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EXHIBIT 4.11
SUBSIDIARY SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") is dated as of February 25,
1998, and is entered into by and between each of the undersigned direct and
indirect Subsidiaries of AMERICAN RESTAURANT GROUP, INC., a Delaware corporation
(the "COMPANY") (each such Subsidiary a "GRANTOR" and collectively, the
"GRANTORS"), and U.S. TRUST COMPANY OF CALIFORNIA, N.A. ("U.S. Trust") as
collateral agent for and representative of (in such capacity herein called the
"COLLATERAL AGENT") the Secured Parties (as hereinafter defined).
R E C I T A L S
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WHEREAS, pursuant to that certain Indenture dated as of February 25,
1998 (as supplemented and otherwise amended from time to time, the "Senior Note
Indenture"), by and among the Company, the Grantors, and U. S. Trust, as Trustee
thereunder (in such capacity, the "Indenture Trustee"), the Company will issue
11.50% Series A senior secured notes (and, in connection with the Exchange Offer
as defined in the Senior Note Indenture, the Series B senior secured notes) due
on or before 2003 in an aggregate principal amount of up to $155,000,000
(collectively, the "Senior Notes") to the holders thereof (the "Senior Note
Holders");
WHEREAS, the Company, each Grantor, the lenders listed on the signature
pages thereof (the "Lenders") and BankBoston, N.A., as agent thereunder (the
"Agent"), have entered into that certain Credit Agreement (as defined in the
Intercreditor Agreement referred to below and together with any loan documents
referred to therein, the "New Credit Facility");
WHEREAS, pursuant to a guaranty included in the Senior Note Indenture,
the Grantors have guaranteed the obligations of the Company under the Senior
Notes, the Senior Note Indenture and the other documents to which the Company is
a party;
WHEREAS, the Collateral Agent, the Indenture Trustee and the Agent have
entered into that certain Intercreditor Agreement, dated as of the date hereof
(the "Intercreditor Agreement") providing for, among other things, the
appointment of the Collateral Agent to administer and enforce the Collateral
Documents and Collateral as provided therein;
WHEREAS, it is a condition precedent to the Senior Note Indenture and
the New Credit Facility that each Grantor shall have entered into this Agreement
and granted the security interests provided herein;
WHEREAS, each Grantor wishes to grant a security interest in favor of
the Collateral Agent for the benefit of the Indenture Trustee, the Senior Note
Holders, the
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Agent and the Lenders and the persons who may in the future become secured
parties in accordance with the terms of the Intercreditor Agreement (all such
beneficially interested parties being herein referred to as the "SECURED
PARTIES"); and
WHEREAS, the rights and obligations of each of the Secured Parties are
further governed by and subject to the Intercreditor Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein and
in order to induce the Senior Note Holders to purchase the Senior Notes and to
induce the Lenders to make loans and other extensions of credit under the New
Credit Facility, each Grantor hereby agrees with the Collateral Agent for the
ratable benefit of the Secured Parties as follows:
SECTION 1. GRANT OF SECURITY. Each Grantor, in order to secure the
Secured Obligations (as defined in Section 2), hereby assigns and pledges to the
Collateral Agent for its benefit and for the ratable benefit of the Secured
Parties and hereby grants to the Collateral Agent for its benefit and for the
ratable benefit of the Secured Parties a first-priority security interest in all
of the Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which the Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COLLATERAL"):
(a) All items of "equipment" and "fixtures" (as such terms are defined
in Section 9-109(2) and 9-313 of the Uniform Commercial Code of the State
of New York (the "Code"), respectively) and including all equipment,
machinery, furnishings, fixtures, tools, supplies, automotive equipment,
motor vehicles and other equipment of any kind and nature, together with
all replacements, substitutions, attachments, parts (including spare
parts), modifications, additions, improvements, upgrades and accessions
of, to or upon such items of equipment or fixtures (together referred to
herein as the "EQUIPMENT");
(b) All inventory in all of its forms, wherever located now or
hereafter existing (as such term is defined in Section 9-109(4) of the
Code), including, but not limited to, (i) all goods held by the Grantor
for sale or lease or to be furnished under contracts of service or so
leased or furnished, (ii) all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in the Grantor's business, (iii)
goods in which the Grantor has an interest in mass or a joint or other
interest or right of any kind, (iv) goods which are returned to or
repossessed by the Grantor and (v) all additions and accessions thereto
and replacements thereof (all such inventory, accessions and products
being the "INVENTORY");
(c) All accounts (as such term is defined in Section 9-106 of the
Code), contract rights, chattel paper (as such term is defined in Section
9-105(b) of the
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Code), investment property (as such term is defined in Section 9-115 of
the Code), instruments (as such term is defined in Section 9-105(1)(i) of
the Code), guaranties, letters of credit, documents (as such term is
defined in Section 9-105(f) of the Code), drafts, acceptances, tax
refunds, insurance claims, rights to performance, judgments, security
agreements, leases, other obligations or receivables and general
intangibles (as such term is defined in Section 9-106 of the Code) of
every nature, including without limitation, all rights and claims to the
payment or receipt of money or other forms of consideration of any kind
included in this clause (c) (any and all such rights and claims to the
payment or receipt of money or other forms of consideration being the
"PAYMENT RIGHTS," and any and all such leases, security agreements and
other contracts being the "RELATED CONTRACTS");
(d) All United States and foreign trademarks, trademark rights, service
marks, certification marks, collective marks, service xxxx rights, trade
names, trade name rights, designs, logos, indicia, corporate names,
company names, business names, fictitious business names, trade styles
and/or other source and/or business identifiers, registrations and
applications pertaining thereto, renewals and extensions thereof, whether
now owned or hereafter acquired or issued, all common law and other rights
in and to the foregoing and the accompanying goodwill and other like
business property rights and the right (but not the obligation) to
register claim under trademark and to renew and extend such trademarks,
and the right (but not the obligation) to xxx in the name of the Grantor
for past, present or future infringement of trademark and all proceeds of
the foregoing, including, without limitation, license royalties, income,
payments, claims, damages and proceeds of suit ("TRADEMARK Property");
(e) All United States and foreign common law and/or statutory
copyrights, rights and interests of every kind and nature in copyrights
and works protectable by copyright, whether now owned or hereafter created
or acquired and renewals and extensions of copyrights, and the right (but
not the obligation) to make publication thereof for copyright purposes, to
register claim upon copyright and the right (but not the obligation) to
renew and extend such copyrights, and the right (but not the obligation)
to xxx in the name of the Grantor for past, present and future
infringements of copyright, and all proceeds of the foregoing, including
without limitation, royalties, income, payments, claims, damages, and
proceeds of suit ("COPYRIGHT PROPERTY");
(f) All United States and foreign patents and patent applications now
owned or hereafter acquired from time to time, and licenses and rights in,
