secured Party a continuing security interest in all of Debtor's
right, title and interest in and to the following property, whether now
existing or hereafter acquired or arising and whether registered or
unregistered (collectively, the "Trademark Collateral"):
(i) all state (including common law),
federal and foreign trademarks, service marks and trade names,
corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, together with and including
all licenses therefor held by Debtor (unless otherwise prohibited by
any license or related licensing agreement under circumstances where
the granting of the security interest would have the effect under
applicable law of the termination or permitting termination of the
license for breach and if such breach would constitute a material
breach of such license sufficient to give rise to a right on the part
of the licensor to terminate such license or to impose liability for
not insignificant damages upon the licensee for breach of such
license), and all registrations and recordings thereof, and all
applications filed or to be filed in connection therewith, including
registrations and applications in the PTO, any State of the United
States or any other country or any political subdivision thereof, and
all extensions or renewals thereof, including without limitation any
of the foregoing identified on Schedule A hereto (as the same may be
amended, modified or supplemented from time to time), and the right
(but not the obligation) to register claims under any state or federal
trademark law or regulation or any trademark law or regulation of any
foreign country and to apply for, renew and extend any of the same, to
xxx or bring opposition or cancellation proceedings in the name of
Debtor or in the name of Secured Party for past, present or future
infringement or unconsented use thereof, and all rights arising
therefrom throughout the world (collectively, the "Trademarks");
(ii) all claims, causes of action and rights to
xxx for past, present or future infringement or unconsented use of any
Trademarks and all rights arising therefrom and pertaining thereto;
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(iii) all general intangibles related to or
arising out of any of the Trademarks and all the goodwill of Debtor's
business symbolized by the Trademarks or associated therewith; and
(iv) all products and Proceeds of any and all of
the foregoing.
(b) Continuing Security Interest. Debtor agrees
that this Agreement shall create a continuing security interest in the
Trademark Collateral which shall remain in effect until terminated in
accordance with Section 17.
(c) Incorporation into Loan Agreement. This
Agreement shall be fully incorporated into the Loan Agreement and all
understandings, agreements and provisions contained in the Loan Agreement shall
be fully incorporated into this Agreement. Without limiting the foregoing, the
Trademark Collateral described in this Agreement shall constitute part of the
Collateral in the Loan Agreement. The foregoing notwithstanding, nothing
herein shall be construed to prohibit any Permitted Disposition to the extent
expressly permitted in the Loan Agreement.
3. Further Assurances; Appointment of Secured Party as
Attorney-in-Fact. Debtor at its expense shall execute and deliver, or cause to
be executed and delivered, to Secured Party any and all documents and
instruments, in form and substance satisfactory to Secured Party, and take any
and all action, which Secured Party may reasonably request from time to time,
to perfect and continue perfected, maintain the priority of or provide notice
of Secured Party's security interest in the Trademark Collateral and to
accomplish the purposes of this Agreement. Secured Party shall have the right,
in the name of Debtor, or in the name of Secured Party or otherwise, without
notice to or assent by Debtor, and Debtor hereby irrevocably constitutes and
appoints Secured Party (and any of Secured Party's officers or employees or
agents designated by Secured Party) as Debtor's true and lawful
attorney-in-fact with full power and authority, (i) to sign the name of Debtor
on all or any of such documents or instruments and perform all other acts that
Secured Party deems reasonably necessary or advisable in order to perfect or
continue perfected, maintain the priority or enforceability of or provide
notice of Secured Party's security interest in, the Trademark Collateral, and
(ii) to execute any and all other documents and instruments, and to perform any
and all acts and things for and on behalf of Debtor, which Secured Party may
deem reasonably necessary or advisable to maintain, preserve and protect the
Trademark Collateral and to accomplish the purposes of this Agreement,
including (A) after the occurrence and during the continuance of any Event of
Default, to defend, settle, adjust or institute any action, suit or proceeding
with respect to the Trademark Collateral, (B) to assert or retain any rights
under any license agreement for any of the Trademark Collateral, and (C) after
the occurrence and during the continuance of any Event of Default, to execute
any and all applications, documents, papers and instruments for Secured Party
to use the Trademark Collateral, to grant or issue any exclu-
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sive or non-exclusive license (subject to the rights of any then existing
licensees) with respect to any Trademark Collateral, and to assign, convey or
otherwise transfer title in or dispose of the Trademark Collateral. The power
of attorney set forth in this Section 3, being coupled with an interest, is
irrevocable so long as this Agreement shall not have terminated in accordance
with Section 17. Anything herein to the contrary notwithstanding, unless an
Event of Default shall have occurred and be continuing, Secured Party shall not
require Debtor to record, register, or file this Agreement with any foreign
recording system (meaning for purposes of this sentence any recording,
registration, or filing system pertaining to trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, source or business identifiers,
designs, other general intangibles of like nature, or licenses with respect to
any thereof, not maintained by the United States, any State thereof, or any
political subdivision of any thereof, or any agency or instrumentality of any
thereof), or otherwise to record, register, or file the security interest of
Secured Party in the Trademark Collateral with any foreign recording system, if
the result thereof would be the imposition on Debtor of any tax, charge, or
imposition other than in a de minimis amount.
