EXHIBIT 10.14
-------------
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
----------------------------------------------
SECOND AMENDED AND RESTATED SECURITY AGREEMENT, dated as of June 29, 2001,
between NATIONAL RESTAURANT ENTERPRISES, INC., a Delaware corporation (the
"Borrower"), and FLEET NATIONAL BANK (f/k/a BankBoston, N.A.), a national
banking association, as agent (hereinafter, in such capacity, the "Agent") for
itself and other lending institutions (hereinafter, collectively, the "Banks")
which are or may become parties to the Credit Agreement dated as of June 29,
2001 (as defined herein).
WHEREAS, the Borrower, AmeriKing, Inc. ("AmeriKing"), the Agent and the
Banks entered into a Third Amended and Restated Revolving Credit Agreement dated
as of June 17, 1997 (as amended and in effect from time to time, the "Original
Credit Agreement") pursuant to which the Banks, subject to the terms and
conditions therein, provided certain financial accommodations to the Borrower;
and
WHEREAS, the Borrower, AmeriKing, the Agent and the Banks subsequently
agreed to amend and restate the Original Credit Agreement pursuant to a Fourth
Amended and Restated Revolving Credit Agreement dated as of December 24, 1998
(as amended and in effect from time to time, the "Revolver Credit Agreement")
and to provide certain additional financing in connection with the acquisition
of Burger King Restaurants pursuant to the Acquisition Revolving Credit
Agreement dated as of December 24, 1998 (as amended and in effect from time to
time, the "Acquisition Credit Agreement" and collectively with the Revolver
Credit Agreement, the "Existing Credit Agreements"); and
WHEREAS, in connection with the Existing Credit Agreements, the Borrower
granted to the Agent, for the benefit of the Agent and the Banks, a security
interest in and lien on all of its assets in order to secure the payment and
performance of all of the Obligations pursuant to an Amended and Restated
Security Agreement dated as of December 24, 1998 (as amended and in effect from
time to time, the "Existing Security Agreement"); and
WHEREAS, the parties to the Existing Credit Agreements and National
Restaurant Enterprises Holdings, Inc. ("Holdings") wish to consolidate, amend
and restate the Existing Credit Agreements in their entirety by entering into a
Consolidated, Amended and Restated Revolving Credit Agreement dated as of the
date hereof by and among the Borrower, AmeriKing, Holdings, the Banks and the
Agent (as amended and in effect from time to time, the "Credit Agreement"); and
WHEREAS, each of the Borrower and the Agent wishes to continue and reaffirm
the grants of liens and security interests by the Borrower in favor of the Agent
for the benefit of the Banks and the Agent; and
WHEREAS, it is a condition precedent to the Agent and the Banks entering
into the Credit Agreement, and making any loans or otherwise extending credit to
the Borrower under the Credit Agreement, that the Borrower execute and deliver
to
-2-
the Agent, for the benefit of the Banks and the Agent, a security agreement in
substantially the form hereof; and
WHEREAS, the Borrower and the Agent now wish to amend and restate in its
entirety the Existing Security Agreement, for the benefit of the Agent and the
Banks as herein provided, which shall amend and restate in its entirety the
Existing Security Agreement, and the Existing Security Agreement shall remain in
force and effect only as set forth herein;
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. All capitalized terms used herein without definitions
-----------
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of the Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein; provided, however, that the term "instrument" shall be such
-------- -------
term as defined in Article 9 of the Uniform Commercial Code of such jurisdiction
rather than Article 3.
