EXHIBIT 10(ee)
AMENDMENT NUMBER ONE TO
SECURITY AGREEMENT
This AMENDMENT NUMBER ONE TO SECURITY AGREEMENT (this "Amendment") is
entered into as of October 30, 1998, by and between Foothill Capital
Corporation, a California corporation ("Foothill"), and FRI-MRD Corporation, a
Delaware corporation ("FRI-MRD") with reference to the following facts:
A. Foothill, on the one hand, and El Torito Restaurant's, Inc. ("El
Torito"), a Delaware corporation, Chi-Chi's, Inc., a Delaware
Corporation (collectively with El Torito, "Borrower"), FRI-MRD, and
certain of their Affiliates, on the other hand, heretofore have
entered into that certain Loan and Security Agreement, dated as of
January 10, 1997 (as heretofore amended, supplemented, or otherwise
modified, the "Loan Agreement");
B. Foothill and FRI-MRD have heretofore entered into that certain
General Continuing Guaranty, dated as of January 10, 1997 (the
"Guaranty"), pursuant to which FRI-MRD has guaranteed the obligations
of Borrower to Foothill under the Loan Agreement, and that certain
Security Agreement, dated as of January 10, 1997 (the "Security
Agreement"), pursuant to which FRI-MRD has collateralized its
obligations under the Guaranty;
C. Borrower and FRI-MRD have requested Foothill to consent to, inter
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alia, FRI-MRD's issuance of new Senior Secured Discount Notes in the
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original principal amount of up to $24,000,000 (yielding gross
proceeds of approximately $21,000,000) to be secured by a pledge of
the Pledged HGI Collateral;
D. Borrower and FRI-MRD have requested Foothill to amend the Loan
Agreement and the Security Agreement to permit the foregoing
transactions;
E. Borrower, FRI-MRD, and Foothill have entered into that certain
Amendment Number Four to Loan Agreement, dated as of June 9, 1998 (the
"Fourth Amendment") to so modify the Loan Agreement; and
F. Foothill is willing to so modify the Security Agreement in
accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the above recitals and the mutual
premises contained herein, Foothill and FRI-MRD hereby agree as follows:
1. Definitions for this Amendment.
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Any and all initially capitalized terms used herein shall have the
meanings ascribed thereto in the Security Agreement, as amended hereby. For
purposes of this Amendment only, the following initially capitalized terms shall
have the following meanings:
"Effective Date" means the date on which Foothill acknowledges, in
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writing, that each of the conditions contained in Section 3 have been fulfilled
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or waived.
2. Amendments to the Security Agreement.
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a. Section 1.1 of the Agreement hereby is amended by modifying
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following definition:
"Collateral" means each of the following: the Accounts;
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Guarantor's Books; the Equipment; the General Intangibles; the Inventory;
the Negotiable Collateral; any money, or other assets of Guarantor which
now or hereafter come into the possession, custody, or control of Foothill;
and the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Guarantor's Books, Equipment, General
Intangibles, Inventory, Negotiable Collateral, money, deposit accounts, or
other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion
thereof or interest therein, and the proceeds thereof; provided, however,
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that the Pledged HGI Collateral and the proceeds or products thereof shall
not constitute Collateral.
b. Section 5.1 of the Security Agreement hereby is amended and
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restated in its entirety to read as follows:
5.1 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets,
of any kind, whether now owned or hereafter acquired, or any income or
profits therefrom, except for Permitted Liens and the pledge of the Pledged
HGI Collateral pursuant to the Senior Secured Discount Note Agreement.
3. Conditions Precedent to the Effectiveness of this Amendment.
The effectiveness of the provisions of this Amendment is subject to
the fulfillment, to the satisfaction of Foothill and its counsel, of each of the
following conditions:
a. Foothill shall have received each of the following documents,
in form and substance satisfactory to Foothill and its counsel, duly executed,
and each such document shall be in full force and effect:
(1) this Amendment; and
(2) the Fourth Amendment.
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b. All conditions to the effectiveness of Section 3 of the Fourth
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Amendment shall have been fulfilled or waived, and the same shall be in full
force and effect.
c. Foothill shall have received a certificate from the Secretary
of FRI-MRD attesting to the resolutions of FRI-MRD's Board of Directors
authorizing its execution, delivery, and performance of this Amendment and
authorizing specific officers of such FRI-MRD to execute the same;
d. No injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
governmental authority against Borrower, FRI-MRD, any Guarantor, Foothill, or
any of their Affiliates; and
e. All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance reasonably satisfactory
to Foothill and its counsel.
4. Representations and Warranties. FRI-MRD hereby represents and
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warrants to Foothill that: (a) the execution, delivery, and performance of this
Amendment and of the Security Agreement, as amended by this Amendment, are
within its corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of any law, rule, or regulation,
or any order, judgment, decree, writ, injunction, or award of any arbitrator,
court, or governmental authority, or of the terms of its charter or bylaws, or
of any contract or undertaking to which it is a party or by which any of its
properties may be bound or affected; (b) this Amendment and the Security
Agreement, as amended by this Amendment, constitute FRI-MRD's legal, valid, and
binding obligation, enforceable against FRI-MRD in accordance with its terms.
5. Effect on Security Agreement. The Security Agreement, as amended
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by this Amendment, shall be and remain in full force and effect in accordance
with its respective terms and hereby is ratified and confirmed in all respects.
The execution, delivery, and performance of this Amendment shall not operate as
a waiver of or, except as expressly set forth herein, as an amendment, of any
right, power, or remedy of Foothill under the Security Agreement, as in effect
prior to the date hereof.
6. Miscellaneous.
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a. Upon the effectiveness of this Amendment, each reference in the
Security Agreement to "this Agreement", "hereunder", "herein", "hereof" or words
of like import referring to the Security Agreement shall mean and refer to the
Security Agreement as amended by this Amendment.
b. Upon the effectiveness of this Amendment, each reference in the
Loan Documents to the "Security Agreement", "thereunder", "therein", "thereof"
or words of like import referring to the Security Agreement shall mean and refer
to the Security Agreement as amended by this Amendment.
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c. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this Amendment by signing any such
counterpart. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first written above.
FRI-MRD CORPORATION,
a Delaware corporation
By__________________________________
Title_______________________________
FOOTHILL CAPITAL CORPORATION,
a California corporation
By__________________________________
Title_______________________________
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