Exhibit III
SECURITY AGREEMENT
among
ELEPHANT & CASTLE GROUP INC.,
THE ELEPHANT AND CASTLE CANADA INC.,
and
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II,
A LIMITED PARTNERSHIP
dated as of October 6, 1999
TABLE OF CONTENTS
1. THE PLEDGE AND SECURITY INTEREST ....................................................................... 3
2. THE SECURED OBLIGATIONS ................................................................................ 8
3. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES ........................................................ 8
4. DEBTOR REMAINS LIABLE .................................................................................. 8
5. SECURITY AND PLEDGE INTERESTS ABSOLUTE ................................................................. 9
6. DELIVERY OF PLEDGED PROPERTY ........................................................................... 10
7. DIVIDENDS ON PLEDGED SHARES ............................................................................ 10
8. SUBROGATION, ETC. ...................................................................................... 10
9. REPRESENTATIONS AND WARRANTIES ......................................................................... 11
9.1 Location of Collateral, etc........................................................................ 11
9.2 Ownership, No Liens, etc........................................................................... 11
9.3 Possession and Control............................................................................. 11
9.4 Validity, etc...................................................................................... 11
9.5 Due Authorization, Execution, Approval, etc........................................................ 12
9.6 As to Pledged Shares............................................................................... 13
9.7 Compliance with Laws............................................................................... 13
10. CERTAIN COVENANTS ...................................................................................... 13
10.1 As to Equipment.................................................................................... 14
10.4 As to Collateral; Further Assurances, etc.......................................................... 16
10.5 Insurance.......................................................................................... 18
10.6 Transfers and Other Liens.......................................................................... 19
10.7 Further Assurances, etc............................................................................ 19
10.9 Additional Subsidiaries............................................................................ 20
11. SECURED PARTY .......................................................................................... 21
11.1 Secured Party Appointed Attorney-in-Fact........................................................... 21
11.2 Secured Party May Perform.......................................................................... 21
11.3 Secured Party Has No Duty.......................................................................... 22
11.4 Reasonable Care.................................................................................... 22
11.5 Default............................................................................................ 22
12. REMEDIES ............................................................................................... 23
12.1 Certain Remedies................................................................................... 23
12.2 Compliance with Restrictions....................................................................... 26
12.3 Indemnity and Expenses............................................................................. 26
12.4 Floating Charge.................................................................................... 27
13. CLOSING CONDITIONS ..................................................................................... 27
14. MISCELLANEOUS PROVISIONS ............................................................................... 28
14.1 Amendments, etc.................................................................................... 28
14.2 Addresses for Notices.............................................................................. 29
14.3 Section Captions................................................................................... 29
14.4 Severability....................................................................................... 29
14.5 Counterparts, etc.................................................................................. 29
14.6 Rights Cumulative.................................................................................. 29
14.7 Assignment......................................................................................... 29
14.8 No Waiver.......................................................................................... 29
14.9 Binding Effect..................................................................................... 30
14.10 Termination........................................................................................ 30
14.11 Number and Gender of Words......................................................................... 30
14.12 PPSA Definitions................................................................................... 30
14.13 Governing Law; Entire Agreement.................................................................... 30
14.14 Forum Selection and Consent to Jurisdiction........................................................ 30
14.15 Copy of Agreement.................................................................................. 31
Exhibit A List of Subsidiaries and Description of Shares
Exhibit B List of Properties Located in Canada
Exhibit C Trademark Agreement (Canada)
Exhibit D Assignment and Assumption of Lease
Exhibit E Landlord Consent
Exhibit F Letter Agreement
Exhibit G Rainforest Cafe Canada Holdings, Inc. Consent
Exhibit H Consent re Transfer of shares in The Elephant and
Castle Canada Inc.
Exhibit I Consent re Transfer of shares in Canadian Rainforest
Restaurants Inc.
Schedule 9.5(a) Consents of Third Parties
Schedule 9.5(i) Actions, Suits and Proceedings
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as the same may be amended, modified or supplemented
from time to time, this "Agreement") is entered into as of the 6th day of
October, 1999 by and among ELEPHANT & CASTLE GROUP INC., a corporation
incorporated in the Province of British Columbia (the "Debtor") and THE ELEPHANT
AND CASTLE CANADA INC. (the "Subsidiary"), and GE Investment Private Placement
Partners II, a Limited Partnership, a Delaware limited partnership (the "Secured
Party").
WITNESSETH:
WHEREAS, the Debtor and the Secured Party have entered into that certain Note,
Stock Purchase and Warrant Agreement dated November 30, 1995 (as amended, 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 convertible subordinated debentures in the aggregate principal
amount of U.S.$9,000,000 (collectively, the "Notes"). Terms used herein not
otherwise defined shall have the meaning ascribed thereto in the Note, Stock
Purchase and Warrant Agreement.
WHEREAS, the Secured Party desires to receive certain security for the repayment
of the Notes and has agreed to waive and forgive interest due on the Notes by
the Debtor to the Secured Party for the period commencing June 1, 1999 and
ending November 30, 1999 and, in exchange therefor, the Debtor and the
Subsidiary have agreed to execute this Agreement and, pursuant hereto, to pledge
the Collateral (as hereinafter defined) as security for the prompt satisfaction
of the Secured Obligations (as hereinafter defined).
WHEREAS, the Subsidiary is a wholly-owned subsidiary of the Debtor and will
obtain benefits from the waiver of the interest due on the Notes described
above.
NOW, THEREFORE, in consideration of the foregoing and the premises and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged and confessed, and intending to be legally bound hereby, the
Debtor, the Subsidiary and the Secured Party agree as follows:
1. THE PLEDGE AND SECURITY INTEREST
1.1 In order to secure the prompt and unconditional payment and performance of
the Secured Obligations (as herein defined), each of the Debtor and the
Subsidiary hereby:
(a) grants to the Secured Party a lien and a security interest in, and
mortgages, assigns, transfers, delivers, pledges, sets over and
confirms to the Secured Party all of the Debtor's and the Subsidiary's
right, title, interest (including all power of the Debtor and the
Subsidiary, if any, to pass greater title than it has itself),
remedies, powers and privileges, of every kind and character now owned
or hereafter acquired, created or arising in and to the following (all
of the property referred to in this Section 1.1(a), in Section 1.1(b)
and in Section 1.1(c) is hereinafter collectively called the
"Collateral"):
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(i) all shares of capital stock or other equivalents of
the Subsidiary, as set forth on Exhibit A hereto, and
any shares of capital stock or other equity interest
of the Subsidiary obtained in the future by the
Debtor and the certificates representing all such
shares or equity interest ("Subsidiary Shares");
(ii) all shares of capital stock or other equivalents of
Canadian Rainforest Restaurants, Inc., a Canadian
federal corporation ("Rain Forest") (a joint venture
between the Debtor and Rainforest Cafe Canada
Holdings, Inc., a federal corporation organized under
the Canada Business Corporations Act ("RCCH") held by
the Debtor as set forth in Exhibit A hereto, and any
shares of capital stock or other equity interest of
Rain Forest obtained in the future by the Debtor and
the certificates representing all such shares or
equity interest ("Rain Forest Shares");
(iii) all other debt or equity interests of the Debtor in
the Subsidiary and in Rain Forest, presently owned or
from time to time acquired by the Debtor in any
manner, and all dividends, distributions, interest,
cash, instruments and other property from time to
time received, receivable or otherwise distributed in
respect of or in exchange for any or all such debt or
equity interests referred to in clauses (i) and (ii)
above;
(iv) all equipment now owned or hereafter acquired either
by the Debtor or by the Subsidiary, in all of its
forms, located in Canada on all properties owned or
leased by the Debtor or the Subsidiary, a list of
properties currently owned or leased by the Debtor or
the Subsidiary is attached hereto as Exhibit B,
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 receivables, accounts, contracts, contract
rights, chattel paper, documents, instruments and
general intangibles (not otherwise specifically
described herein) of the Debtor and the Subsidiary,
whether or not arising out of or in connection with
the sale or lease of goods or the rendering of
services, and all rights of the Debtor and the
Subsidiary now or hereafter existing in and to all
security agreements, guarantees and other contracts
securing or otherwise relating to any such
receivables, contracts, contract rights, chattel
paper, documents, instruments and general
intangibles, (any and all such receivables,
contracts, contract rights, chattel paper, documents
and instruments being the "Receivables", and any and
all such security agreements, guarantees and other
contracts being the "Related Contracts");
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(vi) all claims, awards and payments made as a result of
the exercise of the right of eminent domain,
condemnation or expropriation against the property or
any part thereof (the "Property") subject to any of
the leases now or hereafter entered into by the
Debtor or the Subsidiary in Canada (the "Leases"), a
list of the Leases now held by Debtor and the
Subsidiary 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");
(vii) all products and proceeds of any of the foregoing
including, without limitation, proceeds which
constitute property of the types described in clauses
(i) through (vi) above, proceeds deposited from time
to time in any lock boxes of the Debtor or the
Subsidiary and, to the extent not otherwise included,
all payments under insurance, or any indemnity,
warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the
foregoing, and all accessions, appurtenances and
additions to and substitutions for any of the
foregoing and all renewals and replacements of any of
the foregoing, and all accounts, receivables, account
receivables, instruments, notes, chattel paper,
documents (including all documents of title), books,
records, contract rights and general intangibles
arising in connection with any of the foregoing;
(viii) (A) all Canadian and foreign copyrights, whether
statutory or common law, registered or unregistered,
now or hereafter in force throughout the world
including, without limitation copyrights registered
in the Canadian Intellectual Property Office or
anywhere else in the world, applications for
registration thereof, whether pending or in
preparation for filing (all of the foregoing items in
this clause (A) being collectively called a
"Copyright"), mask works, and computer software and
databases; (B) all Copyright licenses; (C) all
extensions or renewals of any of the items described
in clauses (A) and (B); (D) all proceeds of, and
rights associated with, the foregoing, including
without limitation royalties, income, payments,
claims, damages and proceeds of suit; and (E) the
right (but not obligation) to xxx in the name of the
Debtor or the Subsidiary for any past, present or
future infringement of any Copyright, and all rights
(but not obligations) corresponding thereto in Canada
and any foreign country.
