Exhibit II
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AMENDMENT NO. 1
dated as of December 12, 2001
to
SECURITY AGREEMENT
dated as of October 6, 1999
Among
ELEPHANT & CASTLE GROUP INC.,
its Subsidiaries signatories hereto,
and
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II,
A LIMITED PARTNERSHIP
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AMENDMENT NO. 1
TO
SECURITY AGREEMENT
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dated as of December 12, 2001
THIS AMENDMENT NO. 1 dated as of December 12, 2001, (this
"Amendment") to the Security Agreement (as defined below) is entered into among
Elephant & Castle Group Inc. (the "Company") and its Subsidiaries signatories
hereto (the "Subsidiaries") and GE Investment Private Placement Partners II, a
Limited Partnership ("GEIPPPII").
W I T N E S S E T H:
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WHEREAS, the Company and GEIPPPII desire to amend and restate that
certain Note, Stock Purchase and Warrant Agreement dated as of November 30, 1995
(as amended, the "Agreement");
WHEREAS, in connection with amendment and restatement of the
Agreement, the Company, the Subsidiaries and GEIPPPII desire to amend that
certain Security Agreement (US) dated as of October 6, 1999 (the "Security
Agreement");
WHEREAS, capitalized terms unless otherwise defined herein shall
have the meaning attributed thereto in the Security Agreement;
WHEREAS, it is a condition to GEIPPPII's entering into the Agreement
that the Company, the Subsidiaries and GEIPPPII execute this Amendment;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, the Subsidiaries and GEIPPPII hereby agree as
follows:
1. Amendment. (a) Recitals to the Security Agreement are hereby
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deleted in their entirety and the following recitals are inserted in lieu
thereof:
"WHEREAS, the Debtor and the Secured Party have decided to amend and
restate that certain Note, Stock Purchase and Warrant Agreement dated
November 30, 1995 (as amended and restated, the "Note, Stock Purchase and
Warrant Agreement") and, pursuant to the Note, Stock Purchase and Warrant
Agreement, the Debtor has executed and delivered to the Secured Party
Restated and Amended Senior Secured Convertible Notes in the principal
amount of $5,000,000 and Restated and Amended Junior Secured Convertible
Notes in the principal amount of $5,000,000 (collectively, the "Notes").
Terms used herein not otherwise defined shall have the meaning ascribed
thereto in the Note, Stock Purchase and Warrant Agreement.
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WHEREAS, the Secured Party and the Debtor desire to continue the
security interest in the Collateral in full force and effect as security
for the repayment of the Notes."
(b) Section 1.1(a) of the Security Agreement is hereby amended by deleting
clauses (iii) and (v) thereof and by inserting the following new clauses (iii)
and (v) in lieu thereof:
"(iii) all equipment now owned or hereafter acquired either by the
Debtor or by its Subsidiaries, in all of its forms, located in the United
States on all properties now owned or leased by the Debtor or any of the
Subsidiaries, a list of properties currently owned or leased by the Debtor
or the Subsidiaries is attached hereto as Exhibit C, including, without
limitation, all machinery and other goods, furniture, fixtures,
furnishings, office supplies, appliances and all other similar types of
tangible personal property of whatever nature (whether or not the same
constitute fixtures) and all parts thereof and all accessions thereto,
together with all parts, fittings, special tools, alterations,
substitutions, replacements and accessions thereto."
"(v) all claims, awards and payments made as a result of the
exercise of the right of eminent domain or condemnation against the
property or any part thereof (the "Property") subject to any of the leases
now held by the Debtor or any of the Subsidiaries (the "Leases"), a list of
the Leases now held by Debtor and its Subsidiaries is set forth on Exhibit
B hereto, or payments received in lieu of the exercise of any such right,
all rents, income or profits arising as from or in connection with any of
the Leases, all compensation received as damages for injury to the
Property, all proceeds from insurance on improvements to the Property, and
all proceeds of any sale, assignment or subletting of any of the Leases
(collectively, "Lease Proceeds")."
(c) Section 1.3 of the Security Agreement is hereby deleted in its
entirety.
(d) Section 2.1 of the Security Agreement are hereby amended by
adding the following paragraph immediately at the end thereof:
"In consideration of the continuation of the Security Interest
hereunder and continuation of the security interest granted pursuant to the
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Canadian Documents, the Secured Party hereby waives and forgives unpaid
interest on (i) the convertible subordinated debentures due June 1, 2003
in the aggregate principal amount, as of the date hereof, of $9,000,000
and (ii) the convertible subordinated debentures due December 31, 2003 in
the aggregate principal amount, as of the date hereof, of $1,000,000,
accrued through June 30, 2001, in the aggregate amount equal $620,000.
