EXHIBIT 10.4
ACCOUNT CONTROL AGREEMENT
This Account Control Agreement ("Agreement") is entered into effective
March 6, 2002, by and among Avado Brands, Inc. ("Secured Party"), Xxx X. XxXxxx,
Xx. ("Pledgor"), and Xxxxxx Xxxxxx & Company, Inc., a Tennessee corporation
having its principal place of business at Memphis, Tennessee ("Xxxxxx Xxxxxx").
The Pledgor is indebted to the Secured Party in accordance with the terms
and provisions of a certain promissory note dated March 6, 2002 in the principal
sum of $14,130,472.99, together with any renewals, extensions, modifications,
and increases thereof.
AGREEMENT
1. THE ACCOUNT
a. Xxxxxx Xxxxxx represents and warrants to Secured Party that Xxxxxx
Xxxxxx maintains a securities account in the name of Xxx X. XxXxxx, Xx.
("Account") for Pledgor. The account is not a margin account and does not have
check-writing privileges. Margin trading shall not be allowed in the account.
b. Exhibit A, attached hereto, is a statement produced by Xxxxxx Xxxxxx in
the ordinary course of its business regarding the property credited to the
Account as of the statement date. Xxxxxx Xxxxxx does not know of any inaccuracy
in the statement.
c. Exhibit A does not reflect any financial assets which are registered in
the name of the Pledgor, payable to the Pledgor's order, or specifically
endorsed to Pledgor, which have not been endorsed to Xxxxxx Xxxxxx or in blank.
2. CONTROL BY SECURED PARTY Xxxxxx Xxxxxx will comply with all
notifications it receives directing it to transfer or redeem any property in the
Account (an "Entitlement Order") originated by Secured Party without further
consent by Pledgor. The Secured Party shall have control over the Account as
contemplated by ss. ss. 9-106 and 8-106 of the Tennessee Uniform Commercial
Code.
3. PLEDGOR'S RIGHTS IN ACCOUNT Except as otherwise provided in this Section
3, Xxxxxx Xxxxxx will comply with Entitlement Orders originated by Pledgor
without further consent by Secured Party. If Secured Party notifies Xxxxxx
Xxxxxx that Secured Party will exercise exclusive control over the Account (a
"Notice of Exclusive Control"), Xxxxxx Xxxxxx will cease:
a. complying with Entitlement Orders or other directions concerning the
Account originated by Pledgor, and
b. distributing to Pledgor interest and dividends on property in the
Account.
Until Xxxxxx Xxxxxx receives a Notice of Exclusive Control, Xxxxxx Xxxxxx
may distribute to Pledgor all interest and regular cash dividends on property in
the Account. Xxxxxx Xxxxxx will not comply with any Entitlement Order originated
by Pledgor that would require Xxxxxx Xxxxxx to make a free delivery to Pledgor
or any other person.
4. PRIORITY OF SECURED PARTY'S SECURITY INTEREST Xxxxxx Xxxxxx subordinates
in favor of Secured Party any security interest, lien, or right of setoff it may
have, now or in the future, against the Account or property in the Account,
except that Xxxxxx Xxxxxx will retain its prior lien on property in the Account
to secure payment for property purchased for the Account and normal commissions,
charges and fees for the Account.
Xxxxxx Xxxxxx further agrees it will not invade the Account to cover margin
debits or calls in any other accounts of Pledgor.
Xxxxxx Xxxxxx will not agree with any third party that Xxxxxx Xxxxxx will
comply with Entitlement Orders originated by the third party.
5. STATEMENTS AND NOTICES OF ADVERSE CLAIMS Xxxxxx Xxxxxx will send copies
of all statements for the Account simultaneously to Pledgor and Secured Party.
Xxxxxx Xxxxxx will use reasonable efforts promptly to notify Secured Party and
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Pledgor if any other person claims that it has a property interest in property
in the Account and that it is a violation to that person's rights for anyone
else to hold, transfer, or deal with the property.
6. XXXXXX XXXXXX'X RESPONSIBILITY Except for permitting a withdrawal,
delivery, or payment in violation of Section 3, Xxxxxx Xxxxxx will not be liable
to Secured Party for complying with Entitlement Orders from Pledgor that are
received by Xxxxxx Xxxxxx before Xxxxxx Xxxxxx receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.