(ix) (A) all Canadian and foreign patents, registered
designs, whether or not registered, and other trade
secrets, research and development, formulae,
know-how, proprietary and intellectual property
rights and information, including all grants,
registrations and applications relating thereto,
which are presently, or in the future may be, owned,
issued, acquired, or used (whether pursuant to a
license or otherwise) by the Debtor or the
Subsidiary, in whole or in part, and all patent
rights with respect thereto
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throughout the world (all of the foregoing items in
this clause (A) being collectively called a
"Patent"); (B) all of the Debtor's and the
Subsidiary's right, title, and interest in all
patentable inventions, and to file applications for
Patents under federal law or the law or regulation of
any foreign country, and to request reexamination
and/or reissue of any U.S. or foreign patents, and to
extend such patents and patent rights; (C) all
proceeds of, and rights associated with, the
foregoing, including without limitation royalties,
income, payments, claims, damages and proceeds of
infringement suits; and (D) the right (but not
obligation) to xxx or bring interference proceedings
in the name of the Debtor or the Subsidiary for past,
present or future infringement of the Patents, and
all rights (but not obligations) corresponding
thereto in Canada and any foreign country.
(b) grants to the Secured Party a lien and security interest in,
and mortgages and pledges to the Secured Party all of the
Debtor's and the Subsidiary's right, title, interest
(including all power of the Debtor and the Subsidiary, if any,
to pass greater title than it has itself), remedies, powers
and privileges, of every kind and character now owned or
hereafter acquired, created or arising in and to the
following: (A) all trademarks, trade names, corporate names,
company names, business names, fictitious business names,
trade styles, service marks, certification marks, collective
marks, logos, other source of business identifiers, prints and
labels on which any of the foregoing have appeared or appear,
designs and general intangibles of a like, now existing
anywhere in the world or hereafter adopted or acquired,
whether currently in use or not, all registrations and
recordings thereof and all applications in connection
therewith, whether pending or in preparation for filing (all
of the foregoing items in this clause (A) being collectively
called a "Trademark"); (B) all Trademark licenses; (C) all
reissues, extensions or renewals of any of the items described
in clauses (A) and (C); (D) all proceeds of, and rights
associated with, the foregoing, including without limitation
royalties, income, payments, claims, damages and proceeds of
infringement suits; and (E) the right (but not obligation) to
xxx or bring cancellation or opposition proceedings in the
name of the Debtor or the Subsidiary for any past, present or
future infringement or dilution of any Trademark, Trademark
registration or Trademark license, or for any injury to the
goodwill associated with the use of any such Trademark or for
breach or enforcement of any Trademark license or protection
of any Trademark, and all rights (but not obligations)
corresponding thereto in Canada and any foreign country.
(c) charges as and by way of a floating charge to and in favour of
the Secured Party all of the Debtor's and the Subsidiary's
right, title and interest in and to all of their respective
presently owned or held and after acquired or held real,
immovable and leasehold property, including, without
limitation, the leasehold property described in Exhibit B, and
all interests therein, and all easements, rights-of-way,
privileges, benefits, licences, improvements and rights
whether connected therewith or appurtenant thereto, including
all structures, plant and other fixtures (all of which is
collectively called the "Real Property"),
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1.2 It is understood that, subject to Permitted Encumbrances (as hereinafter
defined) (i) the security interest hereby granted by the Subsidiary to the
Secured Party shall constitute a second priority security interest subject only
to the security interest of The Toronto-Dominion Bank created pursuant to the
General Security Agreement dated as of October 1, 1990, between The Elephant and
Castle Canada Inc., a corporation incorporated in the Province of Ontario and a
subsidiary of the Debtor and The Toronto-Dominion Bank (the "Bank Security
Interest") and that (ii) the other security interests hereby granted to the
Secured Party will, subject to the provisions of Section 1.3 below, constitute
first priority security interests. The security interests granted by the Debtor
and the Subsidiary to the Secured Party pursuant to this Agreement are
hereinafter collectively referred to as the "Security Interest". The property
and interests described in clauses (a)(i) through (a)(iii) and clause (a)(vi) as
it relates to the property and interests described in clauses (a)(i) through
(a)(iii), all of Section 1.1 hereof, are hereinafter collectively referred to as
the "Pledged Property". The property and interests described in clauses (a)(iv)
and clause (a)(vi) as it relates to the property and interests described in
clause (a)(iv), all of Section 1.1 hereof, are hereinafter collectively referred
to as the "Equipment". The term "Permitted Encumbrances" means:
A. all encumbrances in respect of which filings have been made in
the Personal Property Registries of British Columbia, Alberta,
Saskatchewan, Manitoba or Ontario as of September 1, 1999,
other than British Columbia Base Registration No. 6866578,
Ontario Base Registration No. 043015 and Saskatchewan Base
Registration No. 100041138; and
B. purchase money security interests in Equipment used in
connection with and located at the Real Property and not
exceeding, together with "Permitted Encumbrances" as defined
in Section 1.2 of the U.S. security agreement among the
Debtor, the Secured Party and others dated of even date with
this Agreement, in aggregate principal amount CDN$50,000 in
any one year.
1.3 The Secured Party hereby acknowledges and agrees that, notwithstanding
any provisions of this Agreement to the contrary, it shall subordinate its
Security Interest (by executing a priority agreement if so requested) in any
Equipment acquired after the date hereof which is located on any new properties
(the "New Properties") hereinafter purchased, leased or otherwise acquired by
the Debtor or the Subsidiary and used to operate a restaurant business to the
lien of any security interest granted to any lender which provides financing to
the Debtor or the Subsidiary in respect of any such Equipment on the New
Properties; provided, however, that the extent of such subordination shall be
limited to an aggregate amount of CDN$2,000,000 and such subordination shall be
pursuant to a subordination agreement reasonably satisfactory in
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form and substance to the Secured Party and in all events the Secured Party
shall retain a second priority interest in such Equipment in the case of the
Debtor, and, for so long as the Bank Security Interest exists, a third priority
interest in the Equipment in the case of The Elephant and Castle Canada Inc.
2. THE SECURED OBLIGATIONS
2.1 In consideration of the grant of the Security Interest hereunder and the
grant of the security interests granted pursuant to the U.S. Documents (as
herein defined), the Secured Party hereby waives and forgives interest for the
six (6) month period, beginning as of June 1, 1999 and ending on November 30,
1999 which would otherwise be due and payable by the Debtor to the Secured Party
with respect to the Notes.
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, and (b) all covenants
of the Debtor and the Subsidiary under this Agreement and all covenants of the
Debtor under the Note, Stock Purchase and Warrant Agreement, in each case
including all renewals, extensions and modifications thereof. All of such debts,
indebtedness, liabilities, covenants, and duties referred to in (a) and (b) of
this Section 2.2 are hereinafter collectively referred to as the "Secured
Obligations".
3. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES
(a) This Security Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect
until payment in full of all Secured Obligations, or until earlier
terminated in accordance with the terms hereof and (ii) be binding
upon the Debtor, and the Subsidiary, their respective successors,
transferees and assigns.
(b) Subject to the applicable provisions of the Note, Stock Purchase and
Warrant Agreement, the Secured Party may assign or otherwise
transfer (in whole or in part) any Note held by it to any other
Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof
granted to the Secured Party under this Security Agreement or
otherwise, subject, however, to any contrary provisions in such
assignment or transfer.
(c) Upon the payment in full of all Notes and the termination of all
Secured Obligations, other than in connection with the exercise of
remedies under this Agreement, the Security Interest granted herein
shall terminate and all rights to the Collateral shall revert to the
Debtor or the Subsidiary, as the case may be. Upon any such
termination, the Secured Party will, at sole expense of the Debtor,
execute and deliver to the Debtor and the Subsidiary such documents
(without recourse and without representation or warranty) as the
Debtor shall reasonably request to evidence such termination.
4. DEBTOR REMAINS LIABLE
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Anything herein to the contrary notwithstanding:
(a) the Debtor and the Subsidiary shall remain liable under the
contracts and agreements included in, or relating to, the
Collateral to the extent set forth therein, and shall perform
all of their respective duties and obligations under such
contracts and agreements to the same extent as if this
Security Agreement had not been executed;
(b) the exercise by the Secured Party of any of its rights
hereunder shall not release the Debtor or the Subsidiary from
any of the Debtor's or the Subsidiary's duties or obligations
under any of the contracts or agreements included in, or
relating to, the Collateral; and
(c) the Secured Party shall have no obligation or liability under
any such contracts or agreements included in, or relating to,
the Collateral by reason of this Security Agreement, nor shall
the Secured Party be obligated to perform any of the
obligations or duties of the Debtor or the Subsidiary
thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
5. SECURITY AND PLEDGE INTERESTS ABSOLUTE
All rights of the Secured Party and the Security Interest granted to and pledges
made to the Secured Party hereunder, and all obligations of the Debtor and the
Subsidiary hereunder, shall be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Note, Stock
Purchase and Warrant Agreement or any Note;
(b) the failure of the Secured Party to assert any claim or demand
or to enforce any right or remedy against the Debtor or any
other Person under the provisions of the Note, Stock Purchase
and Warrant Agreement, any Note or otherwise;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations or
any other extension, compromise or renewal of any Secured
Obligations;
(d) any reduction, limitation, impairment or termination of any
Secured Obligation of the Debtor or the Subsidiary for any
reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and
each of the Debtor and the Subsidiary hereby waives any right
to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or
occurrence affecting, any Secured Obligation of the Debtor or
the Subsidiary or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the
Note, Stock Purchase and Warrant Agreement or any Note;
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(f) any addition, exchange, release, surrender or non-perfection
of any collateral (including the Collateral), or any amendment
to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured
Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of,
the Debtor or the Subsidiary.
6. DELIVERY OF PLEDGED PROPERTY
All certificates or instruments representing or evidencing any Pledged Property,
including all Subsidiary Shares and all Rain Forest Shares (collectively, the
"Pledged Shares"), shall be delivered to and held by or on behalf of the Secured
Party pursuant hereto, shall be in suitable form for transfer by delivery, and
shall be accompanied by all necessary instruments of transfer or assignment,
duly executed in blank, and resolutions of the directors approving such
transfer, all in form and substance satisfactory to the Secured Party. The
Secured Party shall have the right, at any time after the occurrence of an Event
of Default in its discretion and without notice to the Debtor, to transfer to or
to register in the name of the Secured Party or any of its nominees any or all
of the Pledged Property, subject only to revocable rights specified in Section
3(b) hereof; provided however that the Secured Party shall promptly give notice
to the Debtor following any such transfer of the Pledged Property. In addition,
the Secured Party shall have the right at any time to exchange certificates or
instruments representing or evidencing the Pledged Property for certificates or
instruments of smaller or larger denominations.
7. DIVIDENDS ON PLEDGED SHARES
In the event that any cash dividend on any shares pledged pursuant to this
Agreement is to be paid at a time when (x) no Default of the nature referred to
in Section 6(ix) or (x) of the Note, Stock Purchase and Warrant Agreement has
occurred and is continuing and (y) no Event of Default has occurred and is
continuing, such dividend may be paid directly to the Debtor. If any such
Default or Event of Default has occurred and is continuing, then any such
dividend shall be paid directly to the Secured Party.
8. SUBROGATION, ETC.
Neither the Debtor nor the Subsidiary will exercise any rights which it may
acquire by reason of any payment made hereunder, whether by way of subrogation,
reimbursement or otherwise, until the prior payment, in full and in cash, of all
Secured Obligations of the Debtor. Subject to the payments permitted under
Section 7, any amount paid to the Debtor or the Subsidiary on account of any
payment made hereunder prior to the payment in full of all Secured Obligations
of the Debtor or the Subsidiary, including without limitation (i) instruments
and other property received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Property, (ii) dividends and other distributions
paid or payable in cash in respect of any Pledged Property in connection with a
total liquidation or dissolution of the payor of the dividends, and (iii) cash
paid, payable or otherwise distributed in respect of principal of or in
redemption of, or in exchange for, any Pledged Property, shall be held in trust
for the benefit of the Secured Party, be segregated from the other property or
funds of the Debtor or the Subsidiary, and shall
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immediately be paid to the Secured Party and credited and applied against the
obligations of the Debtor, whether matured or unmatured, in accordance with the
terms of the Note, Stock Purchase and Warrant Agreement.
9. REPRESENTATIONS AND WARRANTIES
The Debtor and the Subsidiary jointly and severally represent and warrant unto
the Secured Party as set forth in this Section 9 on the date hereof and with
respect to the Pledged Property, as at the date of each pledge and delivery
hereunder:
9.1 Location of Collateral, etc
All of the Equipment currently owned by the Debtor and the Subsidiary and
located in Canada is located at the places specified in Exhibit B hereto. None
of the Equipment has, within the four months preceding the date of this
Agreement, been located at any place other than the places specified in Exhibit
B. The place(s) of business and chief executive office of the Debtor and the
Subsidiary and the office(s) where each of the Debtor and the Subsidiary keeps
its records concerning the Collateral including Receivables and all originals of
all chattel paper which evidence Receivables, are located at 000 Xxxxx Xxxxxx,
Xxxxx Xxxxx, Xxxxxxxxx, XX, Xxxxxx X0X 0X0. Neither the Debtor nor the
Subsidiary has, within the last five years, been known by any legal name
different from the one set forth on the signature page hereto, nor has the
Debtor or the Subsidiary been the subject of any merger or other corporate
reorganization.
9.2 Ownership, No Liens, etc
The Debtor or the Subsidiary, as the case may be, own the Collateral free and
clear of any Lien, except for the security interest created by this Agreement,
the Bank Security Interest or any Permitted Encumbrance. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except financing statements (a)
as may have been filed in favor of the Secured Party relating to this Agreement,
(b) as may relate to the Bank Security Interest, (c) with respect to which the
Debtor has delivered registrable discharges executed by the secured party to the
Secured Party on the date hereof or (d) relate to ineffective security. Each of
the Debtor and the Subsidiary is the legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and assign)
the Collateral in which it has rights, which the Debtor or the Subsidiary has
not previously sold, assigned or transferred and which is free and clear of all
Liens, except the Lien granted pursuant hereto in favor of the Secured Party,
Permitted Encumbrances, and, with respect to the Subsidiary, the Bank Security
Interest. No other subsidiary of the Debtor, other than the Subsidiary and the
subsidiaries listed on Exhibit A to the U.S. Security Agreement (as hereinafter
defined) owns any Equipment.
9.3 Possession and Control
The Debtor or the Subsidiary have exclusive possession and control of all of the
Equipment.
9.4 Validity, etc
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This Agreement creates a valid first, second or third priority security interest
in the Collateral as provided in Section 1.2 and 1.3 hereof, securing the
payment of the Secured Obligations. The Security Interest constitutes, subject
to the filings described in Section 9.5(b) below, a perfected security interest
in all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous documents in any
province of Canada pursuant to applicable law in such jurisdictions. The
delivery of the Pledged Property to the Secured Party is effective to create a
valid, perfected, first priority security interest in the Pledged Property and
all proceeds thereof, securing the Secured Obligations. No filing or other
action will be necessary to perfect or protect the Security Interest as it
relates to the Pledged Shares. None of the Pledged Shares is a "security with a
clearing agency" as that term is defined in the PPSA (as hereinafter defined).