(e) Section 2.2 of the Security Agreement is hereby deleted in its
entirety and the following new Section 2.2 is hereby inserted in lieu
thereof:
"2.2 This Agreement is being executed and delivered to secure, and
the Security Interests herein granted shall secure: (a) full payment and
performance of all of the indebtedness and obligations owing to the
Secured Party by the Debtor under the Note, Stock Purchase and Warrant
Agreement and the Notes, whether for principal, interest, costs, fees,
expenses or otherwise, (b) all covenants of the Debtor and the
Subsidiaries under this Agreement and all covenants, obligations and
conditions to be performed by the Debtor and the Subsidiaries under the
Note, Stock Purchase and Warrant Agreement, in each case including all
renewals, extensions and modifications thereof, and (c) all reasonable
costs and expenses incurred by the Secured Party in collecting the
indebtedness evidenced by the Notes or otherwise enforcing its rights
under this Agreement, the Note, Stock Purchase and Warrant Agreement or
the Notes, including without limitation, reasonable attorneys' fees. All
of such debts, indebtedness, liabilities, covenants, and duties referred
to in (a), (b) and (c) of this Section 2.2 are hereinafter collectively
referred to as the "Secured Obligations"."
(f) Section 15.2 of the Security Agreement is hereby amended by deleting the
address of the Debtor contained therein and by inserting the following address
in lieu thereof: "1190 Hornby Street Vancouver, B.C. Canada V6Z 2K5."
(g) Exhibit A of the Security Agreement is hereby deleted in its entirety and
replaced by Exhibit A attached hereto.
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2. Conditions Precedent. GEIPPPII's obligation to enter into this
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Amendment is subject to satisfaction, on or prior to the date hereof, of the
following conditions:
(a) GEIPPPII and the Company shall have entered into the Agreement;
and
(b) The Security Agreement (Canada) among the Company, Elephant and
Castle Canada Inc. and GEIPPPII dated as of October 6, 1999 and documents
related thereto shall have been amended as provided in the Agreement.
3. Reconfirmation. The Company and GEIPPPII hereby reconfirm their
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rights and obligations under the Security Agreement as amended and restated
hereby.
4. Counterparts. This Amendment may be executed in any number of
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counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.
5. Governing Law. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED
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BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Company, the Subsidiaries and GEIPPPII have
each caused this Amendment to be duly executed and delivered as of the day and
year first above written.
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, a LIMITED PARTNERSHIP
By: GE Asset Management
Incorporated, its General Partner
By: ___________________________________
Name:
Title:
ELEPHANT & CASTLE GROUP INC.
By: ___________________________________
Name: Xxxx Xxxxxx
Title: President and CEO
ELEPHANT & CASTLE, INC.
By: ___________________________________
Name: Xxxx Xxxxxx
Title: President
ALAMO GRILL, INC.
By: ___________________________________
Name: Xxxx Xxxxxx
Title: President and CEO
ELEPHANT AND CASTLE OF
PENNSYLVANIA, INC.
By: ___________________________________
Name: Xxxx Xxxxxx
Title: President and CEO
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E & C Pub, Inc.
By: _____________________________________
Name: Xxxx Xxxxxx
Title: President and CEO
MASSACHUSETTS ELEPHANT & CASTLE
GROUP, INC.
By: _____________________________________
Name: Xxxx Xxxxxx
Title: President and CEO
ELEPHANT & CASTLE INTERNATIONAL, INC.
By: _____________________________________
Name: Xxxx Xxxxxx
Title: President and CEO
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Exhibit A
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List of Subsidiaries and Description of Shares
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Elephant & Castle Inc. 100,000 shares of common stock
authorized
1,000 shares of common stock issued
and outstanding
* Elephant & Castle of Pennsylvania Inc. 100 shares of common stock, no par
value, authorized
100 shares of common stock issued
and outstanding
* E & C Pub Inc. 100,000 shares of common stock
authorized
1,000 shares of common stock issued
and outstanding
* Massachusetts Elephant & Castle Group, Inc. 100 shares of common stock, no par
value, authorized
100 shares of common stock issued
and outstanding
* Elephant & Castle International Inc. 1,000,000 shares of common stock,
$.10 par value, authorized
100,000 shares of common stock
issued and outstanding
Alamo Grill, Inc. 1,000 shares of common stock, no
par value, authorized
51 share of common stock issued and
outstanding
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