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EXHIBIT 10(cc)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of
January 10, 1997, is entered into between FRI-MRD CORPORATION, a Delaware
corporation ("Pledgor"), and Foothill Capital Corporation, a California
corporation ("Secured Party"), with reference to the following:
WHEREAS, Pledgor beneficially owns: (i) One Hundred (100)
shares of the common stock, of EL TORITO RESTAURANTS, INC., a Delaware
corporation ("El Torito"); (ii) One Thousand (1,000) shares of the common
stock, of CHI-CHI'S INC., a Delaware corporation ("Chi- Chi's"); (iii) One
Hundred (100) shares of the common stock, of FRI-ADMIN CORPORATION, a Delaware
corporation ("Admin"); and (iv) One Hundred (100) shares of the common stock,
of EL TORITO FRANCHISING COMPANY, a Delaware corporation ("Franchising");
WHEREAS, Pledgor, Borrower, Secured Party, and the other
parties thereto have entered into that certain Loan and Security Agreement (the
"Loan Agreement"), of even date herewith, pursuant to which Secured Party has
agreed to make certain financial accommodations to Pledgor and Borrower;
WHEREAS, to induce Secured Party to make the financial
accommodations provided to Pledgor and Borrower pursuant to the Loan Agreement,
Pledgor desires to pledge, grant, transfer, and assign to Secured Party a
security interest in the Collateral (as hereinafter defined) to secure the
Secured Obligations (as hereinafter defined), as provided herein.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, representations, and warranties set forth herein and for other good
and valuable consideration, the parties hereto agree as follows:
1. Definitions and Construction.
(a) Definitions. All initially capitalized terms
used herein and not otherwise defined herein shall have the meaning ascribed
thereto in the Loan Agreement. As used in this Agreement:
"Agreement" shall mean this Stock Pledge
Agreement.
"Chief Executive Office" shall mean where
Pledgor is deemed located pursuant to section 9-103(3)(d) of the Code.
"Collateral" shall mean the Pledged Shares,
the Future Rights, and the Proceeds, collectively.
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"Future Rights" shall mean: (a) to the extent
of Pledgor's interest therein, all shares of stock (other than Pledged Shares)
of the Issuers, and all securities convertible or exchangeable into, and all
warrants, options, or other rights to purchase, shares of stock of the Issuers;
(b) to the extent of Pledgor's interest therein, all shares of, all securities
convertible or exchangeable into, and all warrants, options, or other rights to
purchase shares of stock of any Person in which Pledgor, after the date of this
Agreement, acquires a direct equity interest, irrespective of whether such
Person is or becomes a Subsidiary of Pledgor; and (c) the certificates or
instruments representing such additional shares, convertible or exchangeable
securities, warrants, and other rights and all dividends, cash, options,
warrants, rights, instruments, and other property or proceeds from time to time
received, receivable, or otherwise distributed in respect of or in exchange for
any or all of such shares.
"Guaranty" means that certain General
Continuing Guaranty dated of even date herewith made by Pledgor for the benefit
of Secured Party, as the same may from time to time be amended, modified,
supplemented, renewed, or reinstated.
"Holder" and "Holders" shall have the meanings
ascribed thereto in Section 3 of this Agreement.
"Issuers" shall mean El Torito, Chi-Chi's,
Admin, Franchising, and any other Person identified as an Issuer on Schedule A
attached hereto (or any addendum thereto), and any successors thereto, whether
by merger or otherwise.
"Lien" shall mean any lien, mortgage, pledge,
assignment (including any assignment of rights to receive payments of money),
security interest, charge, or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, or any agreement to give any security interest).
"Loan Agreement" shall have the meaning
ascribed thereto in the recitals to this Agreement.
"Permitted Liens" means: (a) Liens granted
to Secured Party or any assignee under the Loan Documents, (b) Liens for unpaid
taxes, assessments, and government charges that either (i) are not yet due and
payable or (ii) are the subject of Permitted Protests, (c) Liens arising by
operation of law, incurred in the ordinary course of business of Pledgor and
not in connection with the borrowing of money, and which Liens either (i) are
for sums not yet due and payable, (ii) are the subject of Permitted Protests,
or (iii) in the aggregate are de minimis in amount, (d) Liens of or resulting
from any judgment or award that does not constitute an Event of Default, and
(e) other Liens imposed by operation of law that do not materially affect
Pledgor's ability to perform its obligations under the Loan Documents.