9.5 Due Authorization, Execution, Approval, etc
(a) No consent of any other party, other than those consents
listed on Schedule 9.5(a) attached hereto, and no consent,
authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body
is required either (i) for the grant by the Debtor and the
Subsidiary of the Security Interest granted hereby or for the
pledge by the Debtor and the Subsidiary of any Collateral
pursuant hereto or for the execution, delivery and performance
of this Agreement by the Debtor and the Subsidiary, or (ii)
for the perfection of or the exercise by the Secured Party of
its rights and remedies hereunder including the exercise by
the Secured Party of the voting or other rights provided for
in this Agreement, or, except with respect to any Pledged
Shares, as may be required in connection with a disposition of
such Pledged Shares by laws affecting the offering and sale of
securities generally, the remedies in respect of the Pledged
Property pursuant to this Agreement and, except for the filing
of financing statements in the Provinces of British Columbia,
Alberta, Saskatchewan, Manitoba and Ontario.
(b) This Agreement and the Security Interest created hereby is in
full compliance with the terms of all documents, instruments
and agreements relating to the Debtor and the Subsidiary or
among the Debtor's or the Subsidiary's shareholders,
respectively, including, without limitation, the Debtor's
memorandum and articles and the articles of incorporation and
bylaws of the Subsidiary.
(c) The Debtor is a corporation duly incorporated, validly
existing and in good standing under the laws of the Province
of British Columbia, has the corporate power and authority to
own its assets and to transact its business and is duly
qualified under the laws of each jurisdiction in which such
qualification is required.
(d) The Subsidiary is a corporation duly amalgamated, validly
existing and in good standing under the laws of the Province
of Ontario, has the corporate power and authority to own its
assets and to transact its business and is duly qualified
under the laws of each jurisdiction in which such
qualification is required.
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(e) This Agreement is a legal, valid and binding obligation of the
Debtor and the Subsidiary, enforceable against the Debtor and
the Subsidiary in accordance with its terms.
(f) The execution, delivery and performance of this Agreement by
the Debtor and the Subsidiary have been duly authorized by all
necessary corporate action and do not and will not contravene
the Debtor's memorandum or articles or the Subsidiary's
articles of incorporation or bylaws.
(g) The execution, delivery and performance of this Agreement by
the Debtor and the Subsidiary do not and will not (1) require
any consent which has not been obtained; (2) violate any
provision of law or require filing or registration with any
governmental authority; (3) result in a breach or constitute a
default under or require any consent under any indenture or
loan or credit agreement, any other agreement, lease or
instrument to which the Debtor or any Subsidiary is a party or
by which any of their property is bound; (4) result in, or
require, the creation or imposition on any lien, security
interest or other encumbrance upon or with respect to any of
their properties now owned or hereafter acquired; or (5) cause
the Debtor or any Subsidiary to be in default under any law,
order, writ, judgment, injunction, decree, agreement, lease or
instrument.
(h) Other than as set forth on Schedule 9.5(i) attached hereto,
there are no actions, suits or proceedings pending or, to the
Debtor's and the Subsidiary's best knowledge, threatened
against or with respect to the Debtor or the Subsidiary that
are (1) reasonably likely to materially and adversely affect
is obligation under this Agreement; or (2) reasonably likely
to materially and adversely affect is business, property,
assets , condition (financial or otherwise), results of
operation, or prospects.
9.6 As to Pledged Shares
In the case of any Pledged Shares pledged by the Debtor, all of such Pledged
Shares are duly authorized and validly issued, fully paid, and non-assessable.
With respect to the Subsidiary Shares, those shares constitute all of the issued
and outstanding shares in the capital of The Elephant and Castle Canada Inc.
and, with respect to the Rainforest Shares, those shares constitute one-half of
the issued and outstanding common shares in the capital of Canadian Rainforest
Restaurants, Inc.
9.7 Compliance with Laws
The Debtor and each Subsidiary is in compliance with the requirements of all
applicable laws, rules, regulations and orders of every governmental authority,
the noncompliance with which might materially adversely affect the business,
properties, assets, operations, condition (financial or otherwise) of the Debtor
and the Subsidiary taken as a whole or the value of the Collateral.
10. CERTAIN COVENANTS
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The Debtor and the Subsidiary jointly and severally covenant and agree that, so
long as any portion of the Notes shall remain unpaid or any Secured Obligations
shall remain outstanding, the Debtor and the Subsidiary will, unless the Secured
Party shall otherwise consent in writing, perform the obligations set forth in
this Section 10.
10.1 As to Equipment
Each of the Debtor and the Subsidiary hereby agrees that it shall:
(a) keep all the Equipment at the places therefor specified in Exhibit B
hereto, or, upon 30 days' prior written notice to the Secured Party,
at such other places in a jurisdiction where all representations and
warranties set forth in Section 9 (including Section 9.4) shall be
true and correct, and all action required pursuant to the first
sentence of Section 10.7 shall have been taken with respect to the
Equipment;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's manual; and
forthwith, or in the case of any loss or damage to any of the
Equipment, as quickly as practicable after the occurrence thereof,
make or cause to be made all repairs, replacements, and other
improvements in connection therewith which are necessary or desirable
to such end; and promptly furnish to the Secured Party a statement
respecting any loss or damage to any of the Equipment; and
(c) promptly pay when due all material property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Equipment, except to the extent the validity thereof is being
contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP as in effect in Canada have
been set aside.
10.2 As to Receivables
(a) Subject to Section 10.3(b), the Debtor and the Subsidiary shall keep
its place(s) of business and chief executive office and the office(s)
where it keeps its records concerning the Receivables, and all
originals of all chattel paper which evidenced Receivables, located at
the chief executive office of the Debtor or the Subsidiary, or, upon
30 days' prior written notice to the Secured Party, at such other
locations in a jurisdiction where all actions required by Section 10.7
shall have been taken with respect to the Receivables; not change its
name except upon 30 days' prior written notice to the Secured Party;
hold and preserve such records and chattel paper; and permit
representatives of the Secured Party at any time during normal
business hours to inspect and make abstracts from such records and
chattel paper.
(b) Until such time as the Secured Party shall notify the Debtor or the
Subsidiary that a Default of the nature referred to in Section 6(ix)
or (x) of the Note, Stock Purchase and Warrant Agreement or an Event
of Default has occurred and is
14
continuing, the Debtor and the Subsidiary shall, in accordance with
its customary business practices, continue to collect, at its own
expense, all amounts due or to become due to it under the Receivables;
provided, however, that the Secured Party shall have the right, at any
time after notice to the Debtor or the Subsidiary from the Secured
Party that a Default of the nature referred to in Section 6(ix) or (x)
of the Note, Stock Purchase and Warrant Agreement or an Event of
Default has occurred and is continuing, to notify the account debtors
or obligors under any Receivables of the assignment of such
Receivables to the Secured Party and to direct such account debtors or
obligors to make payment of all amounts due or to become due to the
Debtor or the Subsidiary thereunder directly to the Secured Party and,
upon such notification and at the expense of the Debtor or the
Subsidiary, to enforce collection of any such Receivables, and to
adjust, settle or compromise the amount or payment thereof, in the
same manner and to the same extent as the Debtor or the Subsidiary
might have done. After delivery to the Debtor or the Subsidiary of the
notice from the Secured Party referred to above:
(i) all amounts and proceeds (including instruments) received by the
Debtor or the Subsidiary in respect of any Receivables shall be
received in trust for the benefit of the Secured Party hereunder,
shall be segregated from other funds of the Debtor or the
Subsidiary, and shall be forthwith paid over to the Secured Party
in the same form as so received (with any necessary endorsements)
to be held as cash collateral and applied as provided by Section
13; and
(ii) except in the ordinary course of business neither the Debtor, nor
the Subsidiary shall, without the consent of the Secured Party,
adjust, settle or compromise the amount or payment of any
Receivable, or release wholly or party any account debtor or
obligor thereof, or allow any credit or discount thereon.
After the occurrence and during the continuance of an Event of Default, (A)
the Secured Party may in its own name or in the name of others communicate with
account debtors in order to verify with them to the Secured Party's satisfaction
the existence, amount and terms of any Receivables and (B) the Secured Party
shall have the right, at the Debtor's expense, to make test verifications of the
Receivables in any manner and through any medium that it considers advisable,
and the Debtor agrees to furnish all such assistance.