2. Grant of Security Interest.
--------------------------
2.1. Collateral Granted. The Borrower hereby (a) ratifies and affirms
------------------
the grants of security interests made pursuant to the Existing Credit
Agreements and (b) to the extent not covered by clause (a), further grants
to the Agent, for the benefit of the Banks and the Agent, to secure the
payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Agent, for the benefit of the
Banks and the Agent, the following properties, assets and rights of the
Borrower, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof (all of the same being
hereinafter called the "Collateral"):
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, equipment, raw
materials, inventory, other goods, accounts, contract rights, rights
to the payment of money, insurance refund claims and all other
insurance claims and proceeds, tort claims, chattel paper, documents,
instruments, securities and other investment property, deposit
accounts, rights to proceeds of letters of credit and all general
intangibles including, without limitation, all tax refund claims,
license fees, patents, patent applications, trademarks, trademark
applications, trade names (other than trademarks and trade names owned
by Burger King Corporation and licensed to the Borrower), copyrights,
copyright applications, rights to xxx and recover for past
infringement of patents, trademarks and copyrights, computer programs,
computer software, engineering drawings, service marks, customer
lists, goodwill, and all licenses, permits, franchise agreements,
agreements of any kind or nature pursuant to which the
-3-
Borrower possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess, use or
have authority to possess or use property (whether tangible or
intangible) of the Borrower, and all recorded data of any kind or
nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and
schematics.
2.2. Delivery of Instruments, etc.
----------------------------
(a) Pursuant to the terms hereof, the Borrower has endorsed,
assigned and delivered to the Agent all negotiable or non-negotiable
instruments, certificated securities and chattel paper pledged by it
hereunder, together with instruments of transfer or assignment duly
executed in blank as the Agent may have specified. In the event that
the Borrower shall, after the date of this Agreement, acquire any
other negotiable or non-negotiable instruments, certificated
securities or chattel paper to be pledged by it hereunder, the
Borrower shall forthwith endorse, assign and deliver the same to the
Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Agent may from time to time specify.
(b) To the extent that any securities now or hereafter acquired
by the Borrower are uncertificated and are issued to the Borrower or
its nominee directly by the issuer thereof, the Borrower shall cause
the issuer to note on its books the security interest of the Agent in
such securities and shall cause the issuer, pursuant to an agreement
in form and substance satisfactory to the Agent, to agree to comply
with instructions from the Agent as to such securities, without
further consent of the Borrower or such nominee. To the extent that
any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by the Borrower are held
by the Borrower or its nominee through a securities intermediary or
commodity intermediary, the Borrower shall, at the request of the
Agent, use reasonable efforts to cause such securities intermediary or
(as the case may be) commodity intermediary, pursuant to an agreement
in form and substance satisfactory to the Agent, to agree to comply
with entitlement orders or other instructions from the Agent to such
securities intermediary as to such securities or other investment
property, or (as the case may be) to apply any value distributed on
account of any commodity contract as directed by the Agent to such
commodity intermediary, without further consent of the Borrower or
such nominee. The Agent agrees with the Borrower that the Agent shall
not give any such entitlement orders or instructions or directions to
any such issuer, securities intermediary or commodity intermediary
unless an Event of Default has occurred and is continuing and the
Agent has elected to exercise its rights and remedies as contemplated
by (S)14.
-4-
(c) To the extent that the Borrower is a beneficiary under any
written letter of credit now or hereafter issued in favor of the
Borrower, the Borrower shall deliver such letter of credit to the
Agent. The Agent shall from time to time, at the request and expense
of the Borrower, make such arrangements with the Borrower as are in
the Agent's reasonable judgment necessary and appropriate so that the
Borrower may make any drawing to which the Borrower is entitled under
such letter of credit, without impairment of the Agent's perfected
security interest in the Borrower's rights to proceeds of such letter
of credit or in the actual proceeds of such drawing. At the Agent's
request, the Borrower shall, for any letter of credit, whether or not
written, now or hereafter issued in favor of the Borrower as
beneficiary, execute and deliver to the issuer and any confirmer of
such letter of credit an assignment of proceeds form, in favor of the
Agent and satisfactory to the Agent and such issuer or (as the case
may be) such confirmer, requiring the proceeds of any drawing under
such letter of credit to be paid directly to the Agent for application
as provided in the Credit Agreement.