and the right (but not the obligation) to xxx in the name of the Grantor
or in the name of the Collateral Agent for, all past, present and future
infringements of any such properties, all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and
reexaminations of any of the foregoing, and all proceeds of the foregoing
including, without limitation, royalties, income, payments, claims,
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damages, and proceeds of suit and the right to xxx for past infringements
of any of the foregoing ("PATENT PROPERTY");
(g) All cash, money, currency and all deposit accounts listed on
Schedule I hereto, including demand, time, savings, passbooks or similar
accounts maintained with the Senior Note Holders, the Lenders or other
banks, savings and loan associations or similar entities (the "PLEDGED
DEPOSITS");
(h) All books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software (owned by the
Grantor or in which it has an interest) that at any time evidence or
contain information relating to any of the Collateral or are otherwise
necessary or helpful in the collection thereof or realization thereupon;
(i) all shares of capital stock of any Subsidiary, and all options or
rights to acquire any such shares or interests, in each case now or
hereafter owned by such Grantor, all distributions on such capital stock
(as constituted immediately prior to such distribution) constituting
securities (whether debt or equity securities or otherwise), and all other
or additional stock, notes, securities or property paid or distributed in
respect of capital stock (as constituted immediately prior to such payment
or distribution) (A) by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement or (B) by
reason of any consolidation, merger, exchange of stock, conveyance of
assets, liquidation, bankruptcy or similar corporate reorganization or
other disposition of capital stock;
(j) all dividends, distributions, payments of interest and principal
and other amounts (whether consisting of securities, personalty or other
property) from time to time received, receivable or otherwise distributed
in respect of or in exchange or substitution for any capital stock;
(k) the account (which may be a securities account) established and
maintained by U.S. Trust and its successors and assigns, entitled
"American Restaurant Group Collateral Account, U.S. Trust Company of
California, N.A., as collateral agent, secured party", and all funds,
securities and other property or other items from time to time credited to
such account and all interest, income and distributions thereon (the
"Collateral Account");
(l) all rights to payment for goods sold or leased or services
rendered, whether or not earned by performance and all rights in respect
of the account debtor, including without limitation all such rights
constituting or evidenced by any account, chattel paper or instrument,
together with (a) any collateral assigned, hypothecated or held to secure
any of the foregoing and the rights under any security agreement granting
a security interest in such collateral, (b) all goods, the sale of which
gave rise to any of the foregoing, including, without limitation, all
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rights in any returned or repossessed goods and unpaid seller's rights,
(c) all guarantees, endorsements and indemnifications on, or of, any of
the foregoing and (d) all powers of attorney for the execution of any
evidence of indebtedness or security or other writing in connection
therewith (the "Receivables");
(m) all original copies of all documents, instruments or other writings
evidencing the Receivables, all books, correspondence, credit or other
files, records, ledge sheets or cards, invoices, and other papers relating
to Receivables, including without limitation all tapes, cards, computer
tapes, computer discs, computer runs, record keeping systems and other
papers and documents relating to the Receivables, whether in the
possession or under the control of such Grantor or any computer bureau or
agent from time to time acting for such Grantor or otherwise and all
credit information, reports and memoranda relating thereto (the
"Receivables Records");
(n) all interest rate or currency protection or hedging arrangements,
including without limitation, caps, collars, floors, forwards and any
other similar or dissimilar interest rate or currency exchange agreements
or other interest rate or currency hedging arrangements;
(o) all insurance policies;
(p) all motor vehicles, tractors, trailers and other like property, if
title thereto is governed by a certificate of title ownership; and
(q) All proceeds of any and all of the foregoing Collateral and, to the
extent not otherwise included, all payments under insurance (whether or
not the Collateral Agent, or any Secured Party is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral.
For purposes of this Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds are sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary
or involuntary, and includes, without limitation, all rights to payment,
including returned premiums, with respect to any insurance relating
thereto.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by acceleration or otherwise, (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section362(a)) of all obligations of every nature of each Grantor under the (a)
the Senior Note Indenture and the Senior Notes, (b) the New Credit Facility and
(c) any instrument governing other indebtedness of any Grantor which is then
secured by the Collateral in accordance with the terms of the Intercreditor
Agreement, whether for principal, interest (including, without limitation,
interest that, but
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for the filing of a petition in bankruptcy with respect to the Grantor, would
accrue on such obligations), fees, expenses or otherwise, whether now existing
or hereafter arising, voluntary or involuntary, whether or not jointly owed with
others, direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred and all or any portion of such obligations that
are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Collateral Agent as a preference, fraudulent
transfer or otherwise (all such obligations being the "UNDERLYING DEBT"), and
all obligations of every nature of each Grantor now or hereafter existing under
this Agreement (all such obligations of each such Grantor, together with the
Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of its rights hereunder shall not release the Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) neither the Collateral Agent nor any Secured Party shall have
any obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Collateral Agent or any
Secured Party be obligated to perform any of the obligations or duties of the
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants as follows:
(a) Location of Equipment and Inventory; Office Locations; Fictitious
Names. As of the Closing Date, all of the Equipment and Inventory (other
than Equipment and Inventory which, either singly or in the aggregate, is
not material) of Grantor is located at the places specified on Schedule I
hereto. As of the Closing Date, the chief place of business and the chief
executive office of the Grantor is located at 000 Xxxxxxx Xxxxxx Xxxxx,
0xx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000. As of the Closing Date, the
offices where the Grantor keeps its material records regarding the Payment
Rights of Grantor and all originals of all chattel paper that evidence
Payment Rights are set forth on Schedule II hereto. As of the Closing
Date, the Grantor does not do business under any trade name or fictitious
business name except as set forth on Schedule II hereto and does not have
any UCC-1 financing statements filed against it under any trade name or
fictitious business name.
(b) Delivery of Certain Collateral. All chattel paper, notes and other
instruments (excluding checks) comprising any or all of the items of
Collateral of Grantor have been delivered to the Collateral Agent duly
endorsed and accompanied by duly executed instruments of transfer or
assignment in blank.