10.3 As to Other Collateral
(a) Until such time as the Secured Party shall notify the Debtor or the
Subsidiary of the revocation of their power and authority to perform
as provided in (i) or (ii) below, which notice may be given by the
Secured Party at any time if a Default of the nature referred to in
Section 6(ix) or (x) of the Note, Stock Purchase and Warrant Agreement
or an Event of Default has occurred and is continuing, the Debtor and
the Subsidiary (i) will, at is own expense, endeavor to collect, as
and when due in accordance with its customary practices, all amounts
due with respect to any of the Collateral (except as otherwise
specifically provided herein),
15
including the taking of such action with respect to such collection as
the Secured Party may reasonably request, or, in the absence of such
request, as the Debtor or the Subsidiary may deem advisable, and (ii)
may grant, in the ordinary course of business, to any party obligated
on any of the Collateral (except as otherwise specifically provided
herein), any rebate, refund or allowance to which such party may be
lawfully entitled, may accept, in connection therewith, the return of
goods, the sale or lease of which shall have given rise to such
Collateral (except as otherwise specifically provided herein). The
Secured Party, however, may, at any time, after Default of the nature
referred to in Section 6(ix) or (x) of the Note, Stock Purchase and
Warrant Agreement or an Event of Default has occurred and is
continuing, notify any parties obligated on any of the Collateral
(except as otherwise specifically provided herein) to make payment to
the Secured Party of any amounts due or to become due thereunder and
enforce collection of any of the Collateral (except as otherwise
specifically provided herein) by suit or otherwise and surrender,
release, or exchange all or any party thereof, or compromise or extend
or renew for any period (whether or not longer than the original
period) any indebtedness thereunder or evidenced thereby. Upon request
of the Secured Party, the Debtor or the Subsidiary will, at its own
expense, notify any parties obligated on any of the Collateral (except
as otherwise specifically provided herein) to make payment to the
Secured Party of any amounts due or to become due thereunder.
(b) The Secured Party is authorized to endorse, in the name of the Debtor
or the Subsidiary, any item, howsoever received from the Secured
Party, representing any payment on or other proceeds of any of the
Collateral (except as otherwise specifically provided herein). The
Debtor and the Subsidiary shall, immediately following the occurrence
and during the continuance of a Default of the nature referred to in
Section 6(ix) and (x) of the Note, Stock Purchase and Warrant
Agreement or an Event of Default deliver to the Secured Party
possession of all originals of all negotiable documents, instruments
and chattel paper currently owned or held by the Debtor or the
Subsidiary (duly endorsed in blank, if requested by the Secured
Party).
10.4 As to Collateral; Further Assurances, etc.
(a) Except as expressly provided in the Note, Stock Purchase and Warrant
Agreement, neither the Debtor nor the Subsidiary will sell, assign,
transfer, pledge, encumber in any manner or otherwise dispose of, or
grant any option with respect to, the Collateral (except in favor of
the Secured Party hereunder). The Debtor and each Subsidiary will
warrant and defend the right and title herein granted unto the Secured
Party in and to the Collateral pledged by it hereunder (and all right,
title, and interest represented by such Collateral) against the claims
and demands of all Persons whomsoever. Each of the Debtor and the
Subsidiary agrees that it will not issue any stock or other securities
in addition to or in substitution for the Pledged Shares. Each of the
Debtor and the Subsidiary agrees that at any time, and from time to
time, at the expense of the Debtor, the Debtor and the Subsidiary will
promptly execute and deliver all further instruments, and
16
take all further action, that may be necessary or desirable, or that
the Secured Party may reasonably request, in order to perfect and
protect any Security Interest granted or purported to be granted by
the Debtor and the Subsidiary hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to
any Collateral pledged by it hereunder.
(b) Stock Powers, etc. The Debtor agrees that all Pledged Shares (and all
other shares of capital stock constituting Pledged Property) delivered
by the Debtor pursuant to this Agreement will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments
of transfer acceptable to the Secured Party, together with resolutions
of the directors of the Subsidiary and Rain Forest whose capital stock
is pledged under this Security Agreement, approving the transfer of
shares to the Secured Party or its nominee. The Debtor will, from time
to time upon the request of the Secured Party, promptly deliver to the
Secured Party such stock powers, instruments, and similar documents,
satisfactory in form and substance to the Secured Party, with respect
to the Pledged Property as the Secured Party may reasonably request.
(c) Continuous Pledge. Subject to Section 4, the Debtor will, at all
times, keep pledged to the Secured Party pursuant hereto all Pledged
Shares and all other shares of capital stock constituting Pledged
Property, all dividends and distributions with respect thereto, and
other securities, instruments, proceeds, and rights from time to time
received by or distributable to the Debtor in respect of any Pledged
Property.
(d) Voting Rights; Dividends, etc. The Debtor agrees:
(i) so long as no Event of Default shall have occurred, the Debtor
shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Property or any part
thereof for any purpose not inconsistent with the terms of this
Agreement; provided, however, that the Debtor shall not exercise
or refrain from exercising any such right if: (A) such action
would modify or in any way adversely change the Debtor's or the
Secured Party's rights under the Pledged Property or any part
thereof or (B) the Secured Party, acting reasonably, shall notify
the Debtor that in the Secured Party's sole judgment such action
would modify or in any way adversely change the Debtors or the
Secured Party's rights under the Pledged Property or any part
thereof.
(ii) after any Default of the nature referred to in Section 6(ix) or
(x) of the Note, Stock Purchase and Warrant Agreement or an Event
of Default shall have occurred and be continuing, promptly upon
receipt thereof by the Debtor and without any request therefor by
the Secured Party, to deliver (properly endorsed where required
hereby or requested by the Secured Party) to the Secured Party
all dividends, distributions, all interest, all principal, all
other cash payments, and all proceeds of the Pledged
17
Property, all of which shall be held by the Secured Party for
use in accordance with Section 13.1; and
(iii) after any Event of Default shall have occurred and be continuing
and the Secured Party has notified the Debtor of the Secured
Party's intention to exercise its voting power under this
Section 10.4:
(A) the Secured Party may exercise (to the exclusion of the
Debtor) the voting power and all other incidental rights of
ownership with respect to any Pledged Shares or other shares
of capital stock constituting Pledged Property and the
Debtor hereby grants the Secured Party an irrevocable proxy,
exercisable under such circumstances, to vote the Pledged
Shares and such other Pledged Property; and
(B) promptly to deliver to the Secured Party such additional
proxies and other documents as may be necessary to allow the
Secured Party to exercise such voting power.
All dividends, distributions, interest, principal, cash payments, and
proceeds which may at any time and from time to time be held by the
Debtor but which Debtor is then obligated to deliver to the Secured
Party, shall, until delivery to the Secured Party, be held by the
Debtor separate and apart from its other property in trust for the
Secured Party. The Secured Party agrees that unless an Event of
Default shall have occurred and be continuing and the Secured Party
shall have given the notice referred to in Section 10.4(d), the Debtor
shall have the exclusive voting power with respect to any shares of
capital stock (including any of the Pledged Shares) constituting
Pledged Property and the Secured Party shall, upon the written request
of the Debtor, promptly deliver such proxies and other documents, if
any, as shall be reasonably requested by the Debtor which are
necessary to allow the Debtor to exercise voting power with respect to
any such share of capital stock (including any of the Pledged Shares)
constituting Pledged Property; provided, however, that no vote shall
be cast, or consent, waiver, or ratification given, or action taken by
the Debtor that would impair any Pledged Property or be inconsistent
with or violate any provision of this Agreement, the Notes or the
Note, Stock Purchase and Warrant Agreement.
(e) Additional Pledged Shares. The Debtor agrees to pledge, hypothecate,
assign, charge, mortgage, deliver and transfer to the Secured Party,
for its benefit, shares of any additional subsidiaries, if any,
formed, purchased or otherwise acquired by the Debtor after the date
hereof within three (3) business days after such formation, purchase
or other acquisition, and all dividends, distributions, interest,
cash, instruments and other property or rights the Debtor might have
with respect to such shares as provided in Sections 6 and 7 hereof.