2.3. Excluded Collateral. Notwithstanding the foregoing provisions
-------------------
of this (S)2, such grant of security interest shall not extend to, and the
term "Collateral" shall not include, any chattel paper and general
intangibles which are now or hereafter held by the Borrower as licensee,
lessee or otherwise, to the extent that (i) such chattel paper and general
intangibles are not assignable or capable of being encumbered as a matter
of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
licensor or lessor thereof or other applicable party thereto and (ii) such
consent has not been obtained; provided, however, that the foregoing grant
-------- -------
of security interest shall extend to, and the term "Collateral" shall
include, (A) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (B) upon any such licensor, lessor or
other applicable party's consent with respect to any such otherwise
excluded chattel paper or general intangibles being obtained, thereafter
such chattel paper or general intangibles as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant of a
security interest and the term "Collateral".
2.4. Stock Pledge Agreement. Concurrently herewith the Borrower is
----------------------
executing and delivering to the Agent, for the benefit of the Banks and the
Agent, a stock pledge agreement pursuant to which the Borrower is pledging
to the Agent, for the benefit of the Banks and the Agent, all the shares of
the capital stock of the Borrower's Subsidiaries. Such pledge shall be
governed by the terms of such stock pledge agreement and not by the terms
of this Agreement.
-5-
3. Title to Collateral, etc. The Borrower is the owner of the Collateral
-------------------------
free from any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement and other liens permitted by the
Credit Agreement. None of the Collateral constitutes, or is the proceeds of,
"farm products" as defined in (S)9-109(3) of the Uniform Commercial Code of the
Commonwealth of Massachusetts. None of the account debtors in respect of any
accounts, chattel paper or general intangibles and none of the obligors in
respect of any instruments included in the Collateral is a governmental
authority subject to the Federal Assignment of Claims Act.
4. Continuous Perfection. The Borrower's place of business or, if more
---------------------
than one, chief executive offices are indicated on the Borrower's Perfection
Certificate delivered to the Agent herewith (the "Perfection Certificate"). The
Borrower will not change the same, or the name, identity or corporate structure
of the Borrower in any manner, without providing at least thirty (30) days prior
written notice to the Agent. The Collateral, to the extent not delivered to the
Agent pursuant to (S)2.2, will be kept at those locations listed on the
Perfection Certificate and the Borrower will not remove the Collateral from such
locations, without providing at least thirty (30) days prior written notice to
the Agent.
5. No Liens. Except for the security interest herein granted and liens
--------
permitted by the Credit Agreement, the Borrower shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Borrower shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Agent or any
of the Banks. The Borrower shall not pledge, mortgage or create, or suffer to
exist a security interest in the Collateral in favor of any person other than
the Agent, for the benefit of the Banks and the Agent, except for liens
permitted by the Credit Agreement.
6. No Transfers. The Borrower will not sell or offer to sell or otherwise
------------
transfer the Collateral or any interest therein except for (a) sales and leases
of inventory and licenses of general intangibles in the ordinary course of
business and (b) sales or other dispositions of obsolescent items of equipment
in the ordinary course of business consistent with past practices.
7. Insurance.
---------
7.1. Maintenance of Insurance. The Borrower will maintain with
------------------------
financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as
shall be in accordance with general practices of businesses engaged in
similar activities in similar geographic areas. Such insurance shall be in
such minimum amounts that the Borrower will not be deemed a co-insurer
under applicable insurance laws, regulations and policies and otherwise
shall be in such amounts, contain such terms, be in such forms and be for
such periods as may be reasonably satisfactory to the Agent. In addition,
all such insurance shall be payable to the Agent as loss payee under a
"standard" or
-6-
"New York" loss payee clause for the benefit of the Banks and the Agent.
