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EXHIBIT 10.69
[LYON CREDIT CORPORATION LETTERHEAD]
December 15, 1998 A Subsidiary of Credit Lyonnais
Mr. Alan Redhead
President
CALIFORNIA BEACH RESTAURANTS, INC.
17383 Sunset Boulevard, Suite 140
Pacific Palisades, CA 90272
RE: LOAN PROPOSAL
Dear Alan:
Lyon Credit Corporation ("Lender") is pleased to present to California Beach
Restaurants, Inc. ("Borrower") the below outlined loan proposal. The terms and
conditions of our proposal are as follows:
- - TRANSACTION: The transaction shall be structured under a Master Loan
& Security Agreement ("Agreement"). The Agreement will
allow for multiple fundings documented as separate
schedules to the Agreement, with minimum takedowns of
$500,000.
- - LENDER: Lyon Credit Corporation
- - BORROWER: CALIFORNIA BEACH RESTAURANTS, INC.
- - LOAN AMOUNT: $1,500,000
- - COLLATERAL: Borrower shall grant to LCC a first priority security
interest (blanket UCC-1 filing) in the following
property (the "Equipment"): Various new furniture,
fixtures and equipment located at Borrower's
Gladstone's 4 Fish Restaurant; (detailed list to be
compiled later), including together with all parts,
accessories, attachments, substitutions, repairs,
improvements and replacements and any and all rights
thereunder and proceeds there of, including without
limitation insurance proceeds.
- - RATE: 8.33%
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Loan Proposal
December 15, 1998
Page Two
o LOAN EXPIRATION: March 31, 1999.
o INTEREST RATE/INDEX: (Fixed upon loan commencement). The interest rate to be
used will be based upon an index prior to funding the Transaction. Such index
to be the yield-to-maturity of the five (5) year Treasury Note as published
in the Wall Street Journal and an Adder. For purposes of this proposal, the
REFERENCE YIELD IS 4.33% AND THE ADDER IS 400 BASIS POINTS. The
yield-to-maturity of the Reference Yield in effect on the day prior to any
Transaction funding will be the yield used along with the Adder to determine
the applicable interest rate on any promissory note.
o LOAN AMORTIZATION: The Loan, shall be fully amortized over a term of sixty
(60) months, to be paid in equal monthly payments, in arrears.
o TRANSACTION COSTS: Borrower agrees that all transaction costs including all
appraisals, legal, recording, filing and other expenses related to the
Transaction will be for the account of Borrower, such expenses not to exceed
$2,000.00 without the prior written approval of Borrower.
o PRE-PAYMENT: Year 1, 5%; Year 2, 4%; Year 3, 3%; Year 4, 2%; Year 5, 1%, of
outstanding principal.
o MISCELLANEOUS: Prior to funding the Transaction, Lender will need evidence
of the following: 1) that Borrower or Guarantor has successfully received an
equity contribution satisfactory to Lender in a minimum amount of $1.5
million and 2) that no letter of credit requirement will exist under the
existing Concession Agreement between Borrower and the County of Los Angeles.
o INSURANCE: Prior to any funding, Borrower must provide Lender, at Borrower's
expense, satisfactory evidence of insurance (as to amount, terms and
insurer) covering Collateral against all risks of physical damage with
Lender named as loss payee. Such insurance shall provide for a minimum of 30
days notice prior to cancellation or any material change.
o PROGRESS PAYMENTS: Lender shall advance funds in partial payment of
equipment upon Borrower's execution of appropriate documentation. Progress
Payments shall be payable on a monthly basis and will be based on Prime
Lending Rate, as published in The Wall Street Journal, plus 1%.
o EXPIRATION: This proposal and all of its terms shall expire on December 31,
1998, if Lender has not received your acceptance hereof by such date.
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Loan Proposal
December 15, 1998
Page Three
o PROPOSAL FEE: By signing below, Borrower acknowledges the terms and
conditions of this proposal and agrees to pay a Proposal Fee of $15,000.00.
Upon receipt of the executed proposal letter and accompanying Proposal Fee,
Lender shall commence the investment approval process. The Proposal Fee will be
refundable to Borrower less all applicable Transaction Costs within 30 days of
either the latter of the last funding on this Transaction or upon Loan
Expiration.
In the event that this Transaction is not approved by Lender, the Proposal Fee
will be refunded to Borrower less applicable Transaction Costs. If this
Transaction is approved and any portion of its is not funded by Lender by Loan
Expiration, a portion of the Proposal Fee will be deemed as earned by Lender on
a pro-rated basis. For purposes of calculation, the amount(s) funded under the
various note(s) shall be the numerator and the loan approval amount stated in
Lender's approval letter shall be the denominator. The resulting percentage
amount shall be multiplied by the total Proposal Fee to calculate the amount of
the Proposal Fee to be refunded to Borrower (less applicable transaction
expenses). Any remaining balance shall be deemed as earned by Lender.
This proposal is based upon final acceptance from Lender's executive committee.
Approval by Lender's executive committee will be evidenced by issuance of an
approval letter covering the Transaction. Any such approval shall be subject to
the completion of documentation as Lender may, in its sole discretion, require
and the occurrence of no material adverse change in business, financial
condition or prospects of Borrower or Guarantor.
Alan, I look forward to hearing from your regarding the above stated proposal.
Please do not hesitate to call with any additional questions which you may have
at (949) 477-5550.