"Permitted Protest" means the right of
Pledgor to protest any Lien (other than any such Lien that secures the
Obligations), tax (other than taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) if required in
accordance
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with GAAP, a reserve with respect to such obligation is established on the
books of Pledgor, as applicable under the circumstances, in accordance with
GAAP, and (b) any such protest is instituted and diligently prosecuted by
Pledgor, as applicable under the circumstances, in good faith.
"Pledged Shares" shall mean all of the shares
described in the recitals to this Agreement and any other shares identified as
Pledged Shares on Schedule A attached hereto (or any addendum thereto).
"Pledgor" shall have the meaning ascribed
thereto in the preamble to this Agreement.
"Proceeds" shall mean all proceeds (including
proceeds of proceeds) of the Pledged Shares and Future Rights including all:
(a) rights, benefits, distributions, premiums, profits, dividends, interest,
cash, instruments, documents of title, accounts, contract rights, inventory,
equipment, general intangibles, deposit accounts, chattel paper, and other
property from time to time received, receivable, or otherwise distributed in
respect of or in exchange for, or as a replacement of or a substitution for,
any of the Pledged Shares, Future Rights, or proceeds thereof (including any
cash, stock, or other securities or instruments issued after any
recapitalization, readjustment, reclassification, merger or consolidation with
respect to the Issuers and any claims against financial intermediaries under
Section 8-313(2) of the Code or otherwise); (b) "proceeds," as such term is
used in Section 9-306 of the Code; (c) proceeds of any insurance, indemnity,
warranty, or guaranty (including guaranties of delivery) payable from time to
time with respect to any of the Pledged Shares, Future Rights, or proceeds
thereof; (d) payments (in any form whatsoever) made or due and payable to
Pledgor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Pledged Shares,
Future Rights, or proceeds thereof; and (e) other amounts from time to time
paid or payable under or in connection with any of the Pledged Shares, Future
Rights, or proceeds thereof.
"Secured Obligations" shall mean all
liabilities, obligations, or undertakings owing by Pledgor to Secured Party of
any kind or description arising out of or outstanding under, advanced or issued
pursuant to, or evidenced by the Guaranty, any other Loan Document heretofore,
herewith, or hereafter executed by Pledgor, or this Agreement, irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, voluntary or involuntary, whether now
existing or hereafter arising, and including all interest (including interest
that accrues after the filing of a case under the Bankruptcy Code) and any and
all reasonable out-of-pocket costs, fees (including reasonable attorneys fees),
and expenses which Pledgor is required to pay pursuant to any of the foregoing,
by law, or otherwise.
"Secured Party" shall have the meaning
ascribed thereto in the preamble to this Agreement, together with its
successors or assigns.
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"Securities Act" shall have the meaning
ascribed thereto in Section 9(c) of this Agreement.
(b) Construction.
(i) Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the term "including" is not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and other similar terms in
this Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement. Article, section, subsection, exhibit,
and schedule references are to this Agreement unless otherwise specified. All
of the exhibits or schedules attached to this Agreement shall be deemed
incorporated herein by reference. Any reference to any of the following
documents includes any and all alterations, amendments, restatements,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: this Agreement, the Loan Agreement, or any of the other Loan
Documents.
(ii) This Agreement has been
reviewed by both of the parties and their respective counsel and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of the parties hereto.
(iii) In the event of any direct
conflict between the express terms and provisions of this Agreement and of the
Loan Agreement, the terms and provisions of the Loan Agreement shall control.
2. Pledge. As security for the prompt payment and
performance of the Secured Obligations in full by Pledgor when due, whether at
stated maturity, by acceleration or otherwise (including amounts that would
become due but for the operation of the provisions of the Bankruptcy Code),
Pledgor hereby pledges, grants, transfers, and assigns to Secured Party a
security interest in all of Pledgor's right, title, and interest in and to the
Collateral.