Without limiting the foregoing, the Borrower will (a) keep all of its
physical property insured with casualty or physical hazard insurance on an
"all risks" basis, with broad form flood and earthquake coverages and
electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100% of the
full replacement cost of such property, (b) maintain all such workers'
compensation or similar insurance as may be required by law and (c)
maintain, in amounts and with deductibles equal to those generally
maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of the Borrower; business interruption insurance; and product
liability insurance.
7.2. Insurance Proceeds. The proceeds of any casualty insurance in
------------------
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with a prior interest in the property
covered thereby, (a) so long as no Default or Event of Default has occurred
and is continuing and to the extent that the amount of such proceeds is
less than $50,000.00, be disbursed to the Borrower for direct application
by the Borrower solely to the repair or replacement of the Borrower's
property so damaged or destroyed and (b) in all other circumstances, be
held by the Agent as cash collateral for the Obligations. The Agent may, at
its sole option, disburse from time to time all or any part of such
proceeds so held as cash collateral, upon such terms and conditions as the
Agent may reasonably prescribe, for direct application by the Borrower
solely to the repair or replacement of the Borrower's property so damaged
or destroyed, or the Agent may apply all or any part of such proceeds to
the Obligations with the Total Revolver Commitment (if not then terminated)
being reduced by the amount so applied to the Obligations.
7.3. Notice of Cancellation, etc. All policies of insurance shall
----------------------------
provide for at least thirty (30) days prior written cancellation notice to
the Agent. In the event of failure by the Borrower to provide and maintain
insurance as herein provided, the Agent may, at its option, provide such
insurance and charge the amount thereof to the Borrower. The Borrower shall
furnish the Agent with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.
8. Maintenance of Collateral; Compliance with Law. The Borrower will keep
----------------------------------------------
the Collateral in good order and repair and will not use the same in violation
of law or any policy of insurance thereon. The Agent, or its designee, may
inspect the Collateral at any reasonable time, wherever located. The Borrower
will pay promptly when due all taxes (except as expressly set forth in (S)8.8 of
the Credit Agreement), assessments, governmental charges and levies upon the
Collateral or incurred in connection with the use or operation of such
Collateral or incurred in connection with this Agreement. The Borrower has at
all times operated, and the Borrower will continue to operate, its business in
compliance with all applicable
-7-
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances.
9. Collateral Protection Expenses; Preservation of Collateral.
----------------------------------------------------------
9.1. Expenses Incurred by Agent. In its discretion, the Agent may
--------------------------
discharge taxes (except as expressly set forth in (S)8.8 of the Credit
Agreement) and other encumbrances at any time levied or placed on any of
the Collateral, make repairs thereto and pay any necessary filing fees. The
Borrower agrees to reimburse the Agent on demand for any and all
expenditures so made. The Agent shall have no obligation to the Borrower to
make any such expenditures, nor shall the making thereof relieve the
Borrower of any default.
9.2. Agent's Obligations and Duties. Anything herein to the contrary
------------------------------
notwithstanding, the Borrower shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the
Borrower thereunder. Neither the Agent nor any Bank shall have any
obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Bank of
any payment relating to any of the Collateral, nor shall the Agent or any
Bank be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Agent or any Bank in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to the
Agent or to which the Agent or any Bank may be entitled at any time or
times. The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under (S)9-207
of the Uniform Commercial Code of the Commonwealth of Massachusetts or
otherwise, shall be to deal with such Collateral in the same manner as the
Agent deals with similar property for its own account.
10. Securities and Deposits. The Agent may at any time, at its option,
-----------------------
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Agent
may demand, xxx for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to the Borrower may at
any time be applied to or set off against any of the Obligations.