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(c) Payment Rights Valid. Each material Payment Right constitutes the
legally valid and binding obligation of the party obligated to pay the
same (the "ACCOUNT GRANTOR") except as may be limited by bankruptcy,
reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally or by general principles of equity relating to
enforceability. To the knowledge of the Grantor, no Account Grantor has
any material defense, set off, claim or counterclaim against the Grantor
which can be asserted against the Collateral Agent whether in a proceeding
to enforce the Collateral Agent's rights in the Collateral or otherwise.
Each such material Payment Right complies in all material respects with
the provisions of all applicable laws and regulations, whether federal,
state or local, applicable thereto (including, without limitation, any
usury law, the Federal Truth and Lending Act and Regulation C of the
Federal Reserve System). None of the Payment Rights is evidenced by a
promissory note or other instrument, other than a check, that has not been
delivered to the Collateral Agent.
(d) Ownership of Collateral. Except for the security interest created
by this Agreement and Liens permitted by each of the agreements governing
the Underlying Debt secured hereby from time to time in effect, including
without limitation the Senior Note Indenture and the New Credit Facility
(collectively, "PERMITTED LIENS"), the Grantor owns the Collateral pledged
by the Grantor hereunder free and clear of any Lien. Except as may have
been filed in favor of the Collateral Agent relating to this Agreement or
in connection with Permitted Liens, no effective financing statement or
other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office.
(e) Perfection. Subject only to Permitted Liens, in the case of
existing Collateral, this Agreement creates, and in the case of after
acquired Collateral, at the time the Grantor first has rights in such
after acquired Collateral, this Agreement will create, in each case upon
the making of the filings described in clause (f) below or the taking of
possession by Collateral Agent with respect to security interests in
Collateral which can only be perfected by taking possession of such
Collateral, for all Collateral other than the Pledged Deposits and, upon
the Collateral Agent's giving proper notice pursuant to the Agency Account
Agreement, dated the date hereof, among the Collateral Agent, the Agent,
Xxxxx Fargo Bank, N.A., the Grantors and the Company (the "Agency Account
Agreement") or in the form of Exhibit A hereto to Xxxxx Fargo Bank,
National Association with respect to account no. 4001-197235 (the
"Collection Account") and the holders of the other accounts listed on
Schedule I hereto, for the Pledged Deposits held in the Collection Account
and the accounts listed on Schedule I hereto, a valid, perfected, first
priority security interest, in each case securing the payment and
performance of the Secured Obligations. Upon making the filings described
in clause (f) below or the taking of possession by Collateral Agent with
respect to security interests in Collateral which can only be perfected by
taking possession of such Collateral, in each case for all Collateral
other than the Pledged Deposits, and upon the Collateral Agent's giving
proper notice to the holders of
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the Pledged Deposits held in the Collection Account and the accounts
listed on Schedule I hereto, for the Pledged Deposits held in the
Collection Account and the accounts listed on Schedule I hereto, all
filings and other actions necessary or desirable to protect and to perfect
the security interests referenced above shall have been duly taken;
provided that the security interest granted hereunder in the Trademark
Property, Copyright Property and Patent Property shall only be perfected
to the extent such interests can be perfected by filing Uniform Commercial
Code financing statements in the jurisdiction set forth on Schedule III
annexed hereto and the filing of the Trademark Collateral Agreement in the
United States Patent and Trademark Office and, in the case of Copyright
Property, the filing of appropriate documentation in the United States
Copyright Office and in the case of Patent Property, the filing of
appropriate documentation in the United States Patent and Trademark
Office. As of the Closing Date, no Grantor has an interest in any
Copyright Property or Patent Property.
(f) Governmental Authorizations. No 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 Grantor of the
security interest granted hereby or for the execution, delivery or
performance of this Agreement by the Grantor or (ii) for the perfection of
(except as otherwise specified in paragraph (e) of this Section 4), or the
exercise by, the Collateral Agent of its rights and remedies hereunder,
except for the filing of a Uniform Commercial Code financing statement
with the appropriate authorities in the jurisdictions listed on Schedule
III hereto, and in the case of Trademark Property the filing of the
Trademark Collateral Agreement in the United States Patent and Trademark
Office and in the case of Copyright Property, the filing of appropriate
documentation in the United States Copyright Office and in the case of
Patent Property, the filing of appropriate documentation in the United
States Patent and Trademark Office.
(g) Other Information. All information heretofore, herein or hereafter
supplied to the Collateral Agent by, or on behalf of, the Grantor with
respect to the Collateral (in each case as such information has been
amended, supplemented or updated as of the date this representation is
deemed made) is accurate and complete in all material respects.
(h) Receivables. Each Receivable (i) is and will be the genuine, legal,
valid and binding obligation of the account debtor in respect thereof,
representing an unsatisfied obligation of such account debtor, (ii) is and
will be enforceable in accordance with its terms, (iii) is and will be in
full force and effect and is not and will not be subject to any setoffs,
defenses, taxes, counterclaims (except (x) with respect to refunds,
returns and allowances in the ordinary course of business and (y) to the
extent that such Receivable may not yet have been earned by performance)
and (iv) is and will be in compliance with all applicable laws, whether
federal, state, local or foreign. The representations and warranties
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contained in this Section 4(h) shall be deemed to be repeated by each
Grantor as of the time when each Receivable arises.
SECTION 5. FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of the
Grantor, the Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor
will: (i) at the reasonable request of the Collateral Agent, xxxx
conspicuously each chattel paper included in the material Payment Rights
and each material Related Contract and each of its material records
pertaining to the Collateral with a legend, in form and substance
reasonably satisfactory to the Collateral Agent, indicating that such
items are subject to the security interest granted hereby; (ii) if any
Payment Right shall be evidenced by a promissory note or other instrument
(excluding checks), deliver and pledge to the Collateral Agent hereunder
for the benefit of the Secured Parties such note or instrument duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral
Agent; (iii) at the request of the Collateral Agent, deliver and pledge to
the Collateral Agent all promissory notes and other instruments (including
checks if an Event of Default shall have occurred and be continuing) and
all original counterparts of chattel paper constituting Collateral duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral
Agent; (iv) upon the reasonable request of the Collateral Agent, execute
and file with the registrar of motor vehicles or other appropriate
authority of any jurisdiction under the law of which indication of a
security interest on a certificate of title is required as a condition of
perfection an application or other document requesting the notation or
other indication of the security interest created hereunder on such
certificate of title and will deliver to the Collateral Agent copies of
all such applications or other documents filed and copies of all such
certificates of title issued indicating the security interest created
hereunder in such Collateral; (v) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as the Collateral Agent
may reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby, (vi) at any
reasonable time and upon reasonable notice, upon demand by the Collateral
Agent exhibit the Collateral to and allow inspection of the Collateral by
the Collateral Agent, or persons designated by the Collateral Agent and
(vii) at the Collateral Agent's reasonable request, appear in and defend
any action or proceeding that may affect the Grantor's title to or the
Collateral Agent's security interest in the Collateral.