3. Delivery and Registration of Collateral.
(a) All certificates or instruments representing
or evidencing the Collateral shall be promptly delivered by Pledgor to Secured
Party or Secured Party's designee pursuant hereto at a location designated by
Secured Party and shall be held by or on behalf of Secured Party pursuant
hereto, and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance reasonably satisfactory to Secured Party.
(b) After the occurrence and during the
continuance of an Event of Default, Secured Party shall have the right, at any
time in its discretion and without notice to
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Pledgor, to transfer to or to register on the books of the Issuers (or of any
other Person maintaining records with respect to the Collateral) in the name of
Secured Party or any of its nominees any or all of the Collateral. In
addition, Secured Party shall have the right, at any time after the occurrence
and during the continuation of an Event of Default, to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
(c) If, at any time and from time to time, any
Collateral (including any certificate or instrument representing or evidencing
any Collateral) is in the possession of a Person other than Secured Party or
Pledgor (a "Holder"), then Pledgor shall promptly, at Secured Party's option,
either cause such Collateral to be delivered into Secured Party's possession,
or execute and deliver to such Holder a written notification/instruction, and
take all other reasonable steps necessary to perfect the security interest of
Secured Party in such Collateral, including obtaining from such Holder a
written acknowledgement that such Holder holds such Collateral for Secured
Party, all pursuant to Section Section 8-313 and 8-321 of the Code or other
applicable law governing the perfection of Secured Party's security interest in
the Collateral in the possession of such Holder. Each such
notification/instruction and acknowledgement shall be in form and substance
reasonably satisfactory to Secured Party.
(d) Any and all Collateral (including dividends,
interest, and other cash distributions) at any time received or held by Pledgor
shall be so received or held in trust for Secured Party, shall be segregated
from other funds and property of Pledgor and shall be forthwith delivered to
Secured Party in the same form as so received or held, with any necessary
endorsements; provided that dividends or distributions received by Pledgor, if
and to the extent they are not prohibited by the Loan Agreement, may be
retained by Pledgor in accordance with Section 4.
(e) If at any time and from time to time any
Collateral consists of an uncertificated security or a security in book entry
form, then Pledgor shall promptly cause such Collateral to be registered or
entered, as the case may be, in the name of Secured Party, or otherwise cause
Secured Party's security interest thereon to be perfected in accordance with
applicable law.
4. Voting Rights and Dividends.
(a) So long as no Triggering Event exists and is
continuing or would result therefrom, and except to the extent that the
Collateral, or any portion thereof, shall have been disposed of by Secured
Party following the occurrence and during the continuance of an Event of
Default in connection with the exercise by Secured Party of its remedies as the
holder of a security interest therein, Pledgor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Collateral or
any part thereof for any purpose not inconsistent with the express terms of the
Loan Documents and shall be entitled to receive and retain any dividends,
interest, or distributions paid in respect of the Collateral in accordance with
the terms of the Loan Agreement and the Loan Documents.
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(b) Upon the occurrence and during the
continuance of any Triggering Event, all rights of Pledgor to exercise the
voting and other consensual rights or receive and retain cash dividends or
distributions that it would otherwise be entitled to exercise or receive and
retain, as applicable pursuant to Section 4(a), shall cease, and all such
rights shall thereupon become vested in Secured Party, who shall thereupon have
the sole right to exercise such voting or other consensual rights and to
receive and retain such cash dividends and distributions. Pledgor shall
execute and deliver (or cause to be executed and delivered) to Secured Party
all such proxies and other instruments as Secured Party may reasonably request
for the purpose of enabling Secured Party to exercise the voting and other
rights which it is entitled to exercise and to receive the dividends and
distributions that it is entitled to receive and retain pursuant to the
preceding sentence.