10.5 Insurance
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The Debtor will maintain or cause to be maintained insurance of the type, in the
amounts and with such insurance companies as provided in Section 5O of the Note,
Stock Purchase and Warrant Agreement. If a Default of the nature referred to in
Section 6(ix) or (x) of the Note, Stock Purchase and Warrant Agreement or an
Event of Default has occurred and is continuing, all proceeds of all insurance
maintained by the Debtor or the Subsidiary and covering the Collateral shall be
paid to the Secured Party for application to the payment in full of all
outstanding Secured Obligations.
10.6 Transfers and Other Liens
Neither the Debtor nor the Subsidiary shall, without the prior written consent
of the Secured Party, which may be granted or denied by the Secured Party in its
sole and absolute discretion:
(a) sell, assign (by operation of law or otherwise), transfer or otherwise
dispose of any of the Collateral other than worn-out or obsolete
Equipment;
(b) create or suffer to exist any Lien or other charge or encumbrance upon
or with respect to any of the Collateral or Leases to secure
Indebtedness of any Person or entity, except for the Security Interest
created by this Agreement, Permitted Encumbrances, the Bank Security
Interest, security interests in the New Properties as permitted by
Section 1.3 and except as permitted by the Note, Stock Purchase and
Warrant Agreement; or
(c) sell, assign (by operation of law or otherwise), transfer, sublet or
otherwise dispose of any Lease.
10.7 Further Assurances, etc.
Each of the Debtor and the Subsidiary agrees that, from time to time at its own
expense, the Debtor and the Subsidiary will promptly execute and deliver all
further instruments and documents including, without limitation, assignments,
certificates and supplemental documents, and do all further acts or things, that
may be necessary or desirable, or that the Secured Party may request, in order
to more fully evidence, perfect, preserve and protect any Security Interest
granted or purported to be granted hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, the Debtor and the
Subsidiary will:
(a) xxxx conspicuously each chattel paper included in the Receivables and
each Related Contract and each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to the
Secured Party, indicating that such chattel paper, Related Contract or
Collateral is subject to the Security Interest granted hereby;
(b) if any Collateral shall be evidenced by a promissory note or other
instrument, negotiable document or chattel paper, deliver and pledge
to the Secured Party hereunder such promissory note, instrument,
negotiable document or chattel paper duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Secured Party;
19
(c) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including,
without limitation, filings with the United States Patent and
Trademark Office or United States Copyright Office and filings with
the Canadian Trademark Office (or any successor office or any similar
office in any other country), as may be necessary or desirable, or as
the Secured Party may request, in order to perfect and preserve the
Security Interests and other rights granted or purported to be granted
to the Secured Party hereby;
(d) furnish to the Secured Party, from time to time at the Secured Party's
request, statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as the Secured Party may reasonably request, all in
reasonable detail;
(e) furnish such other information as the Secured Party may reasonably
request concerning the Collateral;
(f) promptly notify the Secured Party of any change in the facts or
circumstances warranted or represented by the Debtor or any of the
Subsidiary herein which change could reasonably be expected to have a
material adverse effect on the business of the Debtor or the
Subsidiary or the ability of the Debtor or the Subsidiary to perform
its obligations under the Note, Stock Purchase and Warrant Agreement
or this Agreement; and
(g) promptly notify the Secured Party of any material claim, action, or
proceeding commenced against the Debtor or the Subsidiary.
With respect to the foregoing and the grant of the Security Interest hereunder,
the Debtor and the Subsidiary hereby authorizes the Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral, without the signature of the Debtor or the
Subsidiary where permitted by law.
10.8 Landlord Consents
Each of the Debtor and the Subsidiary covenants and agrees that it will use its
best efforts to obtain as promptly as practicable following execution of this
Agreement, all consents from third parties necessary to effect the transaction
contemplated by this Agreement, such consents to be substantially in the form
attached hereto as Exhibit E (the "Landlord Consent").
10.9 Additional Subsidiaries
The Debtor covenants and agrees that it will cause any subsidiary of which the
Debtor owns 75% or more of the issued and outstanding voting shares and which
purchases or otherwise acquires any property or interest of the nature described
in Sections 1.1(a), (b) or (c) after the date hereof within three (3) business
days after any such purchase or acquisition, to become a party to this Agreement
in the same manner and to the same extent as the Subsidiary and thereby grant a
security interest in such property or interest purchased or otherwise acquired
by it and be bound by all of the provisions hereof.
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11. SECURED PARTY
11.1 Secured Party Appointed Attorney-in-Fact
Each of the Debtor and the Subsidiary hereby irrevocably appoints the Secured
Party as the Debtor's and each such Subsidiary's attorney-in-fact, with full
authority in the place and stead of the Debtor or the Subsidiary and in the name
of the Debtor or the Subsidiary or otherwise, to take any action and to execute
any instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys representing any dividend,
interest payment or other distribution or payment due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or take any action or institute any proceedings
which the Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Secured Party with respect to any of the Collateral;
(d) to perform the affirmative obligations of the Debtor or any such
Subsidiary hereunder (including all obligations of the Debtor or any
such Subsidiary pursuant to Section 10.7); and
(e) without limiting the generality of the foregoing, following the
occurrence of an Event of Default, to assign, sell or otherwise
dispose of all right, title and interest of the Debtor in and to the
Trademarks listed on Schedule I to the Trademark Agreement, and
including those trademarks which are added to the same subsequent
hereto, and all registrations and recordings thereof, and all pending
applications therefor, and to record, register and file, or accomplish
any other formality with respect to the foregoing, and to execute and
deliver any and all agreements, documents, statements, certificates,
instruments of assignment or other papers necessary or advisable to
effect such purpose as the Secured Party may in its sole discretion
determine.
Each of the Debtor and the Subsidiary hereby acknowledges, consents and agrees
that the power of attorney granted pursuant to this Section 11 is irrevocable
and coupled with an interest.
11.2 Secured Party May Perform
If the Debtor or the Subsidiary fails to perform any agreement contained herein,
the Secured Party may itself perform, or cause performance of, such agreement,
and the expenses of the Secured Party incurred in connection therewith shall be
payable by the Debtor pursuant to Section 12.3.
21
11.3 Secured Party Has No Duty
In addition to, and not in limitation of, Section 4, the powers conferred on the
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty on it to exercise any such powers. Except for
reasonable care of any Collateral in its possession or control and the
accounting for moneys actually received by it hereunder, the Secured Party shall
have no duty as to any Collateral, or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral including, without limitation, with respect to the Pledged Property,
responsibility for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any
Pledged Property, whether or not the Secured Party has or is deemed to
have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
11.4 Reasonable Care
The Secured Party is required to exercise reasonable care in the custody and
preservation of any of the Collateral in its possession or control; provided,
however, the Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of any of the Collateral if the Collateral is
accorded treatment substantially equal to that which the Secured Party accords
its own property and if it takes such action for that purpose as the Debtor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Secured Party
to comply with any such request at any time shall not in itself be deemed a
failure to exercise reasonable care.
11.5 Default
As used herein, the term "Event of Default" shall mean any one of the following
events:
(a) any representation or warranty made by the Debtor or the Subsidiary in
this Agreement or in any writing furnished in connection with entering
in the transactions contemplated hereby shall be false in any material
respect on the date as of which made;
(b) the Debtor or the Subsidiary shall fail to observe or perform any
covenant, condition or agreement set forth in this Agreement and such
failure shall continue unremedied for a period of fifteen (15) days
after notice thereof from the Secured Party to the Debtor;
(c) any Event of Default under the Note, Stock Purchase and Warrant
Agreement shall have occurred and be continuing; or
(d) any Event of Default under the U.S. Security Agreement (as hereinafter
defined) shall have occurred and be continuing.
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12. REMEDIES
12.1 Certain Remedies
If any Event of Default shall have occurred and be continuing that has not been
cured or waived the Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Personal Property Security Act in effect in the Province of British Columbia at
the time ("PPSA") (whether or not the PPSA applies to the affected Collateral)
and also may:
(a) appoint or reappoint by instrument in writing, any person or persons,
whether an officer or officers or an employee or employees of the
Secured Party or not, to be a receiver or receivers (hereinafter
called a "Receiver", which term when used herein shall include a
receiver, a receiver and manager or a receiver-manager) of the
Collateral (including any interest, income or profits therefrom) and
may remove any Receiver so appointed and appoint another in his stead.