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(b) Each Grantor agrees that, with respect to the Pledged
Deposits, the Grantor shall (i) provide the Collateral Agent with
notice within thirty days after establishing any deposit accounts after
the date hereof and (ii) maintain all Pledged Deposits with banks or
other financial institutions located within the State of California or
in a jurisdiction where all action required by Section 5(a) hereof to
perfect the security interest of Collateral Agent in the Pledged
Deposits shall have been taken to the extent possible under the
applicable law of such jurisdiction.
(c) Each Grantor hereby authorizes the Collateral Agent 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 Grantor where permitted by law. A carbon, photographic
or other reproduction of this Agreement or a financing statement signed
by such Grantor shall be sufficient as a financing statement where
permitted by law.
(d) Each Grantor will furnish to the Collateral Agent from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
SECTION 6. COVENANTS OF THE GRANTORS. Each Grantor shall:
(a) Not use or permit any Collateral to be used in violation of
any provision of this Agreement, or any applicable statute,
regulation or ordinance or any policy of insurance covering the
Collateral (unless such violation together with all other violations
does not and could not reasonably be expected to have a material
adverse effect on the value or use of any material portion of the
Collateral);
(b) Notify the Collateral Agent of any change in the Grantor's
name, trade names, fictitious business names, identity or corporate
structure at least thirty days prior to such change; and
(c) Give the Collateral Agent thirty days' prior written notice
of any change in the location of the Grantor's (i) chief place of
business, (ii) chief executive office and (iii) offices where the
Grantor's records regarding Payment Rights and the originals of all
chattel paper that evidence Payment Rights are kept.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND
INVENTORY. Each Grantor shall:
(a) Keep the Equipment and Inventory (other than Inventory sold
in the ordinary course of business and other than such Equipment and
Inventory which, either singly or in the aggregate, is not material)
at the places therefor specified on Schedule I hereto or at such
other places in jurisdictions where all
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action has been taken that may be necessary or desirable, or that
the Collateral Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted
hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to such Equipment and
Inventory;
(b) Keep records of the Inventory which are correct and accurate
in all material respects, itemizing and describing the kind, type
and quantity of Inventory and the Grantor's cost therefor all in
accordance with the past practices of the Grantor; and
(c) If any Inventory is in possession or control of any of the
Grantor's agents or processors, then upon the occurrence and during
the continuance of an Event of Default, at the request of Collateral
Agent, instruct such agent or processor to hold all such Inventory
for the account of the Collateral Agent and subject to the
instructions of the Collateral Agent.
SECTION 8. INSURANCE.
(a) Unless otherwise agreed in writing by Collateral Agent, each
insurance policy covering the Collateral shall in addition (i) name the
Grantor and the Collateral Agent as insured parties thereunder (without
any representation or warranty by or obligation upon the Collateral
Agent) as their interests may appear, (ii) contain an agreement by the
insurer that, to the extent provided in the Collateral Documents, any
loss thereunder shall be payable to the Collateral Agent
notwithstanding any action, inaction or breach of representation or
warranty by the Grantor, (iii) have attached thereto a lender's loss
payable endorsement or its equivalent, or a loss payable clause
acceptable to the Collateral Agent, for the benefit of the Secured
Parties, (iv) provide that there shall be no recourse against the
Collateral Agent for payment of premiums or other amounts with respect
thereto and (v) provide that at least thirty days' prior written notice
of cancellation or lapse, material amendment, or material reduction in
scope or limits of coverage shall be given to the Collateral Agent by
the insurer. Each Grantor shall, if so requested by the Collateral
Agent, deliver to the Collateral Agent original or duplicate policies
of such insurance and, as often as the Collateral Agent may reasonably
request (but, unless an Event of Default shall have occurred and be
continuing, in no event more than once each calendar year), a report of
a reputable insurance broker with respect to such insurance. Further,
each Grantor shall, at the request of the Collateral Agent, duly
execute and deliver instruments of assignment of such insurance
policies to comply with the requirements of Section 5 hereof and use
its best efforts to cause the respective insurers to acknowledge notice
of such assignment.
(b) Reimbursement under any liability insurance maintained by a
Grantor pursuant to this Section 8 may be paid directly to the person
who shall
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have incurred liability covered by such insurance. In case of any
material loss involving damage to Equipment or Inventory when
subsection (c) of this Section 8 is not applicable, any proceeds of
insurance maintained by the Grantor shall be paid to the Grantor and
the Grantor shall use such proceeds to make necessary repairs or
replacements of such Equipment and Inventory or to purchase additional
Equipment or Inventory or other property of equivalent value and
constituting Collateral hereunder.
(c) Upon the occurrence and during the continuance of an Event of
Default, at the request of the Collateral Agent, all insurance payments
in respect of such Equipment and Inventory shall be paid to and applied
by the Collateral Agent as specified in Section 18.
(d) Prior to the expiration of each insurance policy with respect to
the Equipment and Inventory, upon written request of the Collateral
Agent, each Grantor shall furnish the Collateral Agent with evidence
satisfactory to the Collateral Agent of the reissuance of a policy
continuing insurance in force as required by this Agreement and at or
prior to the date payment of the premium therefor is due, evidence
satisfactory to the Collateral Agent of such payment. In the event a
Grantor fails to provide, maintain, keep in force or deliver and
furnish to the Collateral Agent the policies of insurance required by
this Section 8, the Collateral Agent, upon thirty (30) days' prior
written notice to such Grantor, may (but shall not be obligated to)
procure such insurance or single interest insurance for such risks
covering Secured Parties' interests, and such Grantor will pay all
premiums thereon promptly upon demand by the Collateral Agent, together
with interest thereon at 13.50% per annum, from the date of expenditure
by the Collateral Agent until reimbursement by such Grantor.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO PAYMENT RIGHTS AND RELATED
CONTRACTS.
