EXHIBIT V
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MODIFICATION AGREEMENT
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(Second Amendment to Security Agreement (Canadian))
THIS MODIFICATION AGREEMENT is dated for reference December 17, 2004
AMONG:
ELEPHANT & CASTLE GROUP INC.
(the "Debtor")
AND:
THE ELEPHANT AND CASTLE CANADA INC.
(the "Subsidiary")
AND:
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP
(the "Secured Party")
WHEREAS:
A. The Debtor, the Subsidiary and the Secured Party have agreed to amend and
restate that certain Amended and Restated Note, Stock Purchase and
Warrant Agreement dated as of December 12, 2001 pursuant to the agreement
entitled the "Amended and Restated Note and Stock Purchase Agreement"
dated for reference December 17, 2004 among the same parties (as the same
may be further amended, extended, renewed, replaced, restated and in
effect from time to time the "Note and Stock Purchase Agreement");
B. In connection with the Note and Stock Purchase Agreement the Debtor and
the Subsidiary desire to amend that certain security agreement (as the
same may be further amended, extended, renewed, replaced, restated and in
effect from time to time, the "Security Agreement") dated as of October
6, 1999 and amended as of December 12, 2001 among the Debtor, the
Subsidiary and the Secured Party;
C. Capitalized terms unless otherwise defined herein shall have the meaning
attributed thereto in the Security Agreement;
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D. It is a condition to the Secured Party entering into the Amended and
Restated Note and Stock Purchase Agreement that the Debtor and the
Subsidiary execute this Modification Agreement.
NOW THEREFORE WITNESSETH that in consideration of the premises and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto), the parties hereby agree as
follows:
1. Amendment to the Security Agreement
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The Debtor and Subsidiary agree that the Security Agreement is amended by:
(a) deleting the first recital and substituting the following therefor:
"WHEREAS, the Debtor and the Secured Party have entered into that
certain Note, Stock Purchase and Warrant Agreement dated November
30, 1995 (as amended and restated by that certain Amended and
Restated Note, Stock Purchase and Warrant Agreement dated for
reference December 12, 2001, as further amended and restated by that
certain Amended and Restated Note and Stock Purchase Agreement dated
for reference December 17, 2004, and as may from time to time be
further amended, extended, renewed, replaced, restated and in effect
from time to time the "Note and Stock Purchase Agreement") and,
pursuant to the Note and Stock Purchase Agreement, the Debtor has
executed and delivered to the Secured Party the amended and restated
notes (the "Notes") in the aggregate principal amount of
U.S.$4,203,879. Terms used herein not otherwise defined shall have
the meaning ascribed thereto in the Note and Stock Purchase
Agreement"; and
(b) The following paragraph is added immediately after the second
paragraph of Section 2.1 of the Security Agreement:
"In consideration of the continuation of the Security Interest
hereunder and continuation of the security interest granted pursuant
to the U.S. Documents (as herein defined), the Secured Party hereby
waives and forgives the accrued and unpaid interest on the Notes in
the aggregate amount of U.S.$1,208,811;
(c) Section 2.2 of the Security Agreement is hereby deleted in its
entirety and the following substituted therefor:
"2.2 This Agreement is being executed and delivered to secure, and
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 and Stock Purchase
Agreement and the Notes, whether for principal, interest, costs,
fees, expenses or otherwise, (b) all covenants of the Debtor and of
the Subsidiary under this Agreement and all covenants of the Debtor
under the Note and Stock Purchase 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
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evidenced by the Notes or otherwise enforcing its rights under this
Agreement, the Note and Stock Purchase 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 hereafter
collectively referred to as the "Secured Obligations".
2. Conditions Precedent.
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The Secured Party's obligation to enter into this Modification Agreement
is subject to the satisfaction, on or prior to the date hereof, of the following
conditions:
(a) The Secured Party, the Debtor and the Subsidiary shall have entered
into the Amended and Restated Note and Stock Purchase Agreement; and
(b) The U.S. Security Agreement (as defined in the Security Agreement)
among, inter alia, the Company and the Secured Party dated as of
October 6, 1999 and amended as of December 12, 2001 and documents
related thereto shall have been amended as provided for in the
Amended and Restated Note and Stock Purchase Agreement.
3. General Provisions
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(a) All covenants, clauses, agreements, provisos, stipulations,
conditions, powers, matters and things whatsoever contained in the
Security Agreement as amended hereby, are hereby confirmed by each
of the Secured Party, the Debtor and the Subsidiary and shall
continue in full force and effect, save as expressly amended hereby.
(b) This Modification Agreement shall from the date hereof and without
prejudice to the rights and priorities of the Secured Party as
against the Debtor and the Subsidiary or any subsequent
encumbrancer, be read and construed along with the Security
Agreement and be treated as a part thereof and for such purposes and
so far as may be necessary to effectuate these presents, the
Security Agreement shall be regarded as being hereby amended and the
Security Agreement as so amended together with all of the covenants,
clauses, agreements, provisos, stipulations, conditions, powers,
matters and things whatsoever contained in the Security Agreement
shall continue in full force and effect.
(c) The Debtor and Subsidiary covenant and agree to keep, observe and
perform each and every one of the terms, covenants and conditions on
the part of the Debtor and Subsidiary to be kept, observed and
performed in the Security Agreement as modified by this Modification
Agreement in accordance with the terms thereof and hereof.
(d) This Modification Agreement and everything herein contained shall
inure to the benefit of and be binding upon the parties hereto and
their respective successors and permitted assigns.
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4. Governing Law
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THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY, AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF BRITISH
COLUMBIA AND THE LAWS OF CANADA APPLICABLE THEREIN WITHOUT REGARD FOR
CONFLICT OF LAWS PRINCIPLES.
5. Counterpart and Facsimile Execution
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This Modification Agreement may be signed in as many counterparts as may
be necessary and delivered by facsimile each of which so signed shall be
deemed to be an original, and such counterparts together shall constitute
one and the same Modification Agreement.
IN WITNESS WHEREOF this Modification Agreement has been executed this 17th
day of December, 2004.
DEBTOR:
ELEPHANT & CASTLE GROUP INC.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
SUBSIDIARY:
THE ELEPHANT AND CASTLE CANADA INC.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
SECURED PARTY:
GE INVESTMENT PRIVATE PARTNERS II, A LIMITED
PARTNERSHIP
By: GE Asset Management Incorporated,
its General Partner
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
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