4. Representations and Warranties. Debtor represents and
warrants to Secured Party as follows:
(a) No Other Trademarks. Schedule A sets forth,
as of the Closing Date, a true and correct list of all of the existing
Trademarks that are registered, or for which any application for registration
has been filed with the PTO or any corresponding or similar trademark office of
any other U.S. or foreign jurisdiction, and that are owned by Debtor and all
Trademark license agreements to which the Debtor is a party permitting Debtor
to use a third party's Trademark.
(b) Trademarks Subsisting. Except as set forth
in Schedule B, Each of the Trademarks listed in Schedule A is subsisting and
has not been adjudged invalid or unenforceable, in whole or in part, and, to
the best of Debtor's knowledge, each of the Trademarks is valid and
enforceable.
(c) Ownership of Trademark Collateral; No
Violation.
(i) Debtor has rights in and good
defensible title to the existing Trademark Collateral.
(ii) With respect to the Trademark
Collateral shown on Schedule A hereto as owned by it, except as set
forth in Schedule B, Debtor is the sole and exclusive owner thereof,
free and clear of any Liens and rights of others (other
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than the security interest created hereunder), including licenses,
registered user agreements and covenants by Debtor not to xxx third
persons.
(iii) With respect to any Trademarks for
which Debtor is a licensor pursuant to a license regarding such
Trademark, each such license is in full force and effect, Debtor is
not in default of any of its obligations thereunder and, other than
the parties to such licenses, no other Person has any rights in or to
any of the Trademark Collateral.
(iv) With respect to any Trademarks for
which Debtor is a licensee pursuant to a licensee agreement regarding
such Trademark, each such licensing agreement is in full force and
effect, Debtor is not in default of any of its obligations thereunder
and, to the best of Debtor's knowledge, other than the parties to such
licensing agreements, no other Person has any rights in or to any of
the Trademark Collateral.
(v) To the best of Debtor's knowledge,
except as set forth in Schedule B, the past, present and contemplated
future use of the Trademark Collateral by Debtor has not, does not and
will not infringe upon or violate any right, privilege or license
agreement of or with any other Person.
(d) No Infringement. Except as set forth in
Schedule B, to the best of Debtor's knowledge, no material infringement or
unauthorized use presently is being made of any of the Trademark Collateral by
any Person.
(e) Powers. Debtor has the unqualified right,
power and authority to pledge and to grant to Secured Party a security interest
in all of the Trademark Collateral pursuant to this Agreement, and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other Person except as
already obtained.
5. Covenants. So long as any of the Secured Obligations
remain unsatisfied, Debtor agrees that it will comply with all of the
covenants, terms and provisions of this Agreement, the Loan Agreement and the
other Loan Documents, and Debtor will promptly give Secured Party written
notice of the occurrence of any event that could have a material adverse effect
on any of the Trademarks or the Trademark Collateral, including any petition
under the Bankruptcy Code filed by or against any licensor of any of the
Trademarks for which Debtor is a licensee.
6. Future Rights. For so long as any of the Secured
Obligations shall remain outstanding, or, if earlier, until Secured Party shall
have released or terminated, in whole but
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not in part, its interest in the Trademark Collateral, if and when Debtor shall
obtain rights to any new Trademarks, or any reissue, renewal or extension of
any Trademarks, the provisions of Section 2 shall automatically apply thereto
and Debtor shall give to Secured Party prompt notice of all applications filed
and registrations issued. Debtor shall do all things reasonably deemed
necessary or advisable by Secured Party to ensure the validity, perfection,
priority and enforceability of the security interests of Secured Party in
future acquired Trademark Collateral. Debtor hereby authorizes Secured Party
to modify, amend or supplement the Schedules hereto and to re-execute this
Agreement from time to time on Debtor's behalf and as its attorney-in-fact to
include any future Trademarks which are or become Trademark Collateral and to
cause such re-executed Agreement or such modified, amended or supplemented
Schedules to be filed with the PTO.
7. Secured Party's Duties. Notwithstanding any provision
contained in this Agreement, Secured Party shall have no duty to exercise any
of the rights, privileges or powers afforded to it and shall not be responsible
to Debtor or any other Person for any failure to do so or delay in doing so.