11. Notification to Account Debtors and Other Obligors. If a Default or
--------------------------------------------------
an Event of Default shall have occurred and be continuing, the Borrower shall,
at
-8-
the request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Borrower and obligors on instruments for which the
Borrower is an obligee of the security interest of the Agent in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Agent or to any financial institution designated by the
Agent as the Agent's agent therefor, and the Agent may itself, if a Default or
an Event of Default shall have occurred and be continuing, without notice to or
demand upon the Borrower, so notify account debtors and obligors. After the
making of such a request or the giving of any such notification, the Borrower
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Borrower as trustee for the Agent,
for the benefit of the Banks and the Agent, without commingling the same with
other funds of the Borrower and shall turn the same over to the Agent in the
identical form received, together with any necessary endorsements or
assignments. The Agent shall apply the proceeds of collection of accounts,
chattel paper, general intangibles and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.
12. Further Assurances. The Borrower, at its own expense, shall do, make,
------------------
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may require more completely to vest in
and assure to the Agent and the Banks their respective rights hereunder or in
any of the Collateral, including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and continuation statements
under the Uniform Commercial Code, (b) obtaining governmental and other third
party consents and approvals, including without limitation any consent of any
licensor, lessor or other applicable party referred to in (S)2.3, (c) obtaining
waivers from mortgagees and landlords and (d) taking all actions required by
Sections 8-313 and 8-321 of the Uniform Commercial Code (1990) or Sections 8-106
and 9-115 of the Uniform Commercial Code (1994), as applicable in each relevant
jurisdiction, with respect to certificated and uncertificated securities.
13. Power of Attorney.
-----------------
13.1. Appointment and Powers of Agent. The Borrower hereby
-------------------------------
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-
in-fact with full irrevocable power and authority in the place and stead of
the Borrower or in the Agent's own name, 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 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 the Borrower, without notice to or assent by
the Borrower, to do the following:
(a) upon the occurrence and during the continuance of a Default
or an Event of Default, generally to sell, transfer, pledge,
-9-
make any agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the Uniform Commercial
Code of the Commonwealth of Massachusetts and as fully and completely
as though the Agent were the absolute owner thereof for all purposes,
and to do at the Borrower's expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to protect,
preserve or realize upon the Collateral and the Agent's security
interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as the Borrower might do, including, without
limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local agencies
or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to the Borrower,
the exercise of voting rights with respect to voting securities, which
rights may be exercised, if the Agent so elects, with a view to
causing the liquidation in a commercially reasonable manner of assets
of the issuer of any such securities and (iii) the execution, delivery
and recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto, with
or without the Borrower's signature, or a photocopy of this Agreement
in substitution for a financing statement, as the Agent may deem
appropriate and to execute in the Borrower's name such financing
statements and amendments thereto and continuation statements which
may require the Borrower's signature.
13.2. Ratification by Borrower. To the extent permitted by law, the
------------------------
Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with
an interest and shall be irrevocable.
13.3. No Duty on Agent. The powers conferred on the Agent hereunder
----------------
are solely to protect the interests of the Agent and the Banks in the
Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act, except for the
Agent's own gross negligence or willful misconduct.
14. Remedies. If an Event of Default shall have occurred and be
--------
continuing, the Agent may, without notice to or demand upon the Borrower,
declare this Agreement to be in default, and the Agent shall thereafter have in
any jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial
-10-
Code, including, without limitation, the right to take possession of the
Collateral, and for that purpose the Agent may, so far as the Borrower can give
authority therefor, enter upon any premises on which the Collateral may be
situated and remove the same therefrom. The Agent may in its discretion require
the Borrower to assemble all or any part of the Collateral at such location or
locations within the state(s) of the Borrower's principal office(s) or at such
other locations as the Agent may designate. Unless the Collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Agent shall give to the Borrower at least five Business
Days prior written notice of the time and place of any public sale of Collateral
or of the time after which any private sale or any other intended disposition is
to be made. The Borrower hereby acknowledges that five Business Days prior
written notice of such sale or sales shall be reasonable notice. In addition,
the Borrower waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Agent's rights hereunder, including,
without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights with respect thereto. To
the extent that any of the Obligations are to be paid or performed by a person
other than the Borrower, the Borrower waives and agrees not to assert any rights
or privileges which it may have under (S)9-112 of the Uniform Commercial Code of
the Commonwealth of Massachusetts.