Any such Receiver shall, so far as concerns responsibility for his
acts, be deemed the agent of the Debtor and not the Secured Party, and
the Secured Party shall not be in any way responsible for any
misconduct, negligence, or non-feasance on the part of any such
Receiver, his servants, agents or employees. Subject to the provisions
of the instrument appointing him, any such receiver shall have power
to take possession of the Collateral, to preserve the Collateral or
its value, to carry on or concur in carrying on all or any part of the
business of the Debtor or the Subsidiary including, without
limitation, the right to sell, lease or otherwise dispose of or concur
in selling, leasing or otherwise disposing of the Collateral. To
facilitate the foregoing powers, any such Receiver may, to the
exclusion of all others, including the Debtor and the Subsidiary,
enter upon, use and occupy all premises owned or occupied by the
Debtor or the Subsidiary wherein Collateral may be situate, maintain
Collateral upon such premises, borrow money on a secured or unsecured
basis and use Collateral directly in carrying on the Debtor's or the
Subsidiary's business or as security for loans or advances to enable
him to carry on the Debtor's or the Subsidiary's business or
otherwise, as such Receiver shall, in his discretion, determine.
Except as may be otherwise directed by the Secured Party all monies
received from time to time by such Receiver in carrying out his
appointment shall be received in trust for and paid over to the
Secured Party. Every such Receiver may, in the discretion of the
Secured Party, be vested with all or any of the rights and powers of
the Secured Party;
(b) either directly or through its agents or nominees, exercise any or all
of the powers and rights given to a Receiver by virtue of the
foregoing clause (a);
(c) take possession of, collect, demand, xxx on, enforce, recover and
receive Collateral and give valid and binding receipts and discharges
therefor and in respect thereof and exercise, sell, lease or otherwise
dispose of Collateral in such manner, at such time or times and place
or places, for such consideration and upon such terms and conditions
as to the Secured Party may seem reasonable; and
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(d) without limiting the generality of the foregoing, require the Debtor
and the Subsidiary to, and each of the Debtor and the Subsidiary
hereby agrees that it will, at its expense and upon request of the
Secured Party forthwith, assign, all right, title and interest of the
Debtor or the Subsidiary in and to the Trademarks listed on Schedule I
to the Trademark Agreement, and including those trademarks which are
added to the same subsequent hereto, and all registrations and
recordings thereof, and all pending applications therefor, and record,
register and file, or accomplish any other formality with respect to
the foregoing, and execute and deliver any and all agreements,
documents, statements, certificates, instruments of assignment or
other papers necessary or advisable to effect such purpose.
In addition to those rights granted herein and in any other agreement now or
hereafter in effect between the Debtor or the Subsidiary and the Secured Party
and in addition to any other rights the Secured Party may have at law or in
equity, exercise all rights and remedies of a secured party under the PPSA.
Provided always, that the Secured Party shall not be liable or accountable for
any failure to exercise its remedies, take possession of, collect, enforce,
realize, sell, lease or otherwise dispose of Collateral or to institute any
proceedings for such purposes.
Each of the Debtor and the Subsidiary acknowledges that the Secured Party or any
Receiver appointed by it may take possession of Collateral wherever it may be
located and by any method permitted by law and the Debtor agrees upon request
from the Secured Party or any such Receiver to assemble and deliver possession
of Collateral at such place or places as directed by the Secured Party or any
Receiver.
Each of the Debtor and the Subsidiary agrees to pay all costs, charges and
expenses reasonably incurred by the Secured Party or any Receiver appointed by
it, whether directly or for services rendered (including reasonable solicitors
and auditors costs and other legal expenses and Receiver remuneration), in
operating the Debtor's or the Subsidiary's accounts, in enforcing this Security
Agreement, taking custody of, preserving, repairing, processing, preparing for
disposition and disposing of Collateral and in enforcing or collecting
Indebtedness and all such costs, charges and expenses, together with any monies
owing as a result of any borrowing by the Secured Party or any Receiver
appointed by it, as permitted hereby, shall be secured hereby and shall be paid
from the proceeds of realization, collection or disposition of Collateral in the
following order of priority:
(a) to satisfy claims of all secured or unsecured creditors ranking in
priority to the Secured Party;
(b) to pay all remuneration, costs and expenses of every nature and kind
incurred by the Receiver in connection with the exercise of the
Receiver's powers and authorities hereby conferred, excluding the
Receiver's borrowings;
(c) to repay to the Secured Party any sum or sums borrowed by the Receiver
from the Secured Party and interest thereon if secured by the
Collateral;
(d) to repay to the Secured Party all the Indebtedness;
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(e) to repay any sum or sums borrowed by the Receiver from any
financial institution, corporation or other person other than the
Secured Party and interest thereon if secured by the Collateral;
(f) any surplus shall, subject to the rights of other creditors, be
paid to the Debtor or the Subsidiary, as the case may be.
The Secured Party will give the Debtor and the Subsidiary such notice, if any,
of the date, time and place of any public sale or of the date after which any
private disposition of collateral is to be made, as may be required by the PPSA.
Each of the Debtor and the Subsidiary agrees that the Secured Party may exercise
its rights and remedies hereunder immediately upon default, except as may be
otherwise provided in the PPSA and the Bankruptcy and Insolvency Act, and the
Debtor and the Subsidiary hereby expressly confirms that except as may be
otherwise provided herein or in the PPSA, the Secured Party has not given any
covenant, express or implied, and is under no obligation to allow the Debtor or
the Subsidiary any period of time to remedy any default prior to the Secured
Party exercising its rights and remedies hereunder.
The Secured Party shall not be responsible or liable for any debts contracted by
it, for damages to persons or property or for salaries or non-fulfilment of
contracts during any period when the Secured Party shall manage the Collateral
upon entry, as herein provided, nor shall the Secured Party be liable to account
as mortgagee in possession or for anything except actual receipts or be liable
for any loss on realization or for any default or omission for which a mortgagee
in possession may be liable. The Secured Party shall not be bound to do, observe
or perform or to see to the observance or performance by the Debtor or the
Subsidiary of any obligations or covenants imposed upon the Debtor or the
Subsidiary nor shall the Secured Party, in the case of securities, instruments
or chattel paper, be obliged to preserve rights against other persons, nor shall
the Secured Party be obliged to keep any of the Collateral identifiable. Each of
the Debtor and the Subsidiary hereby waives any applicable provision of law
permitted to be waived by it which imposes higher or greater obligations upon
the Secured Party than aforesaid.
Each of the Debtor and the Subsidiary hereby irrevocably appoints the Secured
Party or the Receiver, as the case may be, with full power of substitution, to
be the attorney of the Debtor or the Subsidiary for and in the name of the
Debtor or the Subsidiary to sign, endorse or execute under seal or otherwise any
deeds, documents, transfers, cheques, instruments, demands, assignments,
assurances or consents that the Debtor or the Subsidiary is obliged to sign,
endorse or execute and generally to use the name of the Debtor or the Subsidiary
and to do all things as may be necessary or incidental to the exercise of all or
any of the powers conferred on the Secured Party or the Receiver, as the case
may be, pursuant to this Security Agreement.
If any Event of Default shall have occurred and be continuing that has not been
cured or waived the Secured Party may:
(a) transfer all or any part of the Pledged Property into the name of
the Secured Party or its nominee, with or without disclosing that
such Pledged Property is subject to the lien and security interest
hereunder,
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(b) notify the parties obligated on any of the Collateral to make
payment to the Secured Party of any amount due or to become due
thereunder,
(c) enforce collection of any of the Collateral by suit or otherwise,
and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any
party with respect thereto,
(d) endorse any checks, drafts, or other writings in the Debtor's or
the Subsidiary's name to allow collection of the Collateral,
(e) take control of any proceeds of the Collateral,
(f) execute (in the name, place and stead of the Debtor or the
Subsidiary) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of
the Collateral.
12.2 Compliance with Restrictions
Each of the Debtor and the Subsidiary agrees that in any sale of any of the
Collateral whenever an Event of Default shall have occurred and be continuing,
the Secured Party is hereby authorized to comply with any limitation or
restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
nor shall the Secured Party be liable nor accountable to the Debtor or the
Subsidiary for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.
12.3 Indemnity and Expenses
(a) Each of the Debtor and the Subsidiary agrees to indemnify the
Secured Party from and against any and all claims, losses and
liabilities arising out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement),
except claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct.
(b) Each of the Debtor and the Subsidiary will, so long as an Event of
Default shall not have occurred and be continuing, within 15
Business Days after demand and, if an Event of Default has occurred
and is continuing, upon demand, pay to the Secured Party the amount
of any and all reasonable expenses, including the costs of any
insurance and payment of taxes and other charges and the reasonable
fees and disbursements of its counsel and of any experts and
agents, which the Secured Party may incur in connection with
26
(i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of or the sale
of, collection from, or other realization upon, any of the
Collateral,
(iii) the exercise or enforcement of any of the rights of the
Secured Party hereunder, or
(iv) the failure of the Debtor or the Subsidiary to perform or
observe any of the provisions hereof.