5. Representations and Warranties. Pledgor represents,
warrants, and covenants as follows:
(a) Pledgor has taken all steps it deems
necessary or appropriate to be informed on a continuing basis of changes or
potential changes affecting the Collateral (including rights of conversion and
exchange, rights to subscribe, payment of dividends, reorganizations or
recapitalization, tender offers and voting rights), and Pledgor agrees that
Secured Party shall have no responsibility or liability for informing Pledgor
of any such changes or potential changes or for taking any action or omitting
to take any action with respect thereto;
(b) All information herein or hereafter supplied
to Secured Party by or on behalf of Pledgor in writing with respect to the
Collateral is, or in the case of information hereafter supplied will be,
accurate and complete in all material respects;
(c) Pledgor is and will be the sole record holder
and beneficial owner (provided that, for purposes of determining beneficial
ownership of a Person, indirect ownership through ownership of interests in one
or more intermediate Persons, that in turn own direct interests in such Person
first referred to, shall not be deemed beneficial ownership) of the Collateral
(including the Pledged Shares and all other Collateral acquired by Pledgor
after the date hereof) free and clear of any adverse claim, Lien, or other
right, title, or interest of any party other than Permitted Liens;
(d) This Agreement, and the delivery to Secured
Party of the Pledged Shares representing Collateral (or the delivery to all
Holders of the Pledged Shares representing Collateral of the
notification/instruction referred to in Section 3 of this Agreement), creates a
valid, perfected, and first priority security interest in one hundred percent
(100%) of the Pledged Shares in favor of Secured Party securing payment of the
Secured Obligations, and all actions necessary to achieve such perfection have
been duly taken;
(e) Schedule A to this Agreement is true and
correct and complete in all material respects; without limiting the generality
of the foregoing: (i) all the Pledged Shares are in certificated form, and,
except to the extent registered in the name of Secured Party or its
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nominee pursuant to the provisions of this Agreement, are registered in the
name of Pledgor; and (ii) the Pledged Shares as to each of the Issuers
constitute at least the percentage of all the fully diluted issued and
outstanding shares of stock of such Issuer as set forth in Schedule A to this
Agreement;
(f) There are no presently existing Future Rights
or Proceeds owned by Pledgor, except as set forth in Schedule C hereto;
(g) The Pledged Shares have been duly authorized
and validly issued and are fully paid and nonassessable; and
(h) Neither the pledge of the Collateral pursuant
to this Agreement nor the extensions of credit related to the Secured
Obligations violates Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
6. Further Assurances.
(a) Pledgor agrees that from time to time, at the
expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action that may be necessary or
reasonably desirable, as Secured Party may request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, Pledgor will: (i) at the request of Secured Party, xxxx
conspicuously each of its records pertaining to the Collateral with a legend,
in form and substance reasonably satisfactory to Secured Party, indicating that
such Collateral is subject to the security interest granted hereby; (ii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
reasonably desirable, as Secured Party may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby;
(iii) allow inspection of the Collateral by Secured Party or Persons designated
by Secured Party (subject to any applicable restrictions or limitations on
inspection rights set forth in any of the Loan Documents); and (iv) appear in
and defend any action or proceeding that may affect Pledgor's title to or
Secured Party's security interest in the Collateral.
(b) Pledgor hereby authorizes 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 Pledgor
where permitted by law. A carbon, photographic, or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.
(c) Pledgor will furnish to Secured Party, upon
the reasonable request of Secured Party: (i) a certificate executed by an
authorized officer of Pledgor, and dated as of the date of delivery to Secured
Party, itemizing in such detail as Secured Party reasonably may request, the
Collateral which, as of the date of such certificate, has been delivered to
Secured
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Party by Pledgor pursuant to the provisions of this Agreement; and (ii) such
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party
reasonably may request.
7. Covenants of Pledgor. Pledgor shall:
(a) At all times keep at least one complete set
of its records concerning substantially all of the Collateral at its Chief
Executive Office as set forth in Schedule B hereto, and not change the location
of its Chief Executive Office or such records without giving Secured Party at
least thirty (30) days prior written notice thereof;
(b) Upon receipt by Pledgor of any material
written notice, report, or other written communication from any of the Issuers
or any Holder relating to all or any part of the Collateral, deliver such
notice, report or other communication to Secured Party as soon as possible, but
in no event later than five (5) days following the receipt thereof by Pledgor.
8. Secured Party as Pledgor's Attorney-in-Fact.
(a) Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to
time at Secured Party's reasonable discretion, to take any action and to
execute any instrument that Secured Party may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement, including: (i) after
the occurrence and during the continuance of a Triggering Event, to receive,
endorse, and collect all instruments made payable to Pledgor representing any
dividend, payment, or other distribution in respect of the Collateral or any
part thereof to the extent permitted hereunder and to give full discharge for
the same and to execute and file governmental notifications and reporting
forms; (ii) to issue any notifications/instructions Secured Party reasonably
deems necessary pursuant to Section 3 of this Agreement; or (iii) after the
occurrence and during the continuance of an Event of Default, to arrange for
the transfer of the Collateral on the books of any of the Issuers or any other
Person to the name of Secured Party or to the name of Secured Party's nominee.