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its material records
concerning the Payment Rights and Related Contracts, and all originals
of all chattel paper that evidence Payment Rights, at the location
therefor specified in Section 4 or at such other locations in a
jurisdiction where all action that may be necessary or desirable, or
that the Collateral Agent may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to such Payment Rights and Related
Contracts. Each Grantor will hold and preserve such material records
and chattel paper in accordance with Grantor's past practice and will
permit representatives of the Collateral Agent at any time during
normal business hours and upon reasonable notice to inspect and make
abstracts from such material records and chattel paper and each Grantor
agrees to render to the Collateral Agent, at the Grantor's cost and
expense, such clerical and
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other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of the Collateral Agent, each Grantor shall
deliver to, or make available for review by, the Collateral Agent
complete and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than three years from the date
on which such Payment Rights arose, maintain substantially complete and
accurate records with respect to the material Payment Rights in
accordance with its customary practices as of the date hereof.
(c) Each Grantor shall duly fulfill all obligations on its part to
be fulfilled under or in connection with the Payment Rights and the
Related Contracts except to the extent that the failure to fulfill its
obligations could not reasonably be expected to, either singly or in
the aggregate, have a material adverse effect on the value or use of
any material portion of the Collateral, and shall do nothing to
materially impair the rights of the Collateral Agent with respect to
any Payment Right or Related Contract.
(d) Except as otherwise provided in this subsection (d) of this
Section 9, each Grantor shall continue to collect, at its own expense,
all amounts due or to become due each Grantor under the Payment Rights
and Related Contracts. In connection with such collections, each
Grantor may take (and, if an Event of Default shall have occurred and
be continuing, at the Collateral Agent's direction, shall take) such
action as the Grantor (or, if an Event of Default shall have occurred
and be continuing, the Collateral Agent) may deem necessary or
advisable to enforce collection of the Payment Rights; provided,
however, that the Collateral Agent shall have the right at any time, if
an Event of Default shall have occurred and be continuing, and upon
written notice to the Grantor of its intention to do so, to notify the
account debtors or obligors under any Payment Rights of the assignment
of such Payment Rights to the Collateral Agent and to direct such
account debtors or obligors to make payment of all amounts due or to
become due to the Grantor thereunder directly to the Collateral Agent,
to notify each Person maintaining a lock box or similar arrangement to
which account debtors or obligors under any Payment Rights have been
directed to make payment to remit all amounts representing collections
on checks and other payment items from time to time sent to or
deposited in such lock box or other arrangement directly to the
Collateral Agent and, upon such notification and at the expense of the
Grantor, to enforce collection of any such Payment Rights and to
adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Grantor might have done. After
receipt by a Grantor of the notice from the Collateral Agent referred
to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by such
Grantor in respect of the Payment Rights and the Related Contracts
shall be received in trust for the benefit of the Collateral Agent and
the Secured Parties hereunder, shall be segregated from other funds of
such Grantor and shall be
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forthwith paid over or delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement) to be held as cash
collateral in the Collateral Account and either (x) released to such
Grantor so long as no Event of Default shall have occurred and be
continuing or (y) if any Event of Default shall have occurred and be
continuing, applied as provided by Section 18 hereof, and (ii) such
Grantor shall not adjust, settle or compromise the amount or payment of
any Payment Right, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. DEPOSIT ACCOUNTS; COLLATERAL ACCOUNT.
(a) Deposit Accounts. (i) Each Grantor shall (x) cause all cash
proceeds of Receivables, all cash payments received in the ordinary
course of such Grantor's restaurant business and all other cash of such
Grantor to be deposited only into the Collection Account and the other
accounts listed in Schedule I and (y) direct all depository
institutions holding Pledged Deposits to cause all such Pledged
Deposits to be transferred no less frequently than once each day to,
and only to, the Collection Account, with the Collateral Agent or Agent
having the right so to direct such depository institutions (which
notice may be given by the Collateral Agent or the Agent at any time
following the occurrence of an Event of Default, regardless of whether
or not such Event of Default has been cured or waived). So long as no
Event of Default shall have occurred and no notice shall have been
given by the the Collateral Agent or the Agent, each Grantor shall be
entitled to receive, retain and use any and all interest or other
distributions paid in respect of the Pledged Deposits.
(ii) Upon the occurrence and during the continuance of an Event
of Default and upon notice (as provided in clause (y) of the
previous paragraph) having been given by the Collateral Agent or the
Agent, (A) all interest or other distributions in respect of the
Pledged Deposits shall be received in trust for the benefit of the
Collateral Agent and the Secured Parties, and upon written notice
from the Collateral Agent or from the Agent to the Company shall be
segregated from other funds of the Grantors and shall be forthwith
paid over from the Collection Account to (x) prior to the full and
final payment of all of the Secured Obligations under the New Credit
Facility, the termination of all commitments to lend thereunder and
the cancellation or expiration of all letters of credit issued,
extended or renewed thereunder, the Agent as Collateral in the same
form as so received (with any necessary endorsement) for deposit in
the Grantors' account No. 546-11302 with the Agent or such other
account as the Agent may specify in writing (the "Agent Account")
and (y) upon the full and final payment of all of the Secured
Obligations under the New Credit Facility, the termination of all
commitments to lend thereunder and the cancellation or expiration of
all letters of credit issued, extended or reversed thereunder, the
Collateral Agent for deposit in the Collateral
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Account as Collateral in the same form as so received (with any
necessary endorsement), and (B) the Requisite Party (as defined in
the Intercreditor Agreement) may exercise dominion and control over,
and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from deposit accounts
maintained with the Agent, the Collateral Agent, any Secured Party
or any other person constituting part of the Collateral.
(b) Collateral Account. (i) The Collateral Account, as
established under Section 10(c) of the Company Security
Agreement, shall be under the sole and exclusive dominion and
control of the Collateral Agent and no Grantor shall have any
rights with respect to the Collateral Account other than with
respect to the receipt of proceeds of Collateral deposited
therein upon the termination of this Agreement and the full
and final payment of all of the Secured Obligations and the
termination of all commitments to lend under the New Credit
Facility and the cancellation or expiration of all letters of
credit issued, extended or renewed thereunder. Without
limiting the generality of the foregoing, no Grantor shall
have any right of withdrawal or transfer from the Collateral
Account.
