MEMBERSHIP INTEREST PLEDGE AGREEMENT
Exhibit 10.4
EXECUTION COPY
This MEMBERSHIP INTEREST PLEDGE AGREEMENT (together with all amendments, supplements and
modifications, if any, from time to time hereto, this “Agreement”), dated as of July 7,
2009, is made by CKR ACQUISITION CORP., a Delaware corporation (hereinafter, the
“Pledgor”), in favor of Xxxxx Fargo Bank, National Association, in its capacity as the
collateral agent (in such capacity, together with its successors and assignees, the “Collateral
Agent”) for the Secured Parties (as defined below).
WHEREAS, Real Mex Restaurants, Inc., a Delaware corporation (the “Issuer”), the
guarantors party to the Indenture (as defined below) and Xxxxx Fargo Bank, National Association, as
trustee (in such capacity, the “Trustee”) thereunder, are parties to that certain
indenture, dated as of even date herewith (as amended, restated, modified, supplemented, renewed,
refunded, replaced or refinanced from time to time, the “Indenture”);
WHEREAS, the Collateral Agent, the Trustee and General Electric Capital Corporation, as Agent,
have entered into the Intercreditor Agreement, dated as of even date herewith (as amended,
supplemented or otherwise modified from time to time, the “Intercreditor Agreement”);
WHEREAS, the Pledgor is the legal and beneficial owner of not less than one hundred percent
(100%) of the membership interests in each of the limited liability companies set forth in
Schedule 1 attached hereto (collectively, the “LLCs”, and each individually, an
“LLC”);
WHEREAS, the holders of the Note Obligations (the “Holders”) have required, as a
condition to the purchase of the Notes under the Indenture, that the Pledgor grant to the
Collateral Agent for the ratable benefit of the Collateral Agent, the Trustee and the Holders
(collectively, the “Secured Parties”) a security interest in and to the Collateral (as
defined herein); and
WHEREAS, the Pledgor wishes to grant pledges and security interests in favor of the Collateral
Agent, for the benefit of the Secured Parties, as herein provided.
NOW, THEREFORE, in consideration of the premises contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS.
Except as otherwise defined in this Agreement, all capitalized terms used herein without
definitions shall have the respective meanings provided therefor in the Indenture. For purposes of
this Agreement, “Obligations” means all of the Note Obligations (including, without
limitation, the Issuer’s Obligations under or in respect of the Notes (including any exchange notes
issued from time to time pursuant to any agreement to provide registration rights in respect of the
Notes)) and, in addition, if the Pledgor is a Guarantor of the Note Obligations, all obligations
and liabilities of the Pledgor which may arise under or in connection with such Guarantee or any
other Note Document to which the Pledgor is a party, whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to any Secured Party that are required to be paid
by the Pledgor pursuant to the terms of this Agreement or any other Note Document). Unless
otherwise provided herein, the rules of construction set forth in Section 1.04 of the Indenture
shall be applicable to this Agreement. Terms used herein and not defined in the Indenture or
otherwise defined herein that are defined in the Uniform Commercial Code of the State of New York
have such defined meanings herein (with terms used in Article 9 controlling over terms used in
another Article), unless the context otherwise indicates or requires, and the following terms shall have
the following meanings:
Cash Collateral. See §4.2.
Cash Collateral Account. See §4.2.
Collateral. The Pledged Interests, the Additional Interest, the Cash Collateral, the
Cash Collateral Account, and all other property now or hereafter pledged or assigned to the
Collateral Agent for the benefit of the Secured Parties by the Pledgor hereunder, and all income
therefrom, increases therein and proceeds thereof.
Limited Liability Agreements. Collectively, each of the Operating Agreements (in
effect on the date hereof and including any amendments or modifications permitted by §3.2(a)
hereof), as set forth in Schedule 2 attached hereto.
Pledged Interests. See §2.1 hereof.
Time Deposits. See §4.2.
2. PLEDGE OF MEMBERSHIP INTERESTS.
2.1. Grant of Security Interests. The Pledgor hereby pledges, grants a security
interest in, mortgages, collaterally assigns and transfers and delivers to the Collateral Agent,
for the benefit of the Secured Parties, subject to the terms and conditions hereinafter set forth,
as security for the payment and performance in full when due of all of the Obligations, all the
right, title and interest of the Pledgor in and to one hundred percent (100%) of the aggregate
membership interests in each of the LLCs, to be held, to the extent certificated, by the Priority
Lien Collateral Agent as bailee for the Collateral Agent pursuant to the Intercreditor Agreement,
for the benefit of the Secured Parties, wherever located and whether now owned or hereafter
acquired or arising, including, without limitation, (a) all payments or distributions, whether in
cash, property or otherwise, at any time owing or payable to the Pledgor on account of its interest
as a member in each LLC or in the nature of a management, investment banking or other fee paid or
payable by any LLC to the Pledgor, (b) all of the Pledgor’s rights and interests under each Limited
Liability Agreement, including all voting and management rights under the respective Limited
Liability Agreement and all rights to grant or withhold consents or approvals, (c) all rights of
access and inspection to and use of all books and records, including computer software and computer
software programs, of each LLC, (d) all other rights, interests, property or claims to which the
Pledgor may be entitled in its capacity as a member of each LLC, and (e) all proceeds and products
of any of the foregoing (all of the foregoing rights, title and interest described in the foregoing
clauses (a) through (e) being herein referred to collectively as the “Pledged Interests”).