Sincerely, AGREED TO AND ACCEPTED BY:
Lyon Credit Corporation CALIFORNIA BEACH RESTAURANTS, INC.
/s/ JOHN D. WHEELING By: /s/ SAM CHILAKOS
- --------------------------------- ----------------------------------
John S. Wheeling
Account Officer Title: Vice President, Finance
------------------------------
Date: December 22, 1998
-------------------------------
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[LYON CREDIT CORPORATION LETTERHEAD]
February 1, 1999
Alan Redhead
President
California Beach Restaurants, Inc.
17383 Sunset Boulevard, Suite 140
Pacific Palisades, CA 90272
Subject: Loan Commitment -- $1,200,000
Dear Mr. Redhead:
Lyon Credit Corporation ("LCC") ("Lender") has approved a loan request for
California Beach Restaurants, Inc. ("Borrower"), substantially as outlined in
its Loan Proposal dated December 15, 1998, subject to the following additional
terms and conditions.
1. Loan Amount -- $1,200,000.
2. UCC Search.
3. Insurance.
4. Copy of Borrower's executed Concession/Lease Agreement with the County of
Los Angeles prior to funding.
5. Final signed copy of Borrower's term sheet on the Convertible Subordinated
Note Offering for a minimum of $1.5 million prior to any funding.
6. Certification from Borrower's CFO or President, prior to any fundings,
that the "net worth test" as defined in the Concession Lease Agreement has
been satisfied.
7. Collateral inspection.
8. Landlord Waiver.
9. Fixture Filing.
If you have any questions concerning this approval, please call me at (714)
477-5540.
Sincerely,
/s/ RAYMOND A. ORPHAN
-------------------------------
Raymond A. Orphan
Vice President
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PROMISSORY NOTE
$821,564.75 April 27, 1999
THIS PROMISSORY NOTE is executed and delivered effective as of the date
written above by the undersigned (collectively, the "Maker") to LYON CREDIT
CORPORATION, a Delaware corporation ("Holder").
1. LOAN. FOR VALUE RECEIVED, the Maker promises to pay to Holder, or
order, the principal sum of EIGHT HUNDRED TWENTY ONE THOUSAND FIVE HUNDRED SIXTY
FOUR AND 75/100 ($ 821,564.75 ), with interest on all unpaid principal from the
date such principal sum is disbursed to or on behalf of Maker by Holder, at the
rate of ONE percent ( 1.0 %) plus the prime lending rate published in The Wall
Street Journal until maturity.
2. DEMAND. This note shall be due and payable, in full, upon demand by
Holder. Payment shall include all principal together with all interest accrued
thereon.
3. PAYMENTS. Payment shall be applied first to interest and the remainder
to principal. Principal and interest shall be paid in lawful money of the United
States of America. Payments shall be made at 1266 East Main Street, Stamford,
Connecticut, or elsewhere as Holder may designate. Interest may be calculated on
a daily basis using a 360-day year. Maker agrees that the rate of interest
contracted for in this note shall, for purposes of applicable law, include the
interest rates stated herein and any other charges, costs, fees and other
expenses which are to be paid by Maker to or for the benefit of Holder to the
extent that the same are deemed to be interest, all of which Maker hereby agrees
to pay. In no event will the total of interest rates charged hereunder be
greater than that permitted by applicable federal or state law.
4. DEFAULTS BY MAKER. A default shall occur if: (i) Maker fails to pay
this note when declared due by Holder or (ii) Maker or any of them becomes a
bankrupt or debtor in or under any state or federal insolvency proceeding.
5. DEFAULT REMEDIES. If a default occurs, then without notice, at the
election of Holder, the entire principal sum and all accrued interest which is
unpaid shall immediately be due and payable. In any event, upon any default
occurring or at maturity by acceleration or upon demand, all principal and
accrued interest shall bear interest at the after-default rate of fifteen
percent (15%) per annum from the date of default until this note is paid in
full.
6. RESERVATION OF RIGHTS. Failure of Holder to exercise any election
hereunder shall not constitute any waiver of any rights, remedies, options or
elections of Holder in the event of any subsequent default or otherwise.
7. FEES AND COSTS. If any default shall occur, Maker promises to pay all
of the following costs and fees if incurred by or on behalf of Holder: (i)
reasonable attorneys' fees, (ii) all costs and expenses of collection,
enforcement or interpretation, whether or not suit is filed, and (iii) all costs
of suit, each of which are to be determined and awarded by a court and not by a
jury. "Suit" includes proceedings in courts of original, appellate and
bankruptcy jurisdiction.
8. WAIVERS BY MAKER. To the maximum extent allowed by applicable law,
Maker expressly waives: (i) diligence, demand, dishonor, protest, presentment,
and grace of any kind, and any notice of the foregoing, and any notices of
nonpayment, default or acceleration, (ii) any and all rights of homestead and
exemption, and (iii) any release or discharge arising from any extension of time
or change in terms of payment or otherwise in this note, or from any change,
addition to or alteration of any instrument securing this note, or from any
other cause whatsoever other than payment in full.
9. PARTIES BOUND. "Maker" means the undersigned (individually or
collectively and jointly and severally) and all co-makers, endorsers, payors,
obligors, sureties and guarantors of this note and anyone who may become liable
for payment or performance of the same, and their respective successors and
assigns, jointly and
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severally, and