All such expenses, costs, taxes and other charges shall be a part
of the Secured Obligations and shall bear interest at the maximum
rate permitted by applicable law from the date incurred until the
date repaid to the Secured Party. It is agreed, however, that the
risk of loss or damage to the Collateral is on the Debtor and the
Subsidiary prior to the Secured Party's exercise of any right or
remedy described herein, and the Secured Party shall have no
liability whatsoever for failure to obtain or maintain insurance,
nor to determine whether any insurance ever in force is adequate as
to amount or as to the risks insured.
12.4 Floating Charge
For the purposes of the Land Title Act (British Columbia), the floating charge
on Real Property created by this Security Agreement shall become a fixed charge
on the earlier of:
(a) the occurrence of an Event of Default under Section 11.5(c); and
(b) the Secured Party taking any action pursuant to Section 13 to
enforce and realize upon any or all of the Security Interest,
and in any event upon the appointment by the Secured Party of a Receiver
pursuant to Section 12.1.
13. CLOSING CONDITIONS
The Secured Party's obligation to enter into this Security Agreement and to
waive and forbear interest as contemplated in Section 2.1 hereof is subject to
the satisfaction, at or prior to the date hereof, of the following conditions:
(a) the representations and warranties made by the Debtor and the
Subsidiary in Section 9 hereof shall be true and correct on and as
of the date hereof and the Debtor and the Subsidiary shall have
performed all obligations and conditions herein or therein required
to be performed or observed by it on or prior to the date hereof,
and the Debtor shall have delivered to the Secured Party an
Officer's Certificate, dated the date hereof, to such effect;
(b) Debtor and the Subsidiary shall, to the extent applicable, have
executed and delivered:
27
(i) the Assignment and Assumption of Lease, substantially in the
form attached hereto as Exhibit D, with respect to the
Leases; and
(ii) the Trademark Agreement (Canada) substantially in the form
attached hereto as Exhibit C, with respect to Canadian
Trademarks;
(c) the Consent, substantially in the form attached hereto as Exhibit
G, shall have been executed and delivered by RCCH;
(d) the Consents in the forms attached as Exhibits H and I shall have
been executed and delivered by the Debtor;
(e) the Debtor shall have executed and delivered the letter agreement,
substantially in the form attached hereto as Exhibit F, with
respect to the Assignment and Assumption of Lease, referred to
above;
(f) the Secured Party shall have received such other documents,
instruments, opinions or assurances, including, without limitation,
corporate resolutions and good standing and incumbency
certificates, as the Secured Party and its counsel may request;
(g) the Debtor and the Secured Party shall have entered into the Waiver
and Amendment No. 6 dated as of October 6, 1999;
(h) Xxxxxxx X. Xxxxxxx and GE Investment Management Incorporated, a
Delaware Corporation, as the general partner of the Secured Party,
shall have entered in the Voting Trust Agreement dated as of July
16, 1999;
(i) the Debtor, Xxxxxxx X. Xxxxxxx and Jephco Holdings shall have
entered into the Settlement Agreement dated as of July 16, 1999;
and
(j) the Debtor and each of its subsidiaries formed under the U.S.
federal laws or laws of any state of the U.S. (the "U.S.
Subsidiaries") shall have executed and delivered a security
agreement (the "U.S. Security Agreement") substantially in the form
of this Agreement and the other documents required by the U.S.
Security Agreement (such documents together with U.S. Security
Agreement, herein referred to as the "U.S. Documents") to which the
Debtor and the U.S. Subsidiaries are a party.
14. MISCELLANEOUS PROVISIONS
14.1 Amendments, etc.
No amendment to or waiver of any provision of this Agreement nor consent to any
departure by the Debtor or the Subsidiary herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Secured Party,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
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14.2 Addresses for Notices
All notices and other communications provided for hereunder shall be in writing
and, if to the Debtor or the Subsidiary, delivered or transmitted to it at: 000
Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, Fax: 604
000-0000 and if to the Secured Party, delivered or transmitted to it, at the
address or facsimile number of the Secured Party specified in the Note, Stock
Purchase and Warrant Agreement, or as to any party at such other address or
facsimile number as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this Section. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by prepaid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted upon receipt of electronic confirmation of transmission.
14.3 Section Captions
Section captions used in this Agreement are for convenience of reference only,
and shall not affect the construction of this Agreement.
14.4 Severability
Wherever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
14.5 Counterparts, etc.
This Agreement may be executed in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute but one and the same
agreement.
14.6 Rights Cumulative
All rights and remedies of the Secured Party hereunder are cumulative of each
other and of every other right or remedy which the Secured Party may otherwise
have at law or in equity or under any other contract or other writing for the
enforcement of the Security Interest herein or in the collection of the Notes or
the Secured Obligations, and the exercise of one or more rights or remedies
shall not prejudice or impair the concurrent or subsequent exercise of other
rights and remedies.
14.7 Assignment
The rights, powers and interests held by the Secured Party hereunder, together
with the Collateral, may be transferred and assigned by the Secured Party,
without the prior written consent of the Debtor or any of the Subsidiary. The
rights of the Debtor and any of the Subsidiary are not transferable hereunder
without the written consent of the Secured Party.
14.8 No Waiver
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No failure on the part of the Secured Party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Secured Party of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
14.9 Binding Effect
This Agreement shall be binding on the Debtor and the Subsidiary and the
Debtor's and the Subsidiary's successors and assigns and shall inure to the
benefit of the Secured Party, and the Secured Party's successors and assigns.
14.10 Termination
This Agreement and the Security Interest in the Collateral will terminate upon
the earlier to occur (i) satisfaction and payment in full of all of the Secured
Obligations by extinguishment thereof but not by renewal, modification or
extension thereof or (ii) fifteen (15) days following the request of the Debtor
received on or at any time after the third anniversary of the date of this
Agreement; provided, however, that (A) the Debtor is, on the date of the
termination, and has been, at all times during the twelve (12) months preceding
such date, in compliance with its covenants contained in Section 5 of the Notes,
Stock Purchase and Warrant Agreement, (B) on the date of the termination there
exists no Default or "Event of Default" (as defined in the Note, Stock Purchase
and Warrant Agreement) or Event of Default hereunder and (C) there is no
litigation in excess of $200,000 existing, pending or threatened against the
Debtor or any of its Subsidiaries on the date of the termination.
14.11 Number and Gender of Words
Whenever herein the singular is used, the same shall include the plural where
appropriate, and the words of any gender shall include each other where
appropriate.
14.12 PPSA Definitions
Unless otherwise defined herein or the context otherwise requires, terms for
which meanings are provided in the PPSA are used in this Agreement, including
the recitals, with such meanings.
14.13 Governing Law; Entire Agreement
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
LAWS OF THE PROVINCE OF BRITISH COLUMBIA AND THE LAWS OF CANADA APPLICABLE
THEREIN WITHOUT REGARD FOR CONFLICT OF LAWS PRINCIPLES.
14.14 Forum Selection and Consent to Jurisdiction
EACH OF THE DEBTOR AND THE SUBSIDIARY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE IN THE CITY
OF VANCOUVER. EACH OF THE DEBTOR AND THE SUBSIDIARY HEREBY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION IN
00
XXX XXXXXX XX XXX XXXXX XX XXX XXXX AND IN THE FEDERAL COURTS IN THE SOUTHERN
DISTRICT OF THE STATE OF NEW YORK AND EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE DEBTOR OR THE
SUBSIDIARY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, EACH OF THE DEBTOR AND THE SUBSIDIARY HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
14.15 Copy of Agreement
Each of the Debtor and the Subsidiary hereby acknowledges receipt of a copy of
this Security Agreement and waives all right to receive a copy of any financing
statement or financing change statement fixed or registered by the Secured
Party, or any verification statement issued by any registry in connection
therewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the day, month and year first above written.
DEBTOR:
ELEPHANT & CASTLE GROUP INC.
By: _____________________________________
Name:
Title:
SUBSIDIARY:
The Elephant and Castle Canada Inc.
By: _____________________________________
Name:
Title:
31
SECURED PARTY:
GE INVESTMENT PRIVATE PARTNERS II, A LIMITED
PARTNERSHIP By: GE Investment Management Incorporated,
its General Partner
By: _____________________________________
Name:
Title:
32