2.2. Additional Interest. The Pledgor also hereby pledges, assigns, and grants a
security interest in any additional membership interests in any LLC or any successor of any LLC
(the “Additional Interest”), to the Collateral Agent, for the benefit of the Secured
Parties. If the Pledgor shall acquire any Additional Interests, then the Pledgor shall deliver to
the Priority Lien Collateral Agent as bailee for the Collateral Agent pursuant to the Intercreditor
Agreement to be held by the Priority Lien Collateral Agent for the benefit of the Secured Parties
forthwith any certificates therefor, accompanied by appropriate instruments of assignment duly
executed by the Pledgor in blank.
2.3. Pledge of Cash Collateral Account. The Pledgor also hereby pledges and assigns
to the Collateral Agent, for the benefit of the Secured Parties, and grants to the Collateral
Agent, for the benefit of the Secured Parties, a security interest in the Cash Collateral Account
and all of the Cash Collateral, subject to the terms of this Agreement.
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2.4. Waiver of Certain Limited Liability Agreement Provisions. The Pledgor
irrevocably waives any and all provisions of the Limited Liability Agreements that (a) prohibit,
restrict, condition or otherwise affect the grant hereunder of any lien, security interest or
encumbrance on any of the Collateral or any enforcement action which may be taken in respect of any
such lien, security interest or encumbrance, or (b) otherwise conflict with the terms of this
Agreement.
2.5. Security for Obligations. This Agreement and the security interest in and pledge
of the Collateral hereunder are unconditionally made with and granted to the Collateral Agent, for
the benefit of the Secured Parties, as security for the payment and performance in full of all the
Obligations. Notwithstanding the foregoing provisions of this §2.5, such grant of security
interest shall not extend to, and the term “Collateral” shall not include, any Excluded Assets.
2.6. Tender of Members’ Consents. The Pledgor has tendered to the Collateral Agent
the consent of any other member of the LLCs that is necessary or appropriate for the consummation
of the transactions contemplated hereby.
2.7. Authorization to File Financing Statement. The Pledgor hereby irrevocably
authorizes the Collateral Agent at any time and from time to time to file in any filing office in
any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto
that (a) indicate the collateral as the Collateral, and (b) provide any other information required
by part 5 of Article 9 of the Uniform Commercial Code of the State of New York or such other
jurisdiction for the sufficiency or filing office acceptance of any financing statement or
amendment, including whether the Pledgor is an organization, the type of organization and any
organizational identification number issued to the Pledgor. The Pledgor agrees to furnish any such
information to the Collateral Agent promptly upon request. The financing statement may indicate
some or all of the Collateral on the financing statements and any amendments thereto. The Pledgor
also ratifies its authorization for the Collateral Agent to have filed in any Uniform Commercial
Code jurisdiction any like initial financing statements if filed prior to the date hereof.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR.
3.1. Representations and Warranties. The Pledgor hereby represents and warrants to
the Secured Parties, as follows:
(a) Each LLC is duly organized, validly existing, and in good standing under the laws
of the state in which it is organized and all other jurisdictions where such LLC does
business. Each Limited Liability Agreement is in full force and effect; the Pledgor is a
duly constituted member of each LLC; the persons and entities listed as members in each
Limited Liability Agreement are the only members of each LLC as of the date hereof; and the
Pledged Interests are validly issued, non-assessable and fully paid membership interests in
each LLC.
(b) The Pledgor has all requisite corporate (or equivalent company) right, power and
authority to make this Agreement (including the provisions enabling the Collateral Agent or
its nominee, upon the occurrence of an Event of Default, to exercise the voting or other
rights provided for herein) and under applicable law, without the consent, approval or
authorization of, or notice to, any other person, including any regulatory authority or any
person having any interest in any LLC.
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(c) The execution, delivery, and performance of this Agreement and the transactions
contemplated hereby (i) have been duly authorized by all necessary corporate or other action
on behalf of the Pledgor, (ii) do not conflict with or result in any breach or contravention
of any applicable law, regulation, judicial order or decree to which the Pledgor is subject,
(iii) do not conflict or violate any provision of the Pledgor’s governing documents, and
(iv) do not violate, conflict with, constitute a default or event of default under, or
result in any rights to accelerate or modify any obligations under any agreement,
instrument, lease, mortgage or indenture to which the Pledgor is party or subject, or to
which any of its assets are subject.
(d) This Agreement has been duly executed and delivered by the Pledgor and is the
legal, valid, and binding obligation of the Pledgor enforceable against it in accordance
with the terms hereof except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting generally the enforcement
of creditors’ rights and except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court before which any
case or proceeding therefor may be brought.
(e) The Pledgor is the sole, direct, legal and beneficial owner of all Pledged
Interests, which Pledged Interests constitute not less than one hundred percent (100%) of
the membership interests in each LLC, as of the date hereof, and has good and marketable
title thereto, free from any right or claim of any person or any Lien, except for the
security interest created by this Agreement and other Permitted Liens; and the liens and
security interests hereunder, constitute valid and perfected first priority liens and
security interests (subject, as to priority, only to Permitted Prior Liens).
(f) If the Pledgor is an organization, the Pledgor’s type and jurisdiction of
organization and the Pledgor’s organizational identification number, if the Pledgor has one,
is set forth below the Pledgor’s signature to this Agreement. The Pledgor’s principal place
of business, chief executive office, and the place where its records concerning the
Collateral are kept is located at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000.
(g) The Pledgor has no further obligation to make any contribution or other payment to
any LLC with respect to the Pledged Interests.