(b) In addition to the designation of Secured
Party as Pledgor's attorney-in-fact in subsection (a), Pledgor hereby
irrevocably appoints Secured Party as Pledgor's agent and attorney-in-fact,
upon the occurrence and during the continuance of an Event of Default, to make,
execute and deliver any and all documents and writings which may be necessary
or appropriate for approval of, or be required by, any regulatory authority
located in any city, county, state or country where Pledgor or any of the
Issuers engage in business, in order to transfer or to effectively transfer any
of the Pledged Shares or otherwise enforce Secured Party's rights hereunder.
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9. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default:
(a) 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 Code (irrespective of whether the Code applies to the
affected items of Collateral), and Secured Party may also 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 exchange, broker's board or at
any of Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party in good faith believes to be commercially reasonable,
irrespective of the impact of any such sales on the market price of the
Collateral. To the maximum extent permitted by applicable law, Secured Party
may be the purchaser of any or all of the Collateral at any such sale and shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply all or any part of the Secured Obligations as a credit
on account of the purchase price of any Collateral payable at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from
any claim or right on the part of Pledgor, and Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay, or appraisal that it
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) calendar days notice to
Pledgor of the time and place of any public sale or the time after which a
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Secured Party 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. To the maximum extent permitted by law,
Pledgor hereby waives any claims against Secured Party arising because the
price at which any Collateral may have been sold at such a private sale was
less than the price that might have been obtained at a public sale, even if
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree.
(b) Pledgor hereby agrees that any sale or other
disposition of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, or other reputable
financial institutions in the City of Los Angeles, California in disposing of
property similar to the Collateral shall be deemed to be commercially
reasonable.
(c) Pledgor hereby acknowledges that the sale by
Secured Party of any Collateral pursuant to the terms hereof in compliance with
the Securities Act of 1933 as now in effect or as hereafter amended, or any
similar statute hereafter adopted with similar purpose or effect (the
"Securities Act"), as well as applicable "Blue Sky" or other state securities
laws may require strict limitations as to the manner in which Secured Party or
any subsequent transferee of the Collateral may dispose thereof. Pledgor
acknowledges and agrees that in order to protect Secured Party's interest it
may be necessary to sell the Collateral at a price less than the maximum
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price attainable if a sale were delayed or were made in another manner, such as
a public offering under the Securities Act. Pledgor has no objection to sale
in such a manner and agrees that Secured Party shall have no obligation to
obtain the maximum possible price for the Collateral. Without limiting the
generality of the foregoing, Pledgor agrees that, upon the occurrence and
during the continuation of an Event of Default, Secured Party may, subject to
applicable law, from time to time attempt to sell all or any part of the
Collateral by a private placement, restricting the bidders and prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, Secured Party may
solicit offers to buy the Collateral or any part thereof for cash, from a
limited number of investors deemed by Secured Party, in its reasonable
judgment, to be institutional investors or other responsible parties who might
be interested in purchasing the Collateral. If Secured Party shall solicit
such offers in such fashion, then the good faith acceptance by Secured Party of
an offer received in response to such solicitation shall be deemed to be a
commercially reasonable method of disposition of the Collateral.