(ii) Subject to the terms of the Intercreditor
Agreement, there shall be deposited in the Collateral Account
from time to time the cash proceeds (as defined in Section
9-306(1) of the UCC) of any of the Collateral (including
insurance proceeds thereon and excluding amounts paid to the
Agent Account pursuant to Section 10(a)) required to be
delivered to the Collateral Agent pursuant hereto, under the
Senior Note Indenture, the New Credit Facility or any other
Security Document. All amounts and investments and other items
credited to the Collateral Account from time to time shall
constitute Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied as
hereinafter provided. At any time following the occurrence and
during the continuance of an Event of Default, the Collateral
Agent may in its discretion apply or cause to be applied
(subject to collection) the balance from time to time
outstanding to the credit of the Collateral Account to the
payment of the Secured Obligations in the manner specified
herein.
SECTION 11. LICENSE OF TRADEMARKS AND TRADE NAMES. Each
Grantor hereby assigns, transfers and conveys to the Collateral Agent, effective
upon the occurrence of, and during the continuance of, any Event of Default, the
nonexclusive right and license to use all trademarks, trade names and copyrights
owned or used by the Grantor that relate to the Collateral and any other
collateral granted by the Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable the Collateral Agent to use, possess and realize on the Collateral and
any successor or assignee to enjoy the benefits of the Collateral. This right
and license shall inure to the benefit of the Collateral Agent and its
successors, assigns and
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transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to the Grantor. If (a) an Event of Default shall have
occurred and, by reason of waiver, modification, amendment or otherwise, no
longer be continuing, (b) no other Event of Default shall be continuing, (c) an
assignment to the Collateral Agent shall have been previously made pursuant to
this Section 11, and (d) the Secured Obligations shall not have become
immediately due and payable, upon the written request of the Grantor, the
Collateral Agent shall promptly execute and deliver to the Grantor such
assignments as may be necessary to reassign to the Grantor any rights, title and
interests as may have been assigned pursuant to this Section 11, subject to any
disposition thereof that may have been made by the Collateral Agent pursuant
hereto; provided that, after giving effect to such reassignment, the Collateral
Agent's security interest and conditional assignment granted pursuant to this
Section 11, as well as all other rights and remedies of the Collateral Agent
granted hereunder, shall continue to be in full force and effect; and provided,
further, that the rights, title and interests so reassigned shall be free and
clear of all Liens other than Liens (if any) encumbering such rights, title and
interest at the time of their assignment to the Collateral Agent.
SECTION 12. TRANSFERS AND OTHER LIENS. Each Grantor shall not:
(a) Except as permitted by each of the agreements governing the Underlying
Debt secured hereby from time to time in effect (including without limitation
the Senior Note Indenture and the New Credit Facility), sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the Collateral.
(b) Except as permitted by each of the agreements governing the Underlying
Debt secured hereby from time to time in effect (including without limitation
the Senior Note Indenture and the New Credit Facility), create or suffer to
exist any Lien upon or with respect to any of the Collateral to secure the
indebtedness or other obligations of any person or entity.
In the event any Collateral is sold, transferred or otherwise disposed of
in an Asset Sale or other transaction permitted by the Senior Note Indenture and
the New Credit Facility (as long as both such agreements are in effect,
otherwise by whichever agreement remains in effect), such Collateral shall,
concurrently therewith, be automatically released from the lien and security
interest under this Agreement and the Collateral Agent shall, at the Grantor's
expense, execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such release; provided that arrangements
satisfactory to the Collateral Agent have been made for delivery to it of the
amounts, if any, required to be paid to the Secured Parties out of the net
proceeds of such disposition.
SECTION 13. COLLATERAL AGENT. The Collateral Agent has been appointed as
the Collateral Agent hereunder pursuant to the Intercreditor Agreement. The
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Collateral Agent shall be obligated, and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking action (including, without limitation, the
release or substitution of Collateral) solely in accordance with the
Intercreditor Agreement. The Collateral Agent may resign and a successor
Collateral Agent may be appointed in the manner provided for in the
Intercreditor Agreement for resignation and appointment of a successor
Collateral Agent. Upon the acceptance of any appointment as the Collateral Agent
by a successor Collateral Agent, the successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement and shall deliver any Collateral in its possession to the
successor Collateral Agent. After any retiring Collateral Agent's resignation,
the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was the
Collateral Agent.
SECTION 14. THE COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor
hereby irrevocably appoints the Collateral Agent the Grantor's attorney-in-fact,
with full authority in the place and stead of the Grantor and in the name of the
Grantor, the Collateral Agent or otherwise, from time to time in the Collateral
Agent's reasonable discretion to take any action and to execute any instrument
that the Collateral Agent may deem necessary or advisable, subject to the terms
and conditions of this Agreement, to accomplish the purposes of this Agreement,
including, without limitation:
(a) Subject to the last sentence of Section 8(d) hereof, and after
consultation with the Grantor, to obtain and adjust insurance required to be
maintained by the Grantor or paid to the Collateral Agent pursuant to Section
8 hereof;
(b) Upon the occurrence of, and during the continuance of, an Event of
Default, to ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) Upon the occurrence of, and during the continuance of, an Event of
Default, to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above;
(d) Upon the occurrence of, and during the continuance of, an Event of
Default, to file any claims or take any action or institute any proceedings
that the Collateral Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Collateral
Agent with respect to any of the Collateral;
(e) After consultation with the Grantor, to pay or discharge taxes (other
than taxes not then required to be paid or discharged by any of the
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agreements governing the Underlying Debt secured hereby, from time to time in
effect including without limitation the Senior Note Indenture and the New
Credit Facility) or Liens (other than Permitted Liens), levied or placed upon
or threatened against the Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by the
Collateral Agent in its reasonable discretion, and such payments made by the
Collateral Agent to become obligations of the Grantor to the Collateral
Agent, due and payable immediately without demand;
(f) Upon the occurrence of, and during the continuance of, an Event of
Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other documents
relating to the Collateral; and
(g) Upon the occurrence of, and during the continuance of, an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all purposes,
and to do, at the Collateral Agent's option and the Grantor's expense, at any
time, or from time to time, all acts and things that the Collateral Agent
deems necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's security interest therein, in order to effect the intent
of this Agreement, all as fully and effectively as the Grantor might do.
SECTION 15. COLLATERAL AGENT MAY PERFORM. If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may, upon thirty days'
prior written notice to the Grantor (unless otherwise expressly set forth in
this Agreement or an Event of Default shall have occurred and be continuing, in
which case, no such notice shall be required), itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor under Section
18 hereof.
SECTION 16. THE COLLATERAL AGENT'S DUTIES AND LIABILITIES.