(h) The copy of each Limited Liability Agreement attached hereto as Exhibit A
is a true, correct, and complete copy thereof, and none of the Limited Liability Agreements
has been amended or modified in any respect, except for such amendments or modifications as
are attached to the copy thereof delivered to the Collateral Agent and attached hereto as
Exhibit A.
3.2. Covenants. The Pledgor covenants to the Secured Parties as follows:
(a) The Pledgor will not amend or modify any of the existing Limited Liability
Agreements (except for ministerial or other non-substantive amendments or modifications) as
in effect on the date hereof (or any other governing document with respect to the Pledged
Interests or any Additional Interest), including any amendment or modification which would
cause Article 8 of the UCC to govern any of the Pledged Interest, or waive any rights or
benefits under any Limited Liability Agreement (or such other governing document), without
the prior written consent of the Collateral Agent which consent shall not be unreasonably
withheld.
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(b) The Pledgor will not sell, dispose of or assign, beneficially or of record, or
grant, create, permit or suffer, any Lien on any of the Pledged Interests, or withdraw as a
member of any LLC or permit the dissolution or merger of such LLC, except as permitted under
the Indenture.
(c) The Pledgor shall not cast any vote or give or grant any consent, waiver or
ratification or take any other action which could reasonably be expected to (i) directly or
indirectly authorize or permit the dissolution, liquidation or sale of any LLC or the sale,
lease, assignment, transfer or other disposition of any of the assets of any LLC (except any
disposal in the ordinary course of business or otherwise as permitted under the Indenture
and so long as no Event of Default has occurred and is continuing), whether by operation of
law or otherwise, (ii) have the result of materially and adversely affecting any of the
Collateral Agent’s or any of the other Secured Parties’ rights under this Agreement or under
any of the other Note Documents, (iii) violate the terms of this Agreement or any of the
other Note Documents, (iv) have the effect of impairing the validity, perfection or priority
of the security interest of the Collateral Agent, for the benefit of the Secured Parties, in
any manner whatsoever, or (v) cause an Event of Default.
(d) The Pledgor will comply in all material respects with all laws, regulations,
judicial orders or decrees applicable to the Collateral or any portion thereof, and perform
and observe its duties under each Limited Liability Agreement or other governing documents
with respect to the Pledged Interests.
(e) The Pledgor will (i) keep and maintain at its own cost and expense at its address
set forth above satisfactory and complete records of the Collateral including a record of
all payments received and all other dealings of a material nature with the Collateral, and
(ii) xxxx its books and records pertaining to the Collateral and its books and records kept
in its jurisdiction of organization to evidence this Agreement and the liens and security
interests granted hereby.
(f) Subject to the provisions of Section 4.05 of the Indenture, the Pledgor will pay
promptly when due any taxes, assessments, and governmental charges or levies imposed upon
the Collateral or in respect of its income or profits therefrom, as well as all claims of
any kind.
(g) The Pledgor will advise the Collateral Agent promptly, in reasonable detail, of
(i) any Lien made or asserted against any of the Collateral except to the extent such Lien
is a Permitted Lien; (ii) any material change in the composition of the Collateral;
(iii) the occurrence of any other event or condition which to its knowledge is likely to
have a material adverse effect on the validity, perfection or priority of the liens and
security interests granted hereunder; and (iv) any bankruptcy or litigation case or
proceeding relating to any of the Collateral.
(h) The Pledgor will not (i) if the Pledgor is an organization, change its type or
jurisdiction of organization or, if it has one, its organizational identification number,
(ii) change its principal place of business or chief executive office or the location of the
records concerning the Collateral without giving prior written notice to the Collateral
Agent and taking such actions as may be necessary or appropriate in the reasonable opinion
of the Collateral Agent duly to perfect and continue the perfection of the Collateral
Agent’s first priority lien and security interest (subject, as to priority, only to
Permitted Prior Liens), for the benefit of the Secured Parties, in the Collateral pursuant
to the laws of any jurisdiction into which such place of business, chief executive office,
or records is or are transferred, and (iii) change its name in any manner that might make
any financing statement filed hereunder misleading or invalid unless, in each case, the
Pledgor shall have notified the Collateral Agent thereof prior to the occurrence thereof and
taken all such actions as may be necessary or appropriate in the reasonable opinion of the
Collateral Agent to make any financing statement filed in favor of the Collateral Agent
not misleading or invalid.
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(i) The Pledgor shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and that of each LLC, the power and
authority of the Pledgor to own its property and carry on its business, the qualification of
each of the Pledgor and each LLC to do business in its jurisdiction of organization, and the
qualification of the Pledgor to do business in each other jurisdiction where such
qualification is necessary except where the failure so to qualify would not have a material
adverse effect on the rights and interests of the Collateral Agent or any of the other
Secured Parties hereunder.
(j) Without limiting the provisions of §2.7 above, the Pledgor shall maintain the
security interest created by this Agreement as a perfected security interest having priority
over all other Liens other than Permitted Prior Liens and, in furtherance of, but without
limiting, the foregoing, except as otherwise expressly permitted by this Agreement, shall
(i) no later than the later of the date hereof and within one (1) Business Day of the date
on which any Collateral that would not be covered by previously filed Uniform Commercial
Code financing statements is acquired, file, or cause to be filed, Uniform Commercial Code
financing statements (or amendments to existing Uniform Commercial Code financing
statements) (or such other statements as may be required under applicable law) in such
manner and in such places as may be required under applicable law to fully preserve,
maintain, and protect the security interest of the Collateral Agent and the priority thereof
in the Collateral granted hereunder, including the filing of Uniform Commercial Code
financing statements in the jurisdiction of organization of the Pledgor, naming the Pledgor
as the debtor, naming the Collateral Agent as the secured party and describing the
collateral as the Collateral and (ii) to the extent that the security interest granted
hereunder with respect to the applicable assets remains in effect at such time, file Uniform
Commercial Code continuation statements (or such other statements as may be required under
applicable law to continue the priority of the security interests described in clause (i))
in the jurisdiction of organization of the Pledgor and in any other location as necessary or
appropriate under applicable law to continue such security interest and the priority
thereof, no earlier than six (6) months and no later than thirty (30) days prior to the date
on which the financing statements described in clause (i) would otherwise lapse or become
ineffective under applicable law. The Pledgor agrees to deliver to each of the Trustee and
the Collateral Agent copies of all Uniform Commercial Code financing statements (including
continuation statements) and other statements filed pursuant to this §3.2(j) within ten (10)
days after the filing thereof.