15. No Waiver, etc. The Borrower waives demand, notice, protest, notice of
---------------
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect to both the Obligations and
the Collateral, the Borrower assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Agent may deem advisable. The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in (S)9.2. The
Agent shall not be deemed to have waived any of its rights upon or under the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Agent with the consent of the Majority Banks. No delay or omission on the
part of the Agent in exercising any right shall operate as a waiver of such
right or any other right. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right on any future occasion. All rights and remedies
of the Agent with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Agent deems expedient.
16. Marshalling. Neither the Agent nor any Bank shall be required to
-----------
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
-11-
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Borrower hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Borrower hereby irrevocably waives the benefits of all such laws.
17. Proceeds of Dispositions; Expenses. The Borrower shall pay to the
----------------------------------
Agent on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Agent in protecting, preserving or
enforcing the Agent's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as the Bank may determine or in such order or
--
preference as is provided in the Credit Agreement, proper allowance and
provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations and after making any payments
required by Section 9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts, any excess shall be returned to the Borrower, and
the Borrower shall remain liable for any deficiency in the payment of the
Obligations.
18. Overdue Amounts. Until paid, all amounts due and payable by the
---------------
Borrower hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
19. 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 COMMONWEALTH OF MASSACHUSETTS. The Borrower
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Borrower by mail at the address
specified in (S)20 of the Credit Agreement. The Borrower 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.
20. Waiver of Jury Trial. THE BORROWER 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
-12-
OR OBLIGATIONS. Except as prohibited by law, the Borrower waives any right which
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that, in entering into the Credit
Agreement and the other Revolver Loan Documents to which the Agent or any Bank
is a party, the Agent and the Banks are relying upon, among other things, the
waivers and certifications contained in this (S)20.
21. Concerning Revised Article 9 of the Uniform Commercial Code. The
-----------------------------------------------------------
parties acknowledge and agree to the following provisions of this Agreement in
anticipation of the possible application, in one or more jurisdictions to the
transactions contemplated hereby, of the revised Article 9 of the Uniform
Commercial Code in the form or substantially in the form approved by the
American Law Institute and the National Conference of Commissioners on Uniform
State Law and contained in the 1999 official text of Revised Article 9 ("Revised
Article 9").
21.1. Attachment. In applying the law of any jurisdiction in which
----------
Revised Article 9 is in effect, the Collateral is all assets of the
Borrower, whether or not within the scope of Revised Article 9. The
Collateral shall include, without limitation, the following categories of
assets as defined in Revised Article 9: goods (including inventory,
equipment and any accessions thereto), instruments (including promissory
notes), documents, accounts (including health-care-insurance receivables),
chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced
by a writing), commercial tort claims, securities and all other investment
property, general intangibles (including payment intangibles and software),
supporting obligations and any and all proceeds of any thereof, wherever
located, whether now owned and hereafter acquired. If the Borrower shall at
any time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, acquire a commercial tort claim, as defined in Revised
Article 9, the Borrower shall immediately notify the Agent in a writing
signed by the Borrower of the brief details thereof and grant to the Agent
in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance satisfactory to the Agent.
21.2. Perfection by Filing. The Agent may at any time and from time
--------------------
to time, pursuant to the provisions of (S)13, file financing statements,
continuation statements and amendments thereto that describe the Collateral
as all assets of the Borrower or words of similar effect and which contain
any other information required by Part 5 of Revised Article 9 for the
sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including whether the Borrower is an
organization, the type of organization and any organization identification
number issued to
-13-
the Borrower. The Borrower agrees to furnish any such information to the
Agent promptly upon request. Any such financing statements, continuation
statements or amendments may be signed by the Agent on behalf of the
Borrower, as provided in (S)13, and may be filed at any time in any
jurisdiction whether or not Revised Article 9 is then in effect in that
jurisdiction.