(a) The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it
hereunder, the Collateral Agent 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. The Collateral Agent shall
be deemed to exercise reasonable care in the custody and preservation of such
Collateral if such Collateral is accorded treatment substantially equivalent
to that which the Collateral Agent accords its own property.
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(b) The Collateral Agent shall not be liable to any Grantor (i) for any
loss or damage sustained by it, or (ii) for any loss, damage, depreciation or
other diminution in the value of any of the Collateral, that may occur as a
result of, in connection with or that is in any way related to (x) any
exercise by the Collateral Agent of any right or remedy under this Agreement
or (y) any other act of or failure to act by the Collateral Agent, except to
the extent that the same shall be determined by a judgment of a court of
competent jurisdiction to be the result of acts or omissions on the part of
the Collateral Agent constituting gross negligence or willful misconduct.
(c) Except to the extent resulting from acts or omissions on the part of
the Collateral Agent or its affiliates, directors, officers, employees,
attorneys, or agents constituting gross negligence or willful misconduct, no
claim may be made by any Grantor against the Collateral Agent or its
affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, or consequential damages in respect of any breach or
wrongful conduct (whether the claim therefor is based on contract, tort or
duty imposed by law) in connection with, arising out of or in any way related
to the transactions contemplated and relationship established by this
Agreement, or any act, omission or event occurring in connection therewith;
and each Grantor hereby waives, releases and agrees not to xxx upon any such
claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.
SECTION 17. REMEDIES UPON DEFAULT; DECISIONS RELATING TO EXERCISE OF
REMEDIES.
(a) Events of Default. The occurrence of any "EVENT OF DEFAULT" as defined
in any of the agreements governing the Underlying Debt secured hereby from
time to time in effect (including without limitation the Senior Note
Indenture and the New Credit Facility) shall constitute an Event of Default
under this Agreement.
(b) Remedies Upon an Event of Default. If any Event of Default shall have
occurred and be continuing, the Collateral Agent may exercise in respect of
the Collateral, (i) all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any applicable jurisdiction
(the "Applicable UCC") (whether or not the Applicable UCC applies to the
affected Collateral), (ii) all of the rights and remedies provided for in
this Agreement, the Senior Note Indenture, the New Credit Facility and any
other agreement between any Grantor and any Secured Party and (iii) such
other rights and remedies as may be provided by law or otherwise (such rights
and remedies of any Secured Party to be cumulative and non-exclusive). If an
Event of Default shall have occurred and be continuing, the Collateral Agent
also may (i) require each Grantor to, and each Grantor hereby agrees that it
will, at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral
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Agent and make it available to the Collateral Agent at a place to be
designated by the Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner
to the extent the Collateral Agent deems appropriate, (iv) take possession of
any Grantor's premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of such Grantor's equipment
for the purpose of completing any work in process, taking any actions
described in the preceding clause (iii) and collecting any Secured
Obligation, and (v) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such
other terms as the Collateral Agent may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale shall be required at law,
at least ten days' prior written notice to the Grantor of the time and place
of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it
was so adjourned.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent may retain any of the directors, officers and employees of
any Grantor, in each case upon such terms as the Collateral Agent and any
such person may agree, notwithstanding the provisions of any employment,
confidentiality or non-disclosure agreement between any such person and any
such Grantor, and each Grantor hereby waives its rights under any such
agreement and consents to each such retention.
(c) Decisions Relating to Exercise of Remedies. Notwithstanding anything
in this Agreement to the contrary, as provided in the Intercreditor
Agreement, the Collateral Agent shall exercise, or shall refrain from
exercising any remedy provided for in Section 17(b) in accordance with the
instructions of the Requisite Party (as defined in the Intercreditor
Agreement) and the Secured Parties shall be bound by such instructions; and
the sole rights of the Secured Parties under this Agreement shall be to be
secured by the Collateral and to receive the payments provided for in Section
18 hereof.
SECTION 18. APPLICATION OF PROCEEDS. All proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as Collateral for, and/or then, or at any
other time thereafter applied, in
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full or in part by the Collateral Agent against the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses of such sale, collection
or other realization and all other expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith and all amounts for
which the Collateral Agent is entitled to indemnification hereunder and all
advances made by the Collateral Agent hereunder for the account of the
Grantors and for the payment of all costs and expenses paid or incurred by
the Collateral Agent in connection with the exercise of any right or remedy
hereunder, all in accordance with Section 19 hereof;
SECOND: To the payment of the Secured Obligations as provided in Section 4
of the Intercreditor Agreement; and
THIRD: After payment in full of the amounts specified in the preceding
subparagraphs, to the payment to, or upon the order of, the Grantors, or
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 19. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify the Collateral Agent and each Secured
Party and each of the officers, directors, agents, employees and affiliates
of each of them (each an "INDEMNITEE") from and against any and all claims,
losses and liabilities growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement). The foregoing
indemnification shall apply whether or not such claims, losses or liabilities
are in any way or to any extent owed, in whole or in part, under any claim or
theory of strict liability, or are caused, in whole or in part, by any
negligent act or omission of any Indemnitee; provided only that no Indemnitee
shall be entitled to receive indemnification for that portion, if any, of any
claims, losses or liabilities proximately caused by such Indemnitee's gross
negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Collateral Agent the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, that Collateral
Agent may incur in connection with (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 Collateral Agent
hereunder or (iv) the failure by the Grantor to perform or observe any of the
provisions hereof.
(c) The obligations of Grantor in this Section 19 hereof shall survive
termination of this Agreement and the discharge of Grantor's other
obligations
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under this Agreement, the Senior Note Indenture, the New Credit Facility and
other Collateral Documents.
SECTION 20. CONTINUING SECURITY INTEREST; TERMINATION. This Agreement
shall create a continuing security interest in the Collateral and shall (a)
remain in full force and effect until the indefeasible payment in full of the
Secured Obligations and termination of the Lenders' obligations to lend and
extend credit under the New Credit Facility and the cancellation or expiration
of all outstanding letters of credit, (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and remedies of
the Collateral Agent and the Secured Parties hereunder, to the benefit of the
Collateral Agent and the Secured Parties and the successors, transferees and
assigns of each. Without limiting the generality of the foregoing clause (c),
any Secured Party may, subject to the provisions of the Senior Note Indenture
and the New Credit Facility, as applicable, assign or otherwise transfer any
Senior Note or loan, or portion thereof, held by them, respectively, or any
other obligations secured hereby and any agreements or instruments executed in
connection therewith to any other person or entity, and such other person or
entity shall thereupon become vested with all the benefits in respect thereof
granted to that Secured Party herein or otherwise. Upon the indefeasible payment
in full of the Secured Obligations and termination of the Lenders' obligations
to lend or extend credit under the New Credit Facility and the cancellation or
expiration of all outstanding letters of credit, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors. Upon any such termination, the Collateral Agent will, at the Grantors'
expense, execute and deliver to the Grantors, against receipt and without
recourse to or warranty by Collateral Agent, such documents as the Grantors
shall reasonably request to evidence such termination.