4. RIGHTS OF COLLATERAL AGENT.
4.1. Collateral Agent Appointed Attorney-in-Fact. Upon the occurrence and during the
continuance of an Event of Default, subject to the Intercreditor Agreement, the Pledgor hereby
irrevocably constitutes and appoints the Collateral Agent, its successors and assigns, its true and
lawful attorney-in-fact, with power and authority and with full power of substitution, at the
expense of the Pledgor, either in the Collateral Agent’s own name or in the name of the Pledgor,
for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments that may reasonably be necessary or desirable
to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing,
hereby gives said attorneys the power and right, on behalf of such Pledgor, without notice to or
assent by such Pledgor, to do the following:
(i) to take any action and execute any instruments that such attorney-in-fact
may deem necessary or advisable to accomplish the purposes hereof;
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(ii) to ask, demand, collect, receive, receipt for, xxx for, compound, and give
acquittance for any and all sums or properties that may be or become due, payable,
or distributable in respect of the Collateral or that constitute a part thereof,
with full power to settle, adjust, or compromise any claim thereunder or therefor as
fully as the Pledgor could do;
(iii) to endorse or sign the name of the Pledgor on all instruments given in
payment or in part payment thereof and all documents of satisfaction, discharge, or
receipt required or requested in connection therewith; and
(iv) to file or take any action or institute any case or proceeding that the
Collateral Agent may deem necessary or appropriate to collect or otherwise realize
upon any or all of the Collateral, or effect a transfer thereof, or that may be
necessary or appropriate to protect and preserve the right, title, and interest of
the Collateral Agent, for the benefit of the Secured Parties, in and to the
Collateral and the security intended to be afforded hereby.
4.2. Cash Collateral Account. All sums of money that are delivered pursuant to this
§4 to the Priority Lien Collateral Agent as bailee for the Collateral Agent pursuant to the
Intercreditor Agreement shall be deposited into an interest bearing account with the Priority Lien
Collateral Agent or another financial institution selected by the Priority Lien Collateral Agent in
its sole discretion (any such account, whether maintained with the Priority Lien Collateral Agent
or in the Priority Lien Collateral Agent’s name as customer being herein referred to as the
“Cash Collateral Account”). Some or all of the funds from time to time in the Cash
Collateral Account may be invested in time deposits, including certificates of deposit issued by
the Priority Lien Collateral Agent or the Collateral Agent or another financial institution
selected by the Priority Lien Collateral Agent in its sole discretion (such certificates of deposit
or other time deposits being hereinafter referred to, collectively, as “Time Deposits”),
that are satisfactory to the Priority Lien Collateral Agent and the Collateral Agent,
provided, in any such case, arrangements satisfactory to the Collateral Agent are made to
perfect, and to ensure the first priority of the Collateral Agent’s security interest in such Time
Deposits (subject, as to priority, only to Permitted Prior Liens). Interest earned on the Cash
Collateral Account and on the Time Deposits, and the principal of the Time Deposits at maturity
that is not invested in new Time Deposits, shall be deposited in the Cash Collateral Account. The
Cash Collateral Account, all sums from time to time standing to the credit of the Cash Collateral
Account, any and all Time Deposits, any and all instruments or other writings evidencing Time
Deposits and any and all proceeds of any thereof are hereinafter referred to as the “Cash
Collateral.” If the Cash Collateral Account is not maintained with the Priority Lien
Collateral Agent, subject to the Intercreditor Agreement, the Pledgor shall, at the Collateral
Agent’s request and option, pursuant to an agreement in form and substance satisfactory to the
Collateral Agent, either (a) cause the depositary bank with which the Cash Collateral Account is
maintained to agree to comply at any time with instructions from the Collateral Agent to such
depositary bank directing the funds comprising the Cash Collateral, without further consent of the
Pledgor, or (b) arrange for the Collateral Agent to become the customer of such depositary bank
with respect to the Cash Collateral Account.
4.3. Distributions, Conversion, Voting, etc. So long as no Event of Default shall
have occurred and be continuing, and to the extent permitted under the Indenture, the Pledgor shall
be entitled to:
(a) receive all cash and other distributions paid in respect of the Pledged Interests
not made in violation of the Indenture;
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(b) exercise any and all management or voting rights relating to the Pledged Interests;
(c) give any and all consents, waivers, approvals, and ratifications in respect of the
Pledged Interests; and
(d) access and use any and all books and records including computer software and
computer software programs.