Xxxxxx Xxxxxx will not be liable to Pledgor for complying with a Notice of
Exclusive Control or with Entitlement Orders originated by Secured Party, even
if Pledgor notifies Xxxxxx Xxxxxx that Secured Party is not legally entitled to
issue the Entitlement Order of Notice of Exclusive Control, unless
a. Xxxxxx Xxxxxx takes the action after it is served with an injunction,
restraining order, or other legal process enjoining it from doing so, issued by
a court of competent jurisdiction, and had a reasonable opportunity to act on
the injunction, restraining order or other legal process, or
b. Xxxxxx Xxxxxx acts in collusion with Secured Party in violating
Pledgor's rights.
c. Xxxxxx Xxxxxx will not change the account number or the account name
without the prior written consent of Secured Party.
This Agreement does not create any obligation of Xxxxxx Xxxxxx except for
those expressly set forth in this Agreement. In particular, Xxxxxx Xxxxxx need
not investigate whether Secured Party is entitled under Secured Party's
agreements with Pledgor to give an Entitlement Order or a Notice of Exclusive
Control. Xxxxxx Xxxxxx may rely on notices and communications it believes given
by the appropriate party.
7. INDEMNITY Secured Party and Pledgor will indemnify Xxxxxx Xxxxxx, its
officers, directors, employees, and agents against claims, liabilities, and
expenses arising out of this Agreement (including reasonable attorney's fees and
disbursements), except to the extent the claims, liabilities, or expenses are
caused by Xxxxxx Xxxxxx'x gross negligence or willful misconduct. Secured
Party's and Pledgor's liability under this section is joint and several.
8. TERMINATION; SURVIVAL Secured Party may terminate this Agreement by
notice to Xxxxxx Xxxxxx and Pledgor. Xxxxxx Xxxxxx may terminate this Agreement
on 30 days notice to Secured Party and Pledgor.
If Secured Party notifies Xxxxxx Xxxxxx that Secured Party's security
interest in the Account has terminated, this Agreement will immediately
terminate. Upon receipt of such notice from Secured Party, Xxxxxx Xxxxxx may
take such steps as Pledgor may request to vest full ownership and control of the
Account in Pledgor, including, but not limited to, removing the name of Secured
Party from the Account or transferring all of the financial assets and credit
balances in the Account to another securities account in the name of Pledgor or
his designee.
Section 6, "XXXXXX XXXXXX'X RESPONSIBILITY," and Section 7, "INDEMNITY,"
will survive termination of this Agreement.
9. GOVERNING LAW This Agreement and account number 00000000 will be
governed by the laws of the State of Tennessee. The parties hereto agree that
certain material events, occurrences and transactions relating to this Agreement
bear a reasonable relationship to the State of Tennessee.
10. ENTIRE AGREEMENT This Agreement, and the schedules and exhibits hereto,
set forth the entire agreement, and supersedes any prior agreements and
contemporaneous oral agreements, of the parties concerning its subject matter.
11. AMENDMENTS No amendment, modification or termination of, or waiver of a
right under, this Agreement will be binding unless it is in writing and signed
by the party to be charged.
12. SEVERABILITY If any term or provision set forth in this Agreement shall
be invalid or unenforceable, the remainder of this Agreement, or the application
of such terms or provisions to persons or circumstances, other than those to
which it is held invalid or unenforceable, shall be construed in all respects as
if such invalid or unenforceable term or provision were omitted.
13. FINANCIAL ASSETS All property credited to the Account will be treated
as "financial assets" under Article 8 and Article 9 of the Tennessee Uniform
Commercial Code.
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14. SUCCESSORS AND ASSIGNS The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
corporate successors or heirs and personal representative.
15. NOTICES Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two days after being sent by certified or registered United States
mail, return receipt requested, postage prepaid, addressed to the party at the
address set forth below such party's name as set forth below. Any person may
change its address for notices in the manner set forth above.
16. TAX REPORTING All items of income, gain, expense and loss recognized in
the Account shall be reported to the Internal Revenue Service and all state and
local taxing authorities under the name and taxpayer identification number of
Pledgor.
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IN WITNESS WHEREOF, Pledgor and Secured Party, their heirs and assigns,
have caused this Agreement to be executed as of March 12, 2002.
PLEDGOR SECURED PARTY
Signature: _________________________ By: ______________________________
Date: _____________________________ Title: ___________________________
Address: ___________________________ Signature: _______________________
___________________________ Date: ___________________________
Address: _________________________
_________________________
XXXXXX XXXXXX & COMPANY, INC.
By: __________________________________
Title: _______________________________
Address: ______________________________
______________________________
Date: ________________________________
Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 10-Q, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
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