(d) If Secured Party shall determine to exercise
its right to sell all or any portion of the Collateral pursuant to this
Section, Pledgor agrees that, upon request of Secured Party, Pledgor will, at
its own expense:
(i) use its reasonable best
efforts to execute and deliver, and cause the Issuers and the directors and
officers thereof to execute and deliver, all such instruments and documents,
and to do or cause to be done all such other acts and things, as may be
necessary or advisable, in the opinion of experienced securities counsel for
Secured Party, to register such Collateral under the provisions of the
Securities Act, and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectuses which, in the opinion of experienced
securities counsel for Secured Party, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto;
(ii) use its reasonable best
efforts to qualify the Collateral under the state securities laws or "Blue Sky"
laws of each state reasonably requested in writing by Secured Party and to
obtain all necessary governmental approvals for the sale of the Collateral, as
reasonably requested by Secured Party; provided, that no Issuer shall be
required to qualify generally to do business in any state where it is not so
qualified, or to take any action that would subject it to taxation or general
service of process in any such state where it is not then so subject;
(iii) if Pledgor is in control
(within the meaning of the Securities Act) of an Issuer, use its reasonable
best efforts to cause such Issuer to make available to its security holders, as
soon as practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act;
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(iv) use its reasonable best
efforts to execute and deliver, or cause the officers and directors of the
Issuers to execute and deliver, to any person, entity or governmental authority
as Secured Party may choose, any and all documents and writings which, in
Secured Party's reasonable judgment, may be necessary or appropriate for
approval, or be required by, any regulatory authority located in any city,
county, state or country where Pledgor or the Issuers engage in business, in
order to transfer or to more effectively transfer the Pledged Shares or
otherwise enforce Secured Party's rights hereunder, or in conjunction with such
transfer of the Pledged Shares, in order to facilitate the transfer of any
license, permit, or leasehold estate or interest of any Issuer, or compliance
with any "change of control" or like restriction with respect thereto; and
(v) use its reasonable best
efforts to do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid,
binding, and in compliance with applicable law.
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not
be adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced. Anything in this
Section 9(d) to the contrary notwithstanding, Secured Party shall not, in
connection with any specific proposed disposition of Collateral, require
registration of the Collateral under the Securities Act unless, in the opinion
of experienced securities counsel for Secured Party, such registration is
reasonably necessary to ensure that such specific proposed distribution does
not violate the Securities Act.
(e) PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM
EXTENT PERMITTED BY LAW: (I) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL
HEARING PRIOR TO THE TIME SECURED PARTY DISPOSES OF ALL OR ANY PART OF THE
COLLATERAL AS PROVIDED IN THIS SECTION; (II) ALL RIGHTS OF REDEMPTION, STAY, OR
APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE
OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND (III) EXCEPT AS SET
FORTH IN SUBSECTION (A) OF THIS SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR
ADVERTISEMENT FOR SALE.
10. Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, any cash held by Secured Party
as Collateral and all cash proceeds received by Secured Party in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral pursuant to the exercise by Secured Party of its remedies as a
secured creditor as provided in Section 9 shall be applied from time to time by
Secured Party as provided in the Loan Agreement.
11. Duties of Secured Party. The powers conferred on
Secured Party hereunder are solely to protect its interests in the Collateral
and shall not impose on it any duty to exercise such powers. Except as
provided in Section 9-207 of the Code, Secured Party shall have no duty
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with respect to the Collateral or any responsibility for taking any necessary
steps to preserve rights against any Persons with respect to any Collateral.
12. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
FOOTHILL'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE FOOTHILL ELECTS TO
BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR PROPERTY MAY BE FOUND. EACH OF
PLEDGOR AND SECURED PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 12.
13. Amendments; Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Pledgor herefrom
shall in any event be effective unless the same shall be in writing and signed
by Secured Party and Pledgor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of Secured Party to exercise, and no delay in
exercising any right under this Agreement, any other Loan Document, or
otherwise with respect to any of the Secured Obligations, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right under
this Agreement, any other Loan Document, or otherwise with respect to any of
the Secured Obligations preclude any other or further exercise thereof or the
exercise of any other right. The remedies provided for in this Agreement or
otherwise with respect to any of the Secured Obligations are cumulative and not
exclusive of any remedies provided by law.
14. Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given shall be in writing and shall be delivered in the manner set forth in the
Loan Agreement.
15. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall: (i) remain
in full force and effect until the indefeasible payment in full of the Secured
Obligations, including the cash collateralization, expiration, or cancellation
of all Secured Obligations, if any, consisting of letters of credit, and the
full and final termination of any commitment to extend any financial
accommodations under the Loan Agreement; (ii) be binding upon Pledgor and its
successors and permitted assigns; and (iii) inure to the benefit of Secured
Party and its successors, transferees, and assigns. Upon the indefeasible
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payment in full of the Secured Obligations, including the cash
collateralization, expiration, or cancellation of all Secured Obligations, if
any, consisting of letters of credit, and the full and final termination of any
commitment to extend any financial accommodations under the Loan Agreement, the
security interests granted herein shall automatically terminate and all rights
to the Collateral shall revert to Pledgor. Upon any such termination, Secured
Party will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination. Such
documents shall be prepared by Pledgor and shall be in form and substance
reasonably satisfactory to Secured Party.
16. Security Interest Absolute. To the maximum extent
permitted by law, all rights of Secured Party, all security interests
hereunder, and all obligations of Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of any
of the Secured Obligations or any other agreement or instrument relating
thereto, including any of the Loan Documents;
(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 of
the Loan Documents, or any other agreement or instrument relating thereto;
(c) any exchange, release, or non-perfection of
any other collateral, or any release or amendment or waiver of or consent to
departure from any guaranty for all or any of the Secured Obligations; or
(d) any other circumstances that might otherwise
constitute a defense available to, or a discharge of, Pledgor.
To the maximum extent permitted by law, Pledgor hereby waives any right to
require Secured Party to: (A) proceed against or exhaust any security held from
Pledgor; or (B) pursue any other remedy in Secured Party's power whatsoever.
17. 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.
18. 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 in any other
jurisdiction, shall not in any way be affected or impaired thereby.
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19. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same Agreement.
20. Waiver of Marshaling. Each of Pledgor and Secured
Party acknowledges and agrees that in exercising any rights under or with
respect to the Collateral: (i) Secured Party is under no obligation to marshal
any Collateral; and (ii) may, in its absolute discretion, realize upon the
Collateral in any order and in any manner it so elects. Pledgor and Secured
Party waive any right to require the marshaling of any of the Collateral.
21. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PLEDGOR AND SECURED
PARTY REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT.
22. Waivers.
(a) To the maximum extent permitted by law, Pledgor
hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or
other financial accommodations made or extended under the Loan Agreement, or
the creation or existence of any Secured Obligations; (iii) notice of the
amount of the Secured Obligations, subject, however, to Section 2.6 of the Loan
Agreement and Pledgor's right to make inquiry of Secured Party to ascertain the
amount of the Secured Obligations at any reasonable time; (iv) notice of any
adverse change in the financial condition of Borrower or of any other fact that
might increase Pledgor's risk hereunder; (v) notice of presentment for payment,
demand, protest, and notice thereof as to any instrument among the Loan
Documents; (vi) notice of any unmatured Event of Default or Event of Default
under the Loan Agreement; and (vii) all other notices (except if such notice is
specifically required to be given to Pledgor under this Agreement or any other
Loan Document) and demands to which Pledgor might otherwise be entitled.
(b) To the fullest extent permitted by applicable law,
Pledgor waives the right by statute or otherwise to require Secured Party to
institute suit against Borrower or to exhaust any rights and remedies which
Secured Party has or may have against Borrower. Pledgor further waives any
defense arising by reason of any disability or other defense (other than the
defense that the Secured Obligations shall have been fully and finally
indefeasibly paid) of Borrower or by reason of the cessation from any cause
(other than that the Secured Obligations shall have been fully and finally
indefeasibly paid) whatsoever of the liability of Borrower in respect thereof.
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(c) To the maximum extent permitted by law, Pledgor
hereby waives: (i) any rights to assert against Secured Party any defense
(legal or equitable), set-off, counterclaim, or claim which Pledgor may now or
at any time hereafter have against Borrower or any other party liable to
Secured Party on account of or with respect to the Secured Obligations; (ii)
any defense, set-off, counterclaim, or claim, of any kind or nature, arising
directly or indirectly from the present or future sufficiency, validity, or
enforceability of the Secured Obligations; (iii) any defense arising by reason
of any claim or defense based upon an election of remedies by Secured Party
including, to the extent applicable, the provisions of Section Section 580d
and 726 of the California Code of Civil Procedure, or any similar law of
California or any other jurisdiction; (iv) the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement thereof.