All such rights of the Pledgor to receive cash and other distributions shall cease if an Event of
Default shall have occurred and be continuing, and in each such case the Pledgor shall, subject to
the Intercreditor Agreement (i) at the request of the Collateral Agent, issue appropriate
instructions that any such distributions be paid directly to the Priority Lien Collateral Agent as
bailee for the Collateral Agent pursuant to the Intercreditor Agreement to be held by the Priority
Lien Collateral Agent, for the benefit of the Secured Parties, or to such account as the Priority
Lien Collateral Agent may designate, and (ii) hold in trust for the Collateral Agent and
immediately pay over any such distributions received by the Pledgor to the Priority Lien Collateral
Agent as bailee for the Collateral Agent pursuant to the Intercreditor Agreement to be held by the
Priority Lien Collateral Agent, for the benefit of the Secured Parties. All such rights of the
Pledgor referred to in clauses (b) and (c) shall, subject to the Intercreditor Agreement, at the
Collateral Agent’s sole option, as evidenced by the Collateral Agent’s notifying the Pledgor in
writing of its exercise of such option, cease in case an Event of Default shall have occurred and
be continuing.
4.4. No Assignment of Duties. This Agreement constitutes a collateral assignment of
the Pledged Interests and the other Collateral only and not an assignment of any duties or
obligations of the Pledgor with respect thereto, and by its acceptance hereof and whether or not
the Collateral Agent shall have exercised any of its rights or remedies hereunder, none of the
Secured Parties undertakes to perform or discharge, and none of the Secured Parties shall be
responsible or liable for the performance or discharge of, any such duties or responsibilities,
including, without limitation, for capital calls. The Pledgor agrees that, notwithstanding the
exercise by the Collateral Agent of any of its rights hereunder, the Pledgor shall remain liable
for the full and prompt performance of all of the Pledgor’s obligations and liabilities with
respect to each LLC. Under no circumstances shall the Collateral Agent, any of the other Secured
Parties or any holder of any of the Obligations as such be deemed to be a member of any LLC by
virtue of the provisions of this Agreement unless expressly agreed to in writing by the Collateral
Agent or such other Secured Party or holder, as applicable. Without limiting the generality of the
foregoing, none of the Secured Parties shall have any member fiduciary duty to the Pledgor, whether
by virtue of the security interests and liens hereunder, or any enforcement action in respect of
such security interests and liens, unless and until the Collateral Agent or such other Secured
Party is admitted to such LLC as a substitute member after exercising enforcement rights under
Article 9 of the Uniform Commercial Code in effect in the State of New York, or otherwise.
5. REMEDIES.
5.1. Remedies. During the continuance of an Event of Default, subject to the
Intercreditor Agreement, the Collateral Agent shall have, in addition to the rights, powers and
authorizations to collect the sums assigned hereunder, all rights and remedies of a secured party
under the Uniform Commercial Code and under other applicable law with respect to the Pledged
Interests and any other Collateral hereunder, including, without limitation, the following rights
and remedies:
(a) if the Collateral Agent so elects and gives written notice of such election to the
Pledgor, the Collateral Agent may, in its sole discretion, (i) exercise any management or
voting rights relating to the Pledged Interests (whether or not the same shall have been
transferred into
its name or the name of its nominee or nominees) for any lawful purpose, including for
the amendment or modification of any operating agreement or other governing documents or the
liquidation of the assets of any LLC, (ii) give all consents, waivers, approvals, and
ratifications in respect of such Pledged Interests, and (iii) otherwise act with respect
thereto as though it were the outright owner thereof (the Pledgor hereby irrevocably
constituting and appointing the Collateral Agent the proxy and attorney-in-fact of the
Pledgor, with full power and authority of substitution, to do so);
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(b) the Collateral Agent may, in its sole discretion, demand, xxx for, collect,
compromise, or settle any rights or claims in respect of any Collateral, as attorney-in-fact
pursuant to §4.1 or otherwise;
(c) the Collateral Agent may, in its sole discretion, sell, resell, assign, deliver, or
otherwise dispose of any or all of the Collateral, for cash or credit or both and upon such
terms, in such manner, at such place or places, at such time or times, and to such persons
or entities as the Collateral Agent thinks expedient, all without demand for performance by
the Pledgor or any notice or advertisement whatsoever except as expressly provided herein or
as may otherwise be required by applicable law; provided that the purchaser of all
or any of the Collateral shall agree not to use any tradename of the Issuer or any of its
Subsidiaries following such purchase;
(d) the Collateral Agent may, in its sole discretion, cause all or any part of the
Pledged Interests held by it to be transferred into its name or the name of its nominee or
nominees; and
(e) the Collateral Agent may, in its sole discretion, set off against the Obligations
or place an administrative hold or freeze on any and all sums deposited in the Cash
Collateral Account and any Time Deposits issued by the Collateral Agent pursuant to the
terms of §4.2 above, with any withdrawal penalty relating to Time Deposits being an expense
of collection.
5.2. Remedies Not Exclusive. No single or partial exercise by the Collateral Agent of
any right, power or remedy hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. Each right, power and remedy herein specifically
granted to the Collateral Agent or otherwise available to it shall be cumulative, and shall be in
addition to every other right, power, and remedy herein specifically given or now or hereafter
existing at law, in equity, or otherwise. Each such right, power and remedy, whether specifically
granted herein or otherwise existing, may be exercised at any time and from time to time and as
often and in such order as may be deemed expedient by the Collateral Agent in its sole discretion.