21.3. Other Perfection, etc. The Borrower shall at any time and from
---------------------
time to time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, take such steps as the Agent may reasonably
request for the Agent (a) to obtain an acknowledgement, in form and
substance satisfactory to the Agent, of any bailee having possession of any
of the Collateral that the bailee holds such Collateral for the Agent, (b)
to obtain "control" of any investment property, deposit accounts,
letter-of-credit rights or electronic chattel paper (as such terms are
defined in Revised Article 9 with corresponding provisions in Rev. (S)(S)
9-104, 9-105, 9-106 and 9-107 relating to what constitutes "control" for
such items of Collateral), with any agreements establishing control to be
in form and substance satisfactory to the Agent, and (c) otherwise to
insure the continued perfection and priority of the Agent's security
interest in any of the Collateral and of the preservation of its rights
therein, whether in anticipation and following the effectiveness of Revised
Article 9 in any jurisdiction.
21.4. Other Provisions. In applying the law of any jurisdiction in
----------------
which Revised Article 9 is in effect, the following references to sections
in this Agreement to existing Article 9 of that jurisdiction shall be to
the Revised Article 9 Section of that jurisdiction indicated below:
-----------------------------------------------------------------------------------------
Agreement Section Existing Article 9 Revised Article 9
-----------------------------------------------------------------------------------------
3 (S) 9-109(3) Rev. (S) 9-102(a)(34)
-----------------------------------------------------------------------------------------
9.2 (S) 0-000 Xxx. (X)0-000
-----------------------------------------------------------------------------------------
12 (S)(S) 8-106 and 9-115 (1994) Rev. (S)(S) 8-106 and 9-106
-----------------------------------------------------------------------------------------
17 (S) 9-504(1)(c) Rev. (S)(S) 9-608(a)(1)(C)
and 9-615(a)(3)
-----------------------------------------------------------------------------------------
21.5. Savings Clause. Nothing contained in this (S)21 shall be
--------------
construed to narrow the scope of the Agent's security interest in any of
the Collateral or the perfection or priority thereof or to impair or
otherwise limit any of the rights, powers, privileges or remedies of the
Agent or any Bank hereunder except (and then only to the extent) mandated
by Revised Article 9 to the extent then applicable.
22. 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
Borrower and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of
-14-
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. The Borrower acknowledges
receipt of a copy of this Agreement.
23. Transitional Arrangements. This Security Agreement shall amend and
-------------------------
restate in its entirety the Existing Security Agreement on the Closing Date. On
the Closing Date, the rights and obligations of the respective parties under the
Existing Security Agreement shall be subsumed within and governed by this
Security Agreement, provided that, the provisions of the Existing Security
-------- ----
Agreement shall remain in full force and effect prior to the Closing Date, and
the liens granted pursuant to the Existing Security Agreement shall continue to
be in effect hereunder as set forth in (S)2.1.
-15-
IN WITNESS WHEREOF, intending to be legally bound, the Borrower has caused
this Agreement to be duly executed as of the date first above written.
NATIONAL RESTAURANT ENTERPRISES, INC.
By: /s/ A. Xxxxxxx Xxxxxx, Xx.
--------------------------------------
Title: Vice President
Accepted:
FLEET NATIONAL BANK,
as Agent
By: /s/ Xxxxx X. O'Xxxxx
--------------------------
Title: Authorized Officer
-16-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF New York)
) ss.
COUNTY OF New York )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 29th day of June, 2001, personally appeared A. Xxxxxxx Xxxxxx
to me known personally, and who, being by me duly sworn, deposes and says that
he is the Vice President of National Restaurant Enterprises, Inc., and that said
instrument was signed and sealed on behalf of said corporation by authority of
its Board of Directors, and said A. Xxxxxxx Xxxxxx acknowledged said instrument
to be the free act and deed of said corporation.
/s/ Xxxx X. Xxxxxxxx
------------------------------
Notary Public
My commission expires:
