AMENDED, RESTATED, AND CONSOLIDATED
SECURITY AGREEMENT
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THIS AMENDED, RESTATED, AND CONSOLIDATED SECURITY AGREEMENT (this
"Agreement") is entered into as of July 19, 2000, among FOOTHILL CAPITAL
CORPORATION, a California corporation ("Foothill") PRANDIUM, INC., a Delaware
corporation formerly known as Family Restaurants, Inc. ("Prandium"), FRI-MRD
CORPORATION, a Delaware corporation ("FRI-MRD"), FRI-ADMIN CORPORATION, a
Delaware corporation ("FRI-Admin"), XXX XXX ROO, INC., a Delaware corporation
("KKR"), THE HAMLET GROUP, INC., a California corporation ("HGI"), and each of
the Subsidiaries of Borrower (as hereinafter defined) identified on the
signature pages hereto (individually and collectively, the "Subsidiary
Guarantors"; together with Prandium, FRI-MRD, FRI-Admin, KKR, and HGI, each, a
"Guarantor," and collectively, the "Guarantors"), in light of the following:
WHEREAS, Borrower, Guarantors, Foothill, and the other parties thereto
are parties to that certain Loan and Security Agreement, dated as of January 10,
1997 (as amended, modified, and otherwise supplemented through the date hereof,
the "Existing Loan Agreement");
WHEREAS, pursuant to the terms and conditions of the Existing Loan
Agreement, (a) Prandium and Foothill entered into that certain Security
Agreement, dated as of January 10, 1997 (the "Prandium Security Agreement"); (b)
FRI-MRD and Foothill entered into that certain Security Agreement, dated as of
January 10, 1997 (the "FRI-MRD Security Agreement"); (c) FRI-Admin and Foothill
entered into that certain Security Agreement, dated as of January 10, 1997 (the
"FRI-Admin Security Agreement"); (d) the Subsidiary Guarantors and Foothill
entered into that certain Security Agreement, dated as of January 10, 1997 (the
"Subsidiary Security Agreement"); (e) KKR and Foothill entered into that certain
Security Agreement, dated as of October 30, 1998 (the "KKR Security Agreement");
and (f) HGI and Foothill entered into that certain Security Agreement, dated as
of October 30, 1998 (the "HGI Security Agreement"; together with the Prandium
Security Agreement, the FRI-MRD Security Agreement, the FRI-Admin Security
Agreement, the Subsidiary Security Agreement, and the KKR Security Agreement,
collectively, the "Existing Security Agreements"); and
WHEREAS, Borrower, Guarantors, and Foothill desire to amend and
restate the Existing Loan Agreement in its entirety as provided in that certain
Amended and Restated Loan and Security Agreement, dated as of the date hereof
(the "Loan Agreement"), it being understood that no repayment of the obligations
under the Existing Loan Agreement is being effected thereby, but merely an
amendment and restatement in accordance with the terms thereof; and
WHEREAS, pursuant to the Loan Agreement and as one of the conditions
thereof, Guarantors and Foothill have agreed to amend, restate, and consolidate
the Existing Security Agreements in their entirety as provided in this
Agreement, it being understood that
no satisfaction of the obligations under the Existing Security Agreements is
being effected hereby, but merely an amendment, restatement, and consolidation
in accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and each intending
to be bound hereby, Foothill and Guarantors agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. All capitalized terms used herein and not otherwise
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defined herein shall have the meanings ascribed to them in the Loan Agreement.
As used in this Agreement, the following terms shall have the following
definitions:
"Accounts" means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to any
Guarantor arising out of the sale, license, or lease of goods or the rendition
of services by such Guarantor, irrespective of whether earned by performance,
and any and all credit insurance, guaranties, or security therefor.
"Acquired Indebtedness" means Indebtedness of a Person that exists at
the time such Person becomes a Restricted Subsidiary of Prandium or that is
assumed by Prandium or any Restricted Subsidiary in connection with the
acquisition of assets from such Person, and, in any such case, is not incurred
by such Person in connection with, or in anticipation of, such Person becoming a
Restricted Subsidiary of Prandium or in connection with, or in anticipation of,
the acquisition of assets from such Person.
"Agreement" means this Amended, Restated, and Consolidated Security
Agreement and any extensions, riders, supplements, notes, amendments, or
modifications to or in connection with this Amended, Restated, and Consolidated
Security Agreement.
"Borrower" means Chi-Chi's, Inc., a Delaware corporation.
"Code" means the California Uniform Commercial Code.
"Collateral" means each of the following: the Accounts; Guarantor's
Books; the Equipment; the General Intangibles; the Inventory; the Investment
Property, the Negotiable Collateral; any money, or other assets of any Guarantor
which now or hereafter come into the possession, custody, or control of
Foothill; and the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Guarantor's Books, Equipment, General
Intangibles, Inventory, Investment Property Negotiable Collateral, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or
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interest therein, and the proceeds thereof; provided, however, that the Pledged
HGI Collateral and the proceeds or products thereof shall not constitute
Collateral.
"Equipment" means all of any Guarantor's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods
(other than consumer goods, farm products, or Inventory), wherever located, and
any interest of any Guarantor in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located.
"Event of Default" has the meaning ascribed to it in Section 6.
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"Excluded Contract Right" means, with respect to any Guarantor, and
with respect to any contract to which such Guarantor is a party, a right or
privilege of such Guarantor under such contract, or an obligation due to such
Guarantor under such contract, that: (a) In the case of a More Important
Contract, arises under a contract described on Schedule E-2 to the Loan
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Agreement; or (b) In the case of a Less Important Contract, (i) does not consist
of the right of such Guarantor to receive a payment, or an obligation due to
such Guarantor with respect to a payment, and (ii) is, by the express terms of
such contract, subject to a restriction on assignability that prohibits the
pledge, hypothecation, mortgage, encumbrance, or grant of a Lien on same, if
such restriction is enforceable, and if the breach of such restriction by such
Guarantor would constitute a material breach of such contract sufficient to give
rise to a right on the part of another party to such contract to terminate such
contract or to impose liability for not insignificant damages upon such
Guarantor for breach of such contract; provided that the proceeds of any
disposition of any Excluded Contract Right shall not constitute an Excluded
Contract Right, and any such proceeds shall be subject to Foothill's security
interest.
"General Corporate Purposes" means, with respect to any transfer or
disposition of Collateral by Prandium or any Restricted Subsidiary (other than
FRI-MRD or any of its Subsidiaries), a transfer or disposition made for general
corporate purposes of such Person reasonably related to (a) its ownership,
operation, management, or conduct of restaurant businesses and other businesses
reasonably related or incidental thereto, (b) ownership of its Subsidiaries to
the extent that such Subsidiaries are engaged in the ownership, operation,
management, or conduct of restaurant businesses and other businesses reasonably
related or incidental thereto, (c) the recapitalization of Prandium or the
restructuring of the Indebtedness of Prandium, (d) the payment of principal or
interest owed by Prandium with respect to Senior Notes or Subordinated Notes, or
(e) the purchase, redemption, or retirement by Prandium of Senior Notes or
Subordinated Notes.
"General Intangibles" means all of any Guarantor's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment
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and other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer discs or tapes, literature,
reports, catalogs, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), other than goods, Accounts, Investment Property, and
Negotiable Collateral; provided that General Intangibles shall not include any
Excluded Contract Right.
"Guarantied Obligations" shall have the meaning ascribed to it in the
Guaranty.
"Guarantors' Books" means all of any Guarantor's books and records,
including: ledgers; records indicating, summarizing, or evidencing such
Guarantor's properties or assets (including the Collateral) or liabilities; all
information relating to such Guarantor's business operations or financial
condition; and all computer programs, disc or tape files, printouts, runs, or
other computer prepared information in respect of such books and records.
"Guarantor" and "Guarantors" have the meanings ascribed thereto in the
preamble to this Agreement.
"Guaranty" means the Amended, Restated, and Consolidated General
Continuing Guaranty of Guarantors to Foothill of even date herewith.
"Inventory" means all present and future inventory in which any
Guarantor has any interest, including goods held for sale, license, or lease or
to be furnished under a contract of service and all of any Guarantor's present
and future raw materials, work in process, finished goods, and packing and
shipping materials, wherever located, and any documents of title representing
any of the above.
"Investment Property" means "investment property" as that term is
defined in the Code (including the shares of stock of Subsidiaries of any
Guarantor, other than the shares of stock HGI owned by FRI-MRD).
"Less Important Contract" means, with respect to any Guarantor, a
contract to which such Guarantor is a party that is not a More Important
Contract.
"Loan Agreement" means that certain Amended and Restated Loan and
Security Agreement, dated as of even date herewith, among Borrower, Guarantors,
and Foothill.
"Material Adverse Collateral Change" means (a) a material and adverse
decline in (i) the value of the Collateral (exclusive of the Stock of
Subsidiaries of any Guarantor and exclusive of dispositions of the Collateral
that are Permitted Dispositions), or (ii) the amount that Foothill would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (b) a material impairment
of the priority of Foothill's Liens with respect to such Collateral, in each
case, other than as the proximate result of the action or inaction of Foothill.
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"More Important Contract" means, with respect to any Guarantor, a
contract to which such Guarantor is a party: (a) the material breach of which by
such Guarantor could give rise to a claim against such Guarantor that is
material in relation to Guarantor's financial condition; or (b) the termination
of which could interfere substantially with the ongoing operations, businesses,
or prospects of such Guarantor.
"Negotiable Collateral" means all of any Guarantor's present and
future letters of credit, notes, drafts, instruments, documents, personal
property leases (wherein Guarantor is the lessor), chattel paper, and
Guarantors' Books relating to any of the foregoing.
"Permitted Disposition" means, (a) with respect to FRI-MRD or any of
its Subsidiaries, `Permitted Disposition' as defined in the Loan Agreement, and
(b) with respect to Prandium or any of its Restricted Subsidiaries (other than
FRI-MRD or any of its Subsidiaries), a transfer or other disposition of
Collateral provided that (i) no Triggering Event exists, (ii) such transfer or
disposition would not result in the breach of any covenant contained in any Loan
Document to which Prandium or such Restricted Subsidiary is a party or by which
Prandium or such Restricted Subsidiary has agreed to be bound (including,
Section 21(d) of the Guaranty), (iii) the transfer or disposition is for General
Corporate Purposes of Prandium or such Restricted Subsidiary, and (iv) such
transfer or disposition is not a transfer or disposition of any real property or
interest in real property which is subject to any mortgage or deed of trust in
favor of Foothill without the prior written consent of Foothill.
"Permitted Liens" means, with respect to assets of any Guarantor or
their respective Subsidiaries (other than the Unrestricted Subsidiaries of
Prandium): (a) Liens granted to Foothill 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 set forth on Schedule P-1 of the Loan Agreement, (d) (i) the
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interests of lessors or lessees under operating leases and subleases, and (ii)
the interests of licensees or franchisees under licenses or franchises of
Borrower Intellectual Property to the extent constituting an Ordinary Course
Disposition under clause (e) of the definition of Ordinary Course Disposition;
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(e) with respect to Prandium and its Restricted Subsidiaries (other than FRI-MRD
and its Subsidiaries) Liens securing purchase money Indebtedness or capital
leases granted or entered into by Prandium or any such Subsidiary, other than in
connection with the acquisition of a Person or the acquisition of assets not in
the ordinary course of an existing business of Prandium or any such Restricted
Subsidiary, provided, however, that such Lien only attaches to the asset
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purchased or acquired; (f) with respect to FRI-MRD and any of its Subsidiaries,
(i) Liens securing purchase money Indebtedness or capital leases permitted under
Section 7.1(g) of the Loan Agreement, so long as the Lien only attaches to the
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asset purchased or acquired, or (ii) Acquisition Liens, (g) Liens arising by
operation of law, incurred in the ordinary course of business of such Guarantor
or any such Subsidiary, as the case may be, 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; (h) Liens arising from deposits made in connection
with obtaining worker's compensation or other
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unemployment insurance; (i) Liens or deposits to secure performance of bids,
tenders, contracts or leases (to the extent permitted under this Agreement),
incurred in the ordinary course of business of such Guarantor or such Restricted
Subsidiary, as the case may be, and not in connection with the borrowing of
money; (j) Liens arising by reason of security for surety or appeal bonds; (k)
Liens of or resulting from any judgment or award that does not constitute an
Event of Default hereunder; (l) with respect to the Headquarters Property, the
Real Property Collateral and the Anaheim Property, Liens with respect thereto,
that are exceptions to the commitments for title insurance issued in connection
with the Headquarters Mortgage, the Mortgages, and the Anaheim Mortgage, as
applicable, as accepted by Foothill at the time of such issuance, (m) with
respect to any other Real Property, easements, rights of way, zoning and similar
covenants and restrictions, and similar encumbrances that do not materially
interfere with or impair the use or operation thereof by such Guarantor or such
Subsidiary, as the case may be; (n) other Liens imposed by operation of law that
do not materially affect such Guarantor's or such Subsidiary's, as the case may
be, ability to perform their respective obligations under the Loan Documents;
(o) replacement or continued Liens granted to a Person who provides refinancing
or continuation of Indebtedness under any Permitted Lien; provided, that the
replacement or continued Lien is limited to all or part of the properties or
assets that secured the refinanced or continued Indebtedness; (p) existing
mortgages or Liens disclosed in the most recent financial statements (or the
notes thereto) of such Guarantor delivered to Foothill prior to the Closing
Date; and (q) with respect to any acquisition after the Closing Date by such
Guarantor or such Subsidiary, as the case may be, of any assets, or of any
Person, any pre-existing Liens on such acquired assets or on the assets of such
acquired Person to the extent and only to the extent that they secure Acquired
Indebtedness.
"Permitted Protest" means the right of any Guarantor or any Subsidiary
of any Guarantor to protest any Lien (other than any such Lien that secures the
Guarantied 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 with GAAP, a reserve with respect to such obligation is established
on the books of such Guarantor or such Subsidiary, as applicable under the
circumstances, in accordance with GAAP, and (b) any such protest is instituted
and diligently prosecuted by such Guarantor or such Subsidiary, as applicable
under the circumstances, in good faith.
"Restricted Subsidiary" means any Subsidiary of Prandium (other than
FRI-MRD and its Subsidiaries) that has not been designated by Prandium as an
Unrestricted Subsidiary.
"Secured Obligations" shall mean all liabilities, obligations, or
undertakings owing by any Guarantor to Foothill 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 any Guarantor, 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
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case under the Bankruptcy Code) and any and all reasonable out-of-pocket costs,
fees (including reasonable attorneys fees), and expenses which any Guarantor is
required to pay pursuant to any of the foregoing, by law, or otherwise.
"Unrestricted Subsidiary" means any Subsidiary of Prandium (other than
FRI-MRD and its Subsidiaries) that is (a) now existing or hereafter created or
acquired, and (b) designated in writing by Prandium to Foothill as an
Unrestricted Subsidiary.
1.2 Code. Any terms used in this Agreement which are defined in the Code
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shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.3 Construction. Unless the context of this Agreement clearly requires
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otherwise, references to the plural include the singular, references to the
singular include the plural, 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
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, subsection, clause,
schedule, and exhibit references are to this Agreement unless otherwise
specified. Any reference in this Agreement or in any of the other Loan Documents
to this Agreement or any of the other Loan Documents shall include all
alterations, amendments, restatements, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements, thereto and thereof, as
applicable. In the event of a direct conflict between the terms and provisions
of this Agreement and the Loan Agreement, it is the intention of the parties
hereto that both such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of the Loan Agreement shall control and govern; provided,
however, that the inclusion herein of additional obligations on the part of
Guarantor and supplemental rights and remedies in favor of Foothill, in each
case in respect of the Collateral, shall not be deemed a conflict with the Loan
Agreement.
1.4 Schedules and Exhibits. All of the schedules and exhibits attached to
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this Agreement shall be deemed incorporated herein by reference.
2. CREATION OF SECURITY INTEREST.
2.1 Grant of Security Interest. Each Guarantor hereby grants to Foothill a
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continuing security interest in all of its currently existing and hereafter
acquired or arising Collateral in order to secure payment and performance of the
Secured Obligations. Foothill's security interests in the Collateral shall
attach to all Collateral without further act on the part of Foothill or any
Guarantor. Anything contained in this Agreement or any other Loan Document to
the contrary notwithstanding, no Guarantor has any authority, express or
implied, to dispose of any item or portion of the Collateral other than
Permitted Dispositions. Concurrent with the consummation of any Permitted
Disposition, Foothill agrees to release its Liens on the subject property or
asset (but not the proceeds from such Permitted Disposition).
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2.2 Negotiable Collateral. In the event that any Collateral, including
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proceeds, is evidenced by or consists of Negotiable Collateral (other than
Collection items received by any Guarantor in the ordinary course of such
Guarantor's business and deposited), such Guarantor shall, promptly upon the
request of Foothill, deliver physical possession of such Negotiable Collateral
to Foothill or its bailee to the extent required for Foothill to have a first
priority perfected Lien thereon.
2.3 [Intentionally omitted.]
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2.4 Delivery of Additional Documentation Required. Each Guarantor shall
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execute, and deliver to Foothill, prior to or concurrently with such Guarantor's
execution and delivery of this Agreement and at any time thereafter at the
request of Foothill, all financing statements, continuation financing
statements, fixture filings, security agreements, chattel mortgages, pledges,
mortgages, deeds of trust, assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices, schedules of accounts,
letters of authority, and all other documents that Foothill may reasonably
request, in form satisfactory to Foothill, to perfect and continue perfected
Foothill's security interests in the Collateral and in order to fully consummate
all of the transactions contemplated under the Loan Documents.
2.5 Power of Attorney. Each Guarantor hereby irrevocably makes,
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constitutes, and appoints Foothill (and any of Foothill's officers, employees,
or agents designated by Foothill) as such Guarantor's true and lawful attorney,
with power to: (a) if such Guarantor refuses to, or fails timely to execute and
deliver any of the documents described in Section 2.4, sign the name of such
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Guarantor on any of the documents described in Section 2.4; (b) endorse such
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Guarantor's name on any Collection item that may come into Foothill's
possession; (c) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Guarantor's policies
of insurance and make all determinations and decisions with respect to such
policies of insurance. The appointment of Foothill as each Guarantor's attorney,
and each and every one of Foothill's rights and powers, being coupled with an
interest, is irrevocable until all of the Secured Obligations have been fully
and finally repaid and performed and Foothill's obligation to extend credit
under the Loan Agreement is terminated.
2.6 Right to Inspect. Prior to the time that an Event of Default has
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occurred and is continuing or Foothill deems itself insecure, Foothill (through
any of its officers, employees, or agents) shall have the right, from time to
time hereafter upon reasonable prior notification to the applicable Guarantor
and during normal business hours, to inspect any Guarantors' Books and the books
and records of such Guarantor's Subsidiaries (other than the Unrestricted
Subsidiaries of Prandium) and to check, test, and, subject to Section 2.11(d) of
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the Loan Agreement, appraise the Collateral in order to verify such Guarantor's
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral. After the time that an Event of Default has
occurred and is continuing or Foothill deems itself insecure, Foothill (through
any of its officers, employees, or agents) shall have the right, from time to
time thereafter, to inspect each Guarantor's and each Restricted Subsidiaries'
Books and to check, test, and, subject to Section 2.11(d) of the Loan
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Agreement, appraise the Collateral in order to verify each Guarantor's financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.
3. REPRESENTATIONS AND WARRANTIES.
Each Guarantor represents and warrants on its own behalf and on behalf
of its Subsidiaries (other than any Unrestricted Subsidiaries of Prandium) as
follows:
3.1 No Prior Encumbrances. Guarantors and such Subsidiaries own the
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Collateral, free and clear of Liens, except for Permitted Liens.
3.2 Place of Business/Chief Executive Office; FEIN. On the Closing Date,
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the chief executive office of each Guarantor is at the address indicated in the
first paragraph of the Loan Agreement. Each Guarantor's FEIN is set forth on
Schedule 3.2.
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3.3 [Intentionally Omitted.]
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3.4 [Intentionally Omitted.]
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3.5 [Intentionally Omitted.]
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3.6 Due Organization and Qualification. Each Guarantor is incorporated in
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the state listed below its name as it appears on the signature pages to this
agreement, and it is and shall at all times hereafter be duly organized and
existing and in good standing under the laws of such state and qualified and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified could reasonably be expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
or prospects of such Guarantor or on the value of the Collateral.
3.7 Due Authorization; No Conflict. The execution, delivery, and
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performance of this Agreement, the Guaranty, and any other Loan Document to
which any Guarantor is a party are within such Guarantor's corporate powers,
have been duly authorized, and are not in conflict with nor, constitute a breach
of any provision contained in such Guarantor's Articles or Certificate of
Incorporation or By-laws, nor will they constitute an event of default under any
material agreement to which such Guarantor is now or may hereafter become a
party.
3.8 Litigation. There are no actions or proceedings pending against any
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Guarantor or any such Subsidiary before any court or administrative agency and
no Guarantor nor any such Subsidiary has knowledge or belief of any pending,
threatened, or imminent litigation, governmental investigations, or claims,
complaints, actions, or prosecutions involving any Guarantor or any such
Subsidiary, except for: (a) matters existing as of the date hereof that (i) have
claimed damages of less than $250,000, or, if no claimed damages, have estimated
damages of less than $250,00 (assuming a determination adverse to such Guarantor
or such Subsidiary, as applicable), and (ii) if decided adversely to such
Guarantor or any such Subsidiary, would not materially impair the prospect of
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repayment of the Secured Obligations or materially impair the value or priority
of Foothill's security interests in the Collateral, (b) matters disclosed on
Schedule 5.9 of the Loan Agreement; and (c) matters arising after the date
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hereof that, if decided adversely to such Guarantor or any such Subsidiary,
would not materially impair the prospect of repayment of the Secured Obligations
or materially impair the value or priority of Foothill's security interests in
the Collateral.
3.9 No Intent to Hinder Creditors. No transfer of property is being made
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by any Guarantor and no obligation is being incurred by any Guarantor or any
such Subsidiary in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of such Guarantor or any such
Subsidiary.
3.10 Reliance by Foothill; Cumulative. The warranties, representations,
---------------------------------
and agreements set forth herein shall be conclusively presumed to have been
relied upon by Foothill and shall be cumulative and in addition to any and all
other warranties, representations, and agreements which any Guarantor or any
such Subsidiary shall now or hereinafter give, or cause to be given, to
Foothill.
4. AFFIRMATIVE COVENANTS.
Each Guarantor covenants and agrees that, until payment in full of the
Secured Obligations, and unless Foothill shall otherwise consent in writing,
such Guarantor shall do all of the following:
4.1 [Intentionally Omitted.]
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4.2 [Intentionally Omitted.]
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4.3 [Intentionally Omitted.]
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4.4 [Intentionally Omitted.]
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4.5 Taxes. Other than taxes of which any Guarantor is unaware or that in
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the aggregate are de minimis, all assessments and taxes (including withholding
taxes), whether real, personal, or otherwise, due or payable by, or imposed,
levied, or assessed against such Guarantor or any of its Subsidiaries (other
than Unrestricted Subsidiaries of Prandium), or any of their properties, have
been paid, and shall be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax (other than taxes that are the subject of a United States
federal tax lien) is the subject of a Permitted Protest. Each Guarantor and its
Subsidiaries (other than Unrestricted Subsidiaries of Prandium), upon request,
shall furnish Foothill with proof reasonably satisfactory to Foothill indicating
that such Guarantor and such Subsidiaries have made all due and timely payments
or deposits of all such federal, state, and local taxes, assessments, or
contributions required of them by law.
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4.6 Insurance.
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(a) At its expense, keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and other hazards and risks, and
in such amounts, as are ordinarily insured against by other owners in similar
businesses. Each Guarantor also shall maintain business interruption, public
liability, product liability, and property damage insurance relating to their
ownership and use of the Collateral, as well as insurance against larceny,
embezzlement, and criminal misappropriation, in each case consistent with past
practice; provided, however, that FRI-MRD and its Subsidiaries only shall be
required to use their reasonable best efforts to maintain earthquake insurance,
in amounts and subject to deductibles consistent with those ordinarily insured
against by other similar companies in the same industry, so long as it is
available at reasonable commercial rates. Foothill agrees that each Guarantor
and its Subsidiaries may self-insure for workers compensation insurance,
generally liability insurance, auto liability insurance, and health insurance,
in each case, consistent with past practice and with a limit of up to $500,000
per occurrence.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be reasonably satisfactory to
Foothill. Insurance policies covering property and assets against loss by fire,
lightening, windstorm, hail, explosion, aircraft, smoke damage, earthquake,
elevator collisions and other risks included under an "extended coverage"
endorsement shall, with respect to hazard insurance and such other insurance as
Foothill shall specify, contain a California Form 438BFU (NS) mortgagee
endorsement, or an equivalent endorsement satisfactory to Foothill, showing
Foothill as a loss payee thereof as its interests may appear, and shall contain
a waiver of warranties. All such insurance (with the exception of workers'
compensation and health insurance policies) shall name Foothill as an additional
insured as its interest may appear. Every policy of insurance referred to in
this Section 4.6 (with the exception of workers' compensation and health
-----------
insurance policies) shall contain an agreement by the insurer that it will not
cancel such policy except after 10 days prior written notice to Foothill.
Certified copies or originals of such policies or certificates thereof
satisfactory to Foothill evidencing such insurance shall be delivered to
Foothill prior to the expiration or the cancellation of the existing or
preceding policies. Each Guarantor shall deliver to Foothill, upon the request
of Foothill, evidence of the payment of all premiums for such policies of
insurance.
4.7 Foothill Expenses. Guarantors, jointly and severally, shall
-----------------
immediately and without demand reimburse Foothill for all sums expended by
Foothill which constitute Foothill Expenses and Guarantors hereby authorize and
approve all advances and payments by Foothill for items constituting Foothill
Expenses.
4.8 Control Agreement. Each Guarantor, Foothill, and each applicable
-----------------
financial intermediary shall enter into a control agreement that, among other
things, provides that, from and after the giving of notice by Foothill to such
financial intermediary, it shall take instructions solely from Foothill with
respect to the applicable Securities Account and related securities
entitlements. Foothill agrees that it will not give such notice unless a
Triggering
-11-
Event has occurred. Each Guarantor agrees that it will not transfer assets out
of any such Securities Accounts other than in the ordinary course of business or
as otherwise permitted under the Loan Documents and, if to another financial
intermediary, unless each of such Guarantor, Foothill, and the substitute
financial intermediary have entered into a control agreement of the type
described above. No arrangement contemplated hereby shall be modified by any
Guarantor without the prior written consent of Foothill. Upon the occurrence and
during the continuance of a Triggering Event, Foothill may elect to notify the
financial intermediary to liquidate or transfer the securities entitlements in
such Securities Account and remit the proceeds thereof to the Foothill Account.
5. NEGATIVE COVENANTS.
Each Guarantor covenants and agrees that until payment in full of the
Secured Obligations, it will not, nor will it permit any of its Subsidiaries
(other than any Unrestricted Subsidiary of Prandium) to, do any of the following
without Foothill's prior written consent:
5.1 Liens. Create, incur, assume, or permit to exist, directly or
-----
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens and the pledge of the Pledged HGI
Collateral pursuant to the Senior Secured Discount Note Agreement.
5.2 [Intentionally omitted.]
---------------------
5.3 [Intentionally omitted.]
---------------------
5.4 Change Name. Except on 30 days prior written notice to Foothill,
-----------
change its name or FEIN.
5.5 [Intentionally omitted.]
---------------------
5.6 [Intentionally omitted.]
---------------------
5.7 [Intentionally omitted.]
---------------------
5.8 [Intentionally omitted.]
---------------------
5.9 Change in Location of Chief Executive Office; Inventory and Equipment
---------------------------------------------------------------------
with Bailees. Without thirty (30) days prior written notification to Foothill,
------------
relocate its chief executive office to a new location, unless, at the time of
such written notification, it provides any financing statements or fixture
filings necessary to perfect and continue perfected Foothill's security
interests and also provides to Foothill a landlord's waiver in form and
substance satisfactory to Foothill. The Inventory and Equipment shall not at any
time now or hereafter be stored with a bailee, warehouseman, or similar party
without Foothill's prior written consent.
-12-
6. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
6.1 The occurrence of an Event of Default (as defined in the Loan
Agreement);
6.2 If (a) any Guarantor fails or neglects to perform, keep, or observe,
in any material respect, any term, provision, condition, covenant, or agreement
contained in this Agreement or in the Guaranty, or in any other present or
future Loan Document between such Guarantor and Foothill, and such failure
continues for a period of 15 days from the date on which such Guarantor first
had knowledge or reasonably should have had knowledge of such failure or
neglect, or (b) such Guarantor fails or neglects to perform, keep, or observe,
in any material respect, any other term, provision, condition, covenant, or
agreement contained in this Agreement or in the Guaranty, or in any other
present or future Loan Document between such Guarantor and Foothill, and
Foothill, in its reasonable discretion, determines such failure or neglect is
not capable of cure by such Guarantor within 15 days from the date on which such
Guarantor first had knowledge or reasonably should have had knowledge of such
failure or neglect.
6.3 If there is a Material Adverse Collateral Change;
6.4 (a) If a notice of lien, levy, or assessment is filed of record with
respect to any of any Guarantor's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or if any
taxes or debts owing at any time hereafter to the United States becomes a lien,
whether xxxxxx or otherwise, upon any of any Guarantor's properties or assets;
or (b) if a notice of lien, levy, or assessment is filed of record for an amount
in excess of $250,000 with respect to any of any Guarantor's properties or
assets by any state, county, municipal, or governmental agency, or if any taxes
or debts owing at any time hereafter to any one or more of such entities becomes
a lien for an amount in excess of $250,000, whether xxxxxx or otherwise, upon
any of any Guarantor's properties or assets and, in any such case, such taxes or
debts are not the subject of a Permitted Protest, and the lien, levy, or
assessment is not released, discharged, or bonded against before the earlier of
30 days of the date it first arises or 5 days of the date when such property or
asset is subject to being forfeited;
6.5 If a judgment or other claim becomes a Lien upon any material portion
of any Guarantor's properties or assets and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30
days of the date it first arises or 5 days of the date when such property or
asset is subject to being forfeited;
6.6 If there is a material default in any material agreement relating to
Indebtedness to which any Guarantor is a party with one or more third Persons
resulting in a right by such third Persons, irrespective of whether exercised,
to accelerate the maturity of such Guarantor's obligations thereunder;
-13-
6.7 [Intentionally omitted;]
6.8 If any misstatement or misrepresentation exists now or hereafter in
any written warranty, representation, statement, or report made pursuant to any
of the Loan Documents to Foothill by any Guarantor or any officer, director,
employee, or agent of any Guarantor (in the case of employees or agents who are
not officers or directors, to the extent authorized by an officer or director to
communicate or transact business with Foothill or who regularly communicate or
transact business with Foothill), or if any such warranty or representation is
withdrawn.
7. FOOTHILL'S RIGHTS AND REMEDIES.
7.1 Rights and Remedies. Upon the occurrence and during the continuation
-------------------
of an Event of Default, the security hereby constituted shall become enforceable
and, in addition to all other rights and remedies available to Foothill as
provided hereafter, Foothill may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Guarantors:
(a) Proceed directly and at once, without notice, against any
Guarantor to collect and recover the full amount or any portion of the
Guarantied Obligations, without first proceeding against Borrower, or against
any security or collateral for the Guarantied Obligations.
(b) Without notice to any Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Guarantied Obligations (i) any indebtedness due
or to become due from Foothill to any Guarantor and (ii) any moneys, credits or
other property belonging to any Guarantor at any time held by or coming into the
possession of Foothill.
(c) May exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein and the Guaranty or otherwise
available to it, all the rights and remedies available to it at law (including
those of a secured party under the Code) or in equity.
(d) [Intentionally Omitted;]
(e) [Intentionally Omitted;]
(f) Without notice or demand, make such payments and do such
acts as Foothill considers reasonably necessary to protect its security interest
in the Collateral. Each Guarantor agrees to assemble the Collateral if Foothill
so requires, and to make the Collateral available to Foothill as Foothill may
designate. Each Guarantor authorizes Foothill to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Foothill's reasonable determination appears to be prior
or superior to its security interest and to pay all reasonable expenses incurred
in
-14-
connection therewith. With respect to any of any Guarantor's owned premises,
such Guarantor hereby grants Foothill a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Foothill's rights or remedies provided
herein, at law, in equity, or otherwise;
(g) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Foothill is hereby granted a license or other right to
use, without charge, each Guarantor's labels, patents, copyrights, rights of use
of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of advertising for sale and selling any
Collateral, and each Guarantor's rights under all licenses and all franchise
agreements shall inure to Foothill's benefit;
(h) Sell all or any part of the Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Guarantor's
premises) as Foothill determines is commercially reasonable. It is not necessary
that the Collateral be present at any such sale. Foothill shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Guarantor,
which right or equity is hereby waived or released by each Guarantor to the
extent permitted by law.
(i) Foothill shall give notice of the disposition of the
Collateral as follows:
(i) Foothill shall give each Guarantor and each holder of a
security interest in the Collateral who has filed with Foothill a
written request for notice, a notice in writing of the time and place
of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Collateral,
then the time on or after which the private sale or other disposition
is to be made;
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to each Guarantor as provided in Section 10, at least 10 days
----------
before the date fixed for the sale, or at least 10 days before the
date on or after which the private sale or other disposition is to be
made; no notice needs to be given prior to the disposition of any
portion of the Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a
recognized market. Notice to Persons other than any Guarantor claiming
an interest in the Collateral shall be sent to such addresses as they
have furnished to Foothill;
(iii) If the sale is to be a public sale, Foothill also shall
give notice of the time and place by publishing a notice one time at
least 10 days before the
-15-
date of the sale in a newspaper of general circulation in the county
in which the sale is to be held;
(j) [Intentionally omitted;]
(k) [Intentionally omitted;]
(l) [Intentionally omitted;]
(m) [Intentionally omitted;]
(n) Any deficiency which exists after disposition of the
Collateral as provided above will be paid immediately by each Guarantor up to
the maximum amount, if any, of such Guarantor's liability under the Guaranty.
Any excess will be promptly returned to Prandium for the benefit of all
Guarantors, without interest and subject to the rights of third parties, by
Foothill.
Except as required by law, Foothill may take any or all of the foregoing action
without demand, presentment, protest, advertisement or notice of any kind to or
upon any Guarantor or any other person. Anything in this Agreement to the
contrary notwithstanding, unless a Triggering Event has occurred and is
continuing, Foothill shall not exercise any of its default remedies with respect
to the Investment Property.
7.2 Remedies Cumulative. Foothill's rights and remedies under this
-------------------
Agreement and the other Loan Documents shall be cumulative. Foothill shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Foothill of one right or remedy shall
be deemed an election, and no waiver by Foothill of any Event of Default on
Borrower's part shall be deemed a continuing waiver. No delay by Foothill shall
constitute a waiver, election, or acquiescence by it.
8. TAXES AND EXPENSES REGARDING THE COLLATERAL.
If any Guarantor fails to pay any monies (whether taxes, rents,
assessments, insurance premiums, or otherwise) due to third persons or entities,
or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement, then, to the extent
that Foothill determines that such failure, by such Guarantor reasonably could
be expected to have a material adverse effect on Foothill's interests in the
Collateral, in its discretion and without prior notice to any Guarantor,
Foothill may do any or all of the following: (a) make payment of the same or any
part thereof; (b) set up such reserves in Borrower's loan account as Foothill
reasonably deems necessary to protect Foothill from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type described in
Section 4.6 hereof insuring such Guarantor's ownership and use of the
-----------
Collateral, and take any action with respect to such policies as Foothill
reasonably deems prudent. Any amounts paid or deposited by Foothill shall
constitute Foothill Expenses, shall immediately become additional Secured
Obligations, shall bear interest at the applicable rate described in the Loan
Document, and shall be secured by
-16-
the Collateral. Any payments made by Foothill shall not constitute an agreement
by Foothill to make similar payments in the future or a waiver by Foothill of
any Event of Default under this Agreement. Foothill need not inquire as to, or
contest the validity of, any such expense, tax, security interest, encumbrance,
or lien and the receipt of the usual official notice for the payment thereof
shall for the purposes of this Agreement be conclusive evidence that the same
was validly due and owing. Foothill shall use its best efforts to provide notice
to Guarantor of any action taken by it under this Section 8.
---------
9. WAIVERS; INDEMNIFICATION.
9.1 Demand; Protest; etc. To the fullest extent permitted by applicable
--------------------
law, each Guarantor waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time held by
Foothill on which such Guarantor may in any way be liable.
9.2 Foothill's Liability for Collateral. So long as Foothill complies
-----------------------------------
with its obligations, if any, under Section 9207 of the Code, Foothill shall not
in any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
Person; and (e) risk of loss, damage, or destruction of the Collateral.
9.3 Indemnification. Each Guarantor agrees to defend, indemnify, save,
---------------
and hold Foothill and its officers, employees, and agents harmless against: (a)
all demands, claims, and liabilities claimed or asserted by any other Person,
and (b) all losses (including reasonable attorneys fees and disbursements) in
any way suffered, incurred, or paid by Foothill as a result of or in any way
arising out of, or related to transactions with Borrower or any Guarantor, under
this Agreement and any other Loan Documents. No Guarantor shall have any
obligation under this Section 9.3: (a) with respect to indemnification of any
-----------
liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of the indemnified
person; (b) with respect to any settlement in excess of $250,000 made without
such Guarantor's consent (which shall not be unreasonably withheld, conditioned,
or delayed and which consent need not be obtained if FRI-MRD or Borrower is in
default of its obligations under this Section 9.3); or (c) without such
-----------
Guarantor's consent (which shall not be reasonably withheld, conditioned, or
delayed), for the fees and disbursements of more than one separate firm of
attorneys for all indemnified persons relative to an indemnification of any
particular liability. This provision shall survive full and final payment in
cash of the Secured Obligations and the termination of all commitments of
Foothill to extend credit to Borrower or any Guarantor for a period of 2 years.
9.4 Waivers.
-------
-17-
(a) To the fullest extent permitted by applicable law, each
Guarantor 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 Obligations; (iii) notice of the
amount of the Obligations, subject, however, to such Guarantor's right to make
inquiry of Foothill to ascertain the amount of the 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 such Guarantor'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 such
Guarantor under this Agreement) and demands to which such Guarantor might
otherwise be entitled.
(b) To the fullest extent permitted by applicable law, each
Guarantor waives the right by statute or otherwise to require Foothill to
institute suit against Borrower or to exhaust any rights and remedies which
Foothill has or may have against Borrower. Each Guarantor further waives any
defense arising by reason of any disability or other defense (other than the
defense that the Obligations shall have been fully and finally indefeasibly
paid) of Borrower or by reason of the cessation from any cause (other than that
the Obligations shall have been fully and finally indefeasibly paid) whatsoever
of the liability of Borrower in respect thereof.
(c) To the fullest extent permitted by applicable law, each
Guarantor hereby waives: (i) any rights to assert against Foothill any defense
(legal or equitable), set-off, counterclaim, or claim which such Guarantor may
now or at any time hereafter have against Borrower or any other party liable to
Foothill on account of or with respect to the 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 Obligations; (iii) any defense arising by reason of any claim or defense
based upon an election of remedies by Foothill including, to the extent
applicable, the provisions of (S)(S) 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 such Guarantor's
liability hereunder or the enforcement thereof.
(d) To the fullest extent permitted by applicable law, each
Guarantor hereby waives (i) any right of subrogation such Guarantor has or may
have as against Borrower with respect to the Obligations, (ii) 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
Obligations, and (iii) any right to proceed or to seek recourse against or with
respect to any property or asset of Borrower. Each Guarantor hereby agrees that,
in light of the waivers contained in this Section, such Guarantor 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.