5.3. Public Sale. In the event of any disposition of the Collateral as provided in
§5.1(c), the Collateral Agent shall give to the Pledgor at least ten (10) Business Days’ prior
written notice of the time and place of any public sale or other disposition of the Collateral or
of the time after which any private sale or any other disposition is to be made. The Pledgor
hereby acknowledges that ten (10) Business Days’ prior written notice of such sale or other
disposition or sales or other dispositions shall be reasonable notice. The Collateral Agent may
enforce its rights hereunder without any other notice and without compliance with any other
condition precedent now or hereafter imposed by law, regulation, judicial order or decree or
otherwise (all of which are hereby expressly waived by the Pledgor, to the fullest extent permitted
by law). The Collateral Agent may buy any part or all of the Collateral at any public sale or
other disposition and if any part or all of the Collateral is of a type customarily sold or
otherwise disposed of in a recognized market or is of a type which is the subject of
widely-distributed standard price quotations, the Collateral Agent may buy at private sale or other
disposition and may make payments thereof by any means. The Collateral Agent may apply the cash
proceeds actually received from any sale or other disposition to the reasonable expenses of retaking, holding, preparing
for sale, selling and the like, to reasonable attorneys’ fees, travel and all other expenses which
may be incurred by the Collateral Agent in attempting to collect the Obligations or to enforce this
Agreement or in the prosecution or defense of any action or proceeding related to this Agreement,
and then to the Obligations in accordance with the provisions of the Indenture. Only after such
applications, and after payment by the Collateral Agent of any amount required by §9-608(a)(1)(C)
or §9-615(a)(3) of the New York Uniform Commercial Code, need the Collateral Agent account to the
Pledgor for any surplus.
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5.4. Private Sale. The Pledgor recognizes that the Collateral Agent may be unable to
effect a public sale or other disposition of the Collateral by reason of the lack of a ready market
for the Collateral, of the limited number of potential buyers of the Collateral or of certain
prohibitions contained in the Securities Act of 1933, state securities laws, federal banking laws,
and other applicable laws, and that the Collateral Agent may be compelled to resort to one or more
private sales or other dispositions thereof to a restricted group of purchasers and that the
Collateral Agent may determine that it is undesirable or inadvisable to effect a public sale by
reason of the time, expense or other adversities inherent in such a sale and may, in its reasonable
discretion, choose to resort to one or more private sales. The Pledgor agrees that any such
private sales or other dispositions may be at prices and other terms less favorable to the seller
than if sold at public sales or other dispositions and that such private sales or other
dispositions shall not solely by reason thereof be deemed not to have been made in a commercially
reasonable manner. The Collateral Agent shall be under no obligation hereunder or otherwise
(except as provided by applicable law) to delay a sale or other disposition of any of the
Collateral for the period of time necessary to permit the registration of such securities for
public sale or other disposition under the Securities Act of 1933 and applicable state securities
laws. Any such sale or other disposition of all or a portion of the Collateral may be for cash or
on credit or for future delivery and may be conducted at a private sale or other disposition where
the Collateral Agent or any other Person or entity may be the purchaser of all or part of the
Collateral so sold or otherwise disposed of. The Pledgor agrees that to the extent notice of sale
or other disposition shall be required by law, at least ten (10) Business Days’ prior notice to the
Pledgor of the time and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Subject to the foregoing, the Collateral Agent
agrees that any sale or other disposition of the Pledged Interests shall be made in a commercially
reasonable manner. The Collateral Agent shall incur no liability as a result of the sale or other
disposition of any of the Collateral, or any part thereof, at any private sale which complies with
the requirements of this §5.4.
5.5. Title. The Pledgor further acknowledges its obligation for payment of any
deficiency remaining beyond the amount of the sale or other disposition price of the Pledged
Interests, or any of them, less any payment or expenses incurred by the Collateral Agent in
connection with such sale or other disposition, and, subject to the Intercreditor Agreement, the
Pledgor will promptly pay the amount of any such deficiency to the Collateral Agent for further
delivery to the Trustee for application in accordance with the provisions of the Indenture.
Nothing contained in this Agreement shall be construed to require the Collateral Agent to take any
action with respect to the Pledged Interests, whether by way of foreclosure or otherwise and except
as required by each Limited Liability Agreement, in order to permit the Collateral Agent to become
a substitute member of any LLC under the applicable Limited Liability Agreement.
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6. ASSIGNMENT NOT AFFECTED BY OTHER ACTS; WAIVERS BY PLEDGOR.
The Pledgor acknowledges and agrees that the security interests and collateral assignments
herein provided for shall remain in full force and effect and shall not be impaired by any
acceptance by the Collateral Agent of any other collateral security for or guaranty of any of the
Obligations, or by any failure or neglect or omission on the part of the Collateral Agent to
realize upon, collect or protect any Obligations or any Collateral. The security interests and
collateral assignments herein provided for shall
not in any manner be affected or impaired by any renewal, extension, modification, amendment,
waiver, or restatement of any of the Obligations or of any collateral security therefor, or of any
guaranty thereof, the Pledgor hereby waiving any and all suretyship defenses to the extent
otherwise applicable. In order to sell or otherwise dispose of or otherwise realize upon the
security interests and assignments herein granted and provided for, and exercise the rights granted
the Collateral Agent hereunder and under applicable law, there shall be no obligation on the part
of the Collateral Agent at any time to first resort for payment to any guarantors of the
Obligations or any part thereof or to resort to any other collateral security, property, liens or
other rights or remedies whatsoever, and, subject to the Intercreditor Agreement, the Collateral
Agent shall have the right to enforce the security interests and collateral assignments herein
provided for irrespective of whether or not other proceedings are pending for realization upon or
from any of the foregoing. Except to the extent required by applicable law or by the Indenture,
the Pledgor waives promptness, diligence, presentment, demand, protest, notice of acceptance,
notice of any Obligations incurred and all other notices of any kind, all defenses which may be
available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in
effect, any right to require the marshalling of assets of each LLC or any other entity or other
person primarily or secondarily liable with respect to any of the Obligations, and all suretyship
defenses generally. Without limiting the generality of the foregoing, the Pledgor agrees to the
provisions of any instrument evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of the Pledgor hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by (a) the failure of any Secured Party to
assert any claim or demand or to enforce any right or remedy against the LLCs or any other entity
or other person primarily or secondarily liable with respect to any of the Obligations; (b) any
extensions, compromise, refinancing, consolidation or renewals of any Obligation; (c) any change in
the time, place or manner of payment of any of the Obligations or any rescissions, waivers,
compromise, refinancing, consolidation or other amendments or modifications of any of the terms or
provisions of the Indenture, the other Note Documents or any other agreement evidencing, securing
or otherwise executed in connection with any of the Obligations, (d) the addition, substitution or
release of any entity or other person primarily or secondarily liable for any Obligation; (e) the
adequacy of any rights which any Secured Party may have against any collateral security or other
means of obtaining repayment of any of the Obligations; (f) the impairment of any collateral
securing any of the Obligations, including without limitation the failure to perfect or preserve
any rights which any Secured Party might have in such collateral security or the substitution,
exchange, surrender, release, loss or destruction of any such collateral security; or (g) any other
act or omission which might in any manner or to any extent vary the risk of the Pledgor or
otherwise operate as a release or discharge of the Pledgor, all of which may be done without notice
to the Pledgor. To the fullest extent permitted by law, the Pledgor hereby expressly waives any
and all rights or defenses arising by reason of (i) any “one action” or “anti-deficiency” law which
would otherwise prevent the Collateral Agent or any Lender from bringing any action or exercising
any other right or remedy against the Pledgor before or after the Collateral Agent’s or such
Lender’s commencement or completion of any foreclosure action, whether judicially, by exercise of
power of sale or otherwise, or (ii) any other law which in any other way would otherwise require
any election of remedies by any Secured Party.
7. REGISTRATION AND FILING.
The Pledgor will cause any financing statements with respect to the Collateral at all times to
be kept recorded and filed at its or such LLC’s expense in such a manner and in such places as may
be required by law in order to fully perfect the interests and protect the rights of the Collateral
Agent and the Secured Parties hereunder.
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8. MISCELLANEOUS.
8.1. Additional Instruments and Assurances. The Pledgor hereby agrees, at its own
expense, to execute and deliver, from time to time, any and all further, or other, instruments, and
to perform such acts, as the Collateral Agent may reasonably request to effect the purposes of this
Agreement and to secure to the Collateral Agent the benefits of all rights and remedies conferred
upon the Collateral Agent by the terms of this Agreement.
8.2. Release of Security Interest; Termination. At such time as all of the
Obligations have been finally paid and satisfied in full, this Agreement shall terminate and,
subject to Article 10 of the Indenture (including Section 10.06 thereof) and the Intercreditor
Agreement, the Liens granted hereunder shall be released and the Collateral Agent shall, subject to
the satisfaction of the conditions described in Article 10 of the Indenture (including Section
10.06 thereof), following the written request and at the expense of the Pledgor, without any
recourse or representation, warranty or liability of any kind, execute and deliver to the Pledgor
such deeds, assignments and other instruments, prepared by the Pledgor and delivered to the
Collateral Agent for its execution, as may be necessary or proper to release the Liens granted
hereunder and to reassign and reconvey to and re-vest in the Pledgor the entire right, title and
interest to the Collateral previously granted, assigned, transferred and conveyed to the Collateral
Agent by the Pledgor pursuant to this Agreement, as fully as if this Agreement had not been made,
subject to any disposition of all or any part thereof that may have been made pursuant to or in
accordance with any Note Document or the Intercreditor Agreement.
8.3. Collateral Agent’s Exoneration. Under no circumstances shall the Collateral
Agent be deemed to assume any responsibility for or obligation or duty with respect to any part or
all of the Collateral of any nature or kind or any matter or proceedings arising out of or relating
thereto, other than (a) to exercise reasonable care in the physical custody of the Collateral to
the extent that any Collateral is in the physical possession of the Collateral Agent and (b) after
an Event of Default shall have occurred and be continuing to act in a commercially reasonable
manner with respect to the Collateral. Neither the Collateral Agent nor any other Secured Party
shall be required to take any action of any kind to collect, preserve or protect its or the
Pledgor’s rights in the Collateral or against other parties thereto. The Collateral Agent’s prior
recourse to any part or all of the Collateral shall not constitute a condition of any demand, suit
or proceeding for payment or collection of any of the Obligations. In acting as Collateral Agent,
the Collateral Agent may rely upon and enforce each and all of the rights, powers, protections,
immunities, indemnities and benefits of the Trustee under Article 7 of the Indenture, mutatis
mutandis, as if the Collateral Agent was the “Trustee,” each reference therein to the Indenture was
a reference to this Agreement and the other Security Documents and each reference therein to the
“Company” or any “Guarantor” was a reference to the Pledgor. The Pledgor hereby acknowledges and
affirms that the rights and remedies of the Collateral Agent with respect to the security interest
in the Collateral made and granted hereby, including with respect to limitation of liability and
indemnification, are more fully set forth in Article 10 of the Indenture, the terms and provisions
of which are incorporated by reference herein.