SECTION 21. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
on its behalf and on behalf of the Secured Parties, assignments and pledges made
and created hereunder, and all obligations of the Grantors, shall be absolute
and unconditional, irrespective of:
(a) Any lack of validity or enforceability of any of the Secured
Obligations or any agreement or instrument relating thereto;
(b) 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 amendment or
waiver of, or any consent to any departure from, any agreement or instrument
relating to the Secured Obligations;
(c) Any exchange, release, subordination or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guaranty, for all or any of the Secured Obligations; or
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(d) Any other circumstance (including, but not limited to, any statute of
limitations) which might otherwise constitute a defense available to, or a
discharge of, the Grantors or a third party grantor or a security interest.
SECTION 22. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by any Grantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Grantor and the Collateral Agent on behalf of the Requisite Party (as defined in
the Intercreditor Agreement), and then such waiver or consent shall be effective
only in the specified instance and for the specific purpose for which given.
SECTION 23. ADDRESSES FOR NOTICES. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied, telexed or
sent by United States mail or courier service and shall be deemed to have been
given when delivered in person, upon receipt (in the case of telecopy or telex)
or four business days after depositing it in the United States mail, registered
or certified, with postage prepaid and properly addressed; provided that any
notice sent to the Collateral Agent shall not be effective until received. For
purposes hereof, the addresses of the parties hereto (until notice of a change
thereof) is delivered as provided in this Section 23 shall be as set forth under
each party's name on the signature pages hereof.
SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings brought against each Grantor with respect to this Agreement may be
brought in any state or Federal court of competent jurisdiction sitting in New
York, New York and by execution and delivery of this Agreement each Grantor
accepts for itself and in connection with the Collateral, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any judgement rendered thereby in connection
with this Agreement. Each Grantor designates and appoints The Xxxxxxxx-Xxxx
Corporation System, Inc., 00 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and such
other Person as may be hereafter selected by the Grantor irrevocably agreeing in
writing to so serve, as its agent to receive on its behalf service of all
process in any proceedings in any court sitting in New York, New York, such
service being hereby acknowledged by the Grantor to be effective and binding
service in every respect. A copy of any such process so served shall be mailed
by registered mail to the applicable Grantor, at its address specified in
Section 23 hereof, except that unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of process.
If any agent appointed by a Grantor refuses to accept service, such Grantor
hereby agrees that service upon it by mail shall constitute sufficient notice.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Collateral Agent to bring
proceedings against any Grantor in the courts of any other jurisdiction.
SECTION 25. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED
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IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES), EXCEPT TO
THE EXTENT THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein,
terms used in Article 9 of the Code are used herein as therein defined.
SECTION 26. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE COLLATERAL AGENT
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each Grantor and the
Collateral Agent each acknowledge that this waiver is a material inducement for
the Grantor and the Collateral Agent to enter into a business relationship, that
the Grantor and the Collateral Agent have already relied on the waiver in
entering into this Agreement and that each will continue to rely on the waiver
in their related future dealings. Each Grantor and the Collateral Agent further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 27. WAIVER. Except as otherwise expressly provided herein, each
Grantor hereby waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Secured Obligations and this Agreement and any
requirement that the Collateral Agent or any Secured Party protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right or take any action against the Grantor or any other person
or entity or any of the Collateral.
SECTION 28. NO WAIVER. No failure on the part of the Collateral Agent to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; and no
single or partial exercise by the Collateral Agent of any right, power or remedy
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are to the
fullest extent permitted by law cumulative, and are not exclusive of any
remedies provided by law.
SECTION 29. MARSHALLING; PAYMENT SET ASIDE. The Collateral Agent shall not
be under any obligation to marshal any assets in favor of the Grantors or any
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other party or against or in payment of any or all of the Secured Obligations.
To the extent that any Grantor makes a payment or payments to the Collateral
Agent or the Collateral Agent enforces its security interests or exercises its
rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or Federal
law, common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
SECTION 30. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
SECTION 31. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation and in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 32. COUNTERPARTS. This Agreement, and any amendments, waivers,
consents or supplements, may be executed in one or more counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, each Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above written.
ARG ENTERPRISES, INC.,
a California corporation
By:/s/ Xxxxxxx X. XxXxxxxxx, Xx.
-----------------------------
Title: Vice President and
Chief Financial Officer
ARG PROPERTY MANAGEMENT CORPORATION, a
California corporation
By:/s/ Xxxxxxx X. XxXxxxxxx, Xx.
-----------------------------
Title: Vice President and
Chief Financial Officer
XXXXXX'X, INC.,
a California corporation
By:/s/ Xxxxxxx X. XxXxxxxxx, Xx.
-----------------------------
Title: Vice President and
Chief Financial Officer
SPECTRUM\ FOODS, INC.,
a California corporation
By:/s/ Xxxxxxx X. XxXxxxxxx, Xx.
-----------------------------
Title: Vice President and
Chief Financial Officer
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LOCAL FAVORITE, INC.,
a California corporation
By:/s/ Xxxxxxx X. XxXxxxxxx
-----------------------------
Title: Vice President and
Chief Financial Officer
SPOONS RESTAURANTS, INC.,
a Texas corporation
By:/s/ Xxxxxxx X. XxXxxxxxx
-----------------------------
Title: Vice President and
Chief Financial Officer
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NOTICE ADDRESS FOR ALL GRANTORS:
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chairman and Chief
Executive Officer
WITH COPIES TO:
Xxxxxxx X. Xxxxxx, Esq.
American Restaurant Group, Inc.
0000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
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U.S. TRUST COMPANY OF CALIFORNIA,
N.A., AS COLLATERAL AGENT
By:/s/
-------------
Title: Authorized Officer
-------------------
NOTICE ADDRESS:
000 Xxxxx Xxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Department