-18-
(e) If any of the Secured Obligations at any time are secured by
a mortgage or deed of trust upon real property, Foothill 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 any Guarantor hereunder. Each Guarantor
understands that (a) by virtue of the operation of California's antideficiency
law applicable to nonjudicial foreclosures, an election by Foothill
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 such Guarantor against Borrower or guarantors or
sureties, and (b) absent the waiver given by such Guarantor herein, such an
election might estop Foothill from enforcing this Agreement against such
Guarantor. Understanding the foregoing, and understanding that such Guarantor is
hereby relinquishing a defense to the enforceability of this Agreement, each
Guarantor hereby waives any right to assert against Foothill any defense to the
enforcement of this Agreement, whether denominated "estoppel" or otherwise,
based on or arising from an election by Foothill nonjudicially to foreclose any
such mortgage or deed of trust. Each Guarantor understands that the effect of
the foregoing waiver may be that such Guarantor may have liability hereunder for
amounts with respect to which such Guarantor may be left without rights of
subrogation, reimbursement, contribution, or indemnity against Borrower or
guarantors or sureties. Each Guarantor 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 such Guarantor's liability
under this Agreement.
(f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, EACH GUARANTOR 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 (S)(S)
2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845, 2848, 2849, AND
2850, TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE (S)(S) 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, EACH GUARANTOR HEREBY WAIVES ALL RIGHTS
AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY FOOTHILL, EVEN THOUGH
THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO
SECURITY FOR A SECURED OBLIGATION, HAS DESTROYED SUCH GUARANTOR'S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST THE BORROWER BY THE OPERATION OF SECTION
580d OF THE CODE OF CIVIL PROCEDURE OR OTHERWISE.
-19-
10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be mailed, sent or delivered in accordance with the Guaranty.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
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 OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR AND FOOTHILL 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 11.
----------
EACH GUARANTOR AND FOOTHILL 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. EACH GUARANTOR AND FOOTHILL 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.
12. DESTRUCTION OF GUARANTORS' DOCUMENTS.
All documents, schedules, agings, or other papers delivered to
Foothill may be destroyed or otherwise disposed of by Foothill four (4) months
after they are delivered to or received by Foothill, unless any Guarantor
requests, in writing, the return of said documents, schedules or other papers
and makes arrangements, at such Guarantor's expense, for their return.
-20-
13. GENERAL PROVISIONS.
13.1 Effectiveness. This Agreement shall be binding and deemed effective
-------------
upon the later of (a) the execution of this Agreement by Guarantors and Foothill
and (b) the Closing Date.
13.2 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the respective successors and assigns of each of the parties;
provided, however, that no Guarantor may assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Foothill
shall release any Guarantor from its Secured Obligations. Foothill may assign
this Agreement and its rights and duties hereunder in accordance with the Loan
Agreement, and no consent or approval by any Guarantor is required in connection
with any such assignment. In accordance with the Loan Agreement, Foothill
reserves the right to sell, assign, transfer, negotiate, or grant participations
in all or any part of, or any interest in Foothill's rights and benefits
hereunder. In accordance with the Loan Agreement, Foothill may disclose all
documents and information which Foothill now or hereafter may have relating to
any Guarantor or any Guarantor's business. To the extent that Foothill assigns
its rights and obligations to a third Person in accordance with the Loan
Agreement, Foothill thereafter shall be released from such assigned obligations
to Guarantors and such assignment shall effect a novation among Guarantors and
such third Person.
13.3 Section Headings. Headings and numbers have been set forth herein for
----------------
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Agreement.
13.4 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against Foothill or any
Guarantor, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties 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 all parties hereto.
13.5 Severability of Provisions. Each provision of this Agreement shall be
--------------------------
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
13.6 Amendments in Writing. This Agreement can only be amended by a
---------------------
writing signed by Foothill and Guarantors.
13.7 Counterparts; Telefacsimile Execution. This Agreement may be executed
-------------------------------------
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original
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executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.
13.8 Revival and Reinstatement of Obligations. If the incurrence or
----------------------------------------
payment of the Secured Obligations by Borrower or the transfer by Borrower to
Foothill of any property of Borrower should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, and other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
Foothill is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that Foothill is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of Foothill related thereto, the liability of Guarantors
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
13.9 Termination. Upon the full and final payment in cash of the Secured
-----------
Obligations and the termination of all commitments of Foothill to extend credit
to Borrower or any Guarantor, Foothill shall promptly terminate and release its
security interests in the Collateral, execute and deliver any necessary
financing statement terminations or releases, and return to Guarantors any
Collateral that was in the possession of Foothill, provided that, with respect
to any loss or damage Foothill may incur as a result of dishonored checks or
other items of payment received by Foothill and applied to the Secured
Obligations, Foothill shall, at its option, (i) have received a written
agreement, executed by Borrower or Guarantors (as required by Foothill in its
sole discretion) and by any Person whose loans or other advances to Borrower or
Guarantors are used in whole or in part to satisfy the Secured Obligations,
indemnifying Foothill from any such loss or damage; or (ii) have retained such
monetary reserves or Liens on the Collateral for such period of time as
Foothill, in its reasonable discretion, may deem necessary to protect Foothill
from any such loss or damage. All reasonable expenses incurred by Foothill in
connection with the termination of the security interests granted to Foothill in
connection with this agreement shall be the sole expense of Guarantors, jointly
and severally.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed at Los Angeles, California.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Xxxxxx Xxxxxx
Title: Vice President
PRANDIUM, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Executive V.P. and CFO
FRI-MRD CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: President
FRI-ADMIN CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: President
XXX XXX ROO, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
THE HAMLET GROUP, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
i
Subsidiaries of Borrower CCMR OF TIMONIUM, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF MARYLAND, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S OF KANSAS, INC.,
a Kansas corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S OF GREENBELT, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S FRANCHISE OPERATIONS
CORPORATION,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF CANTONSVILLE, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
ii
CCMR OF GREENBELT, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF XXXXXXX HIGHWAY, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S MANAGEMENT CORPORATION,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF CUMBERLAND, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF HARFORD COUNTY, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S OF SOUTH CAROLINA, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
iii
MAINTENANCE SUPPORT GROUP, INC.,
Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF XXXXXXXXX, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF INNER HARBOR, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CHI-CHI'S OF WEST VIRGINIA, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR ADVERTISING AGENCY, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
CCMR OF GOLDEN RING, INC.,
a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
iv