(d) To the maximum extent permitted by law, Pledgor
hereby waives any right of subrogation Pledgor has or may have as against
Borrower with respect to the Secured Obligations. In addition, Pledgor hereby
waives any right to proceed against Borrower, now or hereafter, for
contribution, indemnity, reimbursement, or any other suretyship rights and
claims (irrespective of whether direct or indirect, liquidated or contingent),
with respect to the Secured Obligations. Pledgor also hereby waives any right
to proceed or to seek recourse against or with respect to any property or asset
of Borrower. Pledgor hereby agrees that, in light of the waivers contained in
this Section, Pledgor shall not be deemed to be a "creditor" (as that term is
defined in the Bankruptcy Code or otherwise) of Borrower, whether for purposes
of the application of Sections 547 or 550 of the United States Bankruptcy Code
or otherwise.
(e) If any of the Secured Obligations at any time are
secured by a mortgage or deed of trust upon real property, Secured Party may
elect, in its sole discretion, upon a default with respect to the Secured
Obligations, to foreclose such mortgage or deed of trust judicially or
nonjudicially in any manner permitted by law, before or after enforcing this
Agreement, without diminishing or affecting the liability of Pledgor hereunder.
Pledgor understands that (a) by virtue of the operation of California's
antideficiency law applicable to nonjudicial foreclosures, an election by
Secured Party nonjudicially to foreclose such a mortgage or deed of trust
probably would have the effect of impairing or destroying rights of
subrogation, reimbursement, contribution, or indemnity of Pledgor against
Borrower or guarantors or sureties, and (b) absent the waiver given by Pledgor
herein, such an election might estop Secured Party from enforcing this
Agreement against Pledgor. Understanding the foregoing, and understanding that
Pledgor is hereby relinquishing a defense to the enforceability of this
Agreement, Pledgor hereby waives any right to assert against Secured Party any
defense to the enforcement of this Agreement, whether denominated "estoppel" or
otherwise, based on or arising from an election by Secured Party nonjudicially
to foreclose any such mortgage or deed of trust. Pledgor understands that the
effect of the foregoing waiver may be that Pledgor may have liability hereunder
for amounts with respect to which Pledgor may be left without rights of
subrogation, reimbursement, contribution, or indemnity against Borrower or
guarantors or sureties. Pledgor also agrees that the "fair market value"
provisions of Section 580a of the California Code of Civil Procedure shall have
no applicability with respect to the determination of Pledgor's liability under
this Agreement.
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(f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER
OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, PLEDGOR HEREBY WAIVES, TO THE
MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL DEFENSES ARISING
DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE Section
Section 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845, 2848,
2849, AND 2850, TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE
Section Section 580A, 580B, 580C, 580D, AND 726, AND, TO THE EXTENT
APPLICABLE, CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.
(g) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS AGREEMENT, PLEDGOR HEREBY WAIVES ALL RIGHTS
AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY SECURED PARTY, EVEN
THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH
RESPECT TO SECURITY FOR A SECURED OBLIGATION, HAS DESTROYED PLEDGOR'S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST THE BORROWER BY THE OPERATION OF SECTION
580D OF THE CODE OF CIVIL PROCEDURE OR OTHERWISE.
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IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their officers thereunto duly
authorized as of the date first written above.
FOOTHILL CAPITAL FRI-MRD CORPORATION,
CORPORATION, a Delaware corporation
a California corporation
By_______________________________ By____________________________
Title: Title:
18
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: FRI-MRD CORPORATION
Pledged Shares
--------------
Former Name, if Pledgor's
Number of Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Numbers Certificate Issued Ownership Incorporation
------ ------ ----- ------- ------------------ ---------- ---------------
EL TORITO RESTAURANTS, INC. common 100% Delaware
CHI-CHI'S INC. common 100% Delaware
FRI-ADMIN CORPORATION common 100% Delaware
EL TORITO FRANCHISING COMPANY common 100% Delaware
19
SCHEDULE B
TO
STOCK PLEDGE AGREEMENT
Pledgor: FRI-MRD CORPORATION, a Delaware corporation
Address of Chief Executive Office:
FRI-MRD Corporation
c/o Family Restaurants, Inc.
Executive Headquarters
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
20
SCHEDULE C
TO
STOCK PLEDGE AGREEMENT
Existing Future Rights and Proceeds: [None.]