Except for the accounting for moneys actually received by Secured Party
hereunder or in connection herewith, Secured Party shall have no duty or
liability to exercise or preserve any rights, privileges or powers pertaining
to the Trademark Collateral.
8. Remedies. From and after the occurrence and during the
continuation of an Event of Default, Secured Party shall have all rights and
remedies available to it under the Loan Agreement and applicable law (which
rights and remedies are cumulative) with respect to the security interests in
any of the Trademark Collateral or any other Collateral. Debtor agrees that
such rights and remedies include the right of Secured Party as a secured party
to sell or otherwise dispose of its Collateral after default, pursuant to UCC
Section 9504. Debtor agrees that Secured Party shall at all times have such
non-exclusive royalty-free licenses, to the extent permitted by law, for any
Trademark Collateral that is reasonably necessary to permit the exercise of any
of Secured Party's rights or remedies upon or after the occurrence of (and
during the continuance of) an Event of Default with respect to (among other
things) any tangible asset of Debtor in which Secured Party has a security
interest, including Secured Party's rights to sell inventory, tooling or
packaging which is acquired by Debtor (or its successor, assignee or trustee in
bankruptcy), subject to reasonable rights of quality control and inspection in
favor of Debtor as are necessary and advisable for the maintenance of the
Trademark's validity. In addition to and without limiting any of the
foregoing, upon the occurrence and during the continuance of an Event of
Default, Secured Party shall have the right but shall in no way be obligated to
bring suit, or to take such other action as Secured Party deems reasonably
necessary or advisable, in the name of Debtor or Secured Party, to enforce or
protect any of the Trademark Collateral, in which event Debtor shall, at the
request of Secured Party, do any and all lawful acts and execute any and all
documents required by Secured Party in aid of such enforcement. To the extent
that Secured
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Party shall elect not to bring suit to enforce such Trademark Collateral,
Debtor agrees to take all reasonable measures and exercise reasonably diligent
efforts, whether by action, suit, proceeding or otherwise, to prevent the
infringement, misappropriation or violation thereof by others.
9. Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by Debtor and Secured Party and
their respective successors and assigns.
10. Notices. All notices and other communications hereunder
shall be in writing and shall be mailed, sent or delivered in accordance with
the Loan Agreement.
11. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
except to the extent that the validity or perfection of the assignment and
security interests hereunder in respect of any Trademark Collateral are
governed by federal law, in which case such choice of California law shall not
be deemed to deprive Secured Party of such rights and remedies as may be
available under federal law.
12. Entire Agreement; Amendment. This Agreement, together
with the Schedules hereto, contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior drafts and
communications relating to such subject matter. Neither this Agreement nor any
provision hereof may be modified, amended or waived except by the written
agreement of the parties as provided in the Loan Agreement. Notwithstanding
the foregoing, Secured Party may re-execute this Agreement or modify, amend or
supplement the Schedules hereto as provided in Section 6 hereof.
13. Severability. If one or more provisions contained in
this Agreement shall be invalid, illegal or unenforceable in any respect in any
jurisdiction or with respect to any party, such invalidity, illegality or
unenforceability in such jurisdiction or with respect to such party shall, to
the fullest extent permitted by applicable law, not invalidate or render
illegal or unenforceable any such provision in any other jurisdiction or with
respect to any other party, or any other provisions of this Agreement.
14. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the
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failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement.
15. Loan Agreement. Debtor acknowledges that the rights and
remedies of Secured Party with respect to the security interest in the
Trademark Collateral granted hereby are more fully set forth in the Loan
Agreement and all such rights and remedies are cumulative.
16. No Inconsistent Requirements. Debtor acknowledges that
this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters,
and Debtor agrees that all such covenants, terms and provisions are cumulative
and all shall be performed and satisfied in accordance with their respective
terms.
17. Termination. Upon the indefeasible payment in full of
the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, this Agreement shall
terminate, and Secured Party shall promptly execute and deliver such documents
and instruments and take such further action reasonably requested by Debtor, at
Debtor's expense, as shall be necessary to evidence termination of the security
interest granted by Debtor to Secured Party hereunder, including cancellation
of this Agreement by written notice from Secured Party to the PTO.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
CHI-CHI'S, INC.,
a Delaware Corporation
By:___________________________________
Title:________________________________
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:___________________________________
Title:________________________________
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STATE OF _______________ )
) ss
COUNTY OF ______________ )
On January 10, 1997, before me, ____________________________, Notary
Public, personally appeared ____________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Signature
[SEAL]
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STATE OF _______________ )
) ss
COUNTY OF ______________ )
On January 10, 1997, before me, _____________________________, Notary
Public, personally appeared _____________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________________
Signature
[SEAL]
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SCHEDULE A
to the Trademark Security Agreement
Trademarks of Debtor
A-1.