8.4. No Waiver, etc. No amendment or modification to, or any waiver of, any provision
of this Agreement shall be effective unless such amendment, modification or waiver is permitted
under and effected in accordance with Article 9 of the Indenture. No act, failure or delay by the
Collateral Agent shall constitute a waiver of its rights and remedies hereunder or otherwise. No
single or partial waiver by the Collateral Agent of any default or right or remedy that it may have
shall operate as a waiver of any other default, right or remedy or of the same default, right or
remedy on a future occasion.
8.5. Waiver By Pledgor. The Pledgor hereby waives presentment, notice of dishonor,
and protest of all instruments included in or evidencing any of the Obligations or the Collateral,
and any and
all other notices and demands whatsoever (except as expressly provided herein or in the
Indenture or for notices required in connection with judicial proceedings).
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8.6. Notice, etc. All notices, requests and demands hereunder shall be in writing and
(a) made to (i) the Collateral Agent at Xxxxx Fargo Bank, National Association, Corporate Trust
Services, 000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxx Xxxx, and
to (ii) the Pledgor care of the address for notices for the Issuer under the Indenture or to such
other address as any party may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service with instructions to
deliver the next business day, one (1) business day after sending; and if by certified mail, return
receipt requested, five (5) days after mailing.
8.7. Overdue Amounts. Until paid, all amounts due and payable by the Pledgor
hereunder shall be a debt secured by the Collateral and shall bear, whether before or after
judgment, interest at the rate of interest set forth in the Indenture for payment on the Notes
during the continuation of an Event of Default
8.8. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. The Pledgor agrees that any suit for the enforcement of this Agreement
may be brought in the courts of the State of New York sitting in New York County or in the United
States District Court of the Southern District of New York, or any appellate court from any
thereof, and consents to the non-exclusive jurisdiction of such courts and to service of process in
any such suit being made upon the Pledgor by mail at the address specified in §8.6 of this
Agreement. The Pledgor hereby waives any objection that it may now or hereafter have to the venue
of any such suit or any such court or that such suit is brought in an inconvenient court.
8.9. Waiver of Jury Trial. THE PLEDGOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS.
8.10. Limitation of Liability. Except as prohibited by applicable law, the Pledgor
waives any right which it may have to claim or recover in any proceeding referred to in the
preceding sentence any special, exemplary or punitive damages or any damages other than, or in
addition to, actual or consequential damages. The Pledgor (a) certifies that neither the
Collateral Agent nor any other Secured Party nor any representative, agent or attorney of the
Collateral Agent or any other Secured Party has represented, expressly or otherwise, that the
Collateral Agent or such other Secured Party would not, in the event of any litigation, seek to
enforce the foregoing waivers and (b) acknowledges that, in entering into the Indenture and the
other Note Documents to which the Collateral Agent or any of the other Secured Parties is a party,
the Collateral Agent and the other Secured Parties are relying upon, among other things, the
waivers and certifications contained in this §8.10.
8.11. Intercreditor Agreement. The provisions of this Agreement are subject in all
respects to the provisions of the Intercreditor Agreement and, in the event of any discrepancy or
inconsistency between this Agreement and the Intercreditor Agreement, the terms of the
Intercreditor Agreement shall control.
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8.12. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This Agreement and all
rights and obligations hereunder shall be binding upon the Pledgor and its successors and assigns,
and shall inure to the benefit of the Secured Parties and their respective successors and assigns;
provided that neither this Agreement nor any rights or obligations hereunder may be
assigned by the Pledgor, without the prior written consent of the Collateral Agent acting at the
direction of the Holders of at least a majority in aggregate principal amount of the Notes then
outstanding, and any such purported assignment in breach of this proviso shall be of no force and
effect. This Agreement may be executed in one or more duplicate counterparts and when signed by
all of the parties listed below shall constitute a single binding agreement. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy or other electronic
transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity
of all other terms hereof shall in no way be affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term had not been
included herein.
8.13. Delivery. Notwithstanding the foregoing, subject to the terms of the
Intercreditor Agreement, at such time as there are no Priority Lien Obligations existing that have
not been Discharged (as defined in the Intercreditor Agreement), any and all items (including
instruments of transfer or assignments in blank) that are required to be delivered, assigned,
and/or endorsed to the Priority Lien Collateral Agent under this Agreement shall be delivered,
assigned and/or endorsed to the Collateral Agent.
8.14. Entire Agreement. This Agreement and the other Note Documents and any other
document executed in connection herewith or therewith express the entire understanding of the
parties with respect to the transactions contemplated hereby.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have executed this Membership
Interest Pledge Agreement as of the date first above written.
CKR ACQUISITION CORP., a Delaware corporation |
||||
By: | ||||
Name: | ||||
Title: | ||||
Organizational ID Number: 3863478 |
||||
XXXXX FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent |
||||
By: | ||||
Name: | ||||
Title: |
Signature Page to Membership Interest Pledge Agreement
CONSENT
The undersigned has reviewed the items, conditions and provisions of the Membership Interest
Pledge Agreement (the “Agreement”) and hereby consents to the transactions contemplated by
the Agreement.
CHEVYS RESTAURANTS, LLC |
||||
By: | ||||
Name: | ||||
Title: |
SCHEDULE 1
Pledged Interests
LLC | Record Owner | Percentage Owned | ||||
Chevys Restaurants, LLC |
CKR Acquisition Corp. | 100 | % |
SCHEDULE 2
Limited Liability Agreements
LLC | Operating Agreement | Date | ||
Chevys Restaurants, LLC
|
Limited Liability Company Agreement | November 15, 2004 |
EXHIBIT A
COPY OF LIMITED LIABILITY AGREEMENT OF
CHEVYS RESTAURANTS, LLC
CHEVYS RESTAURANTS, LLC
[See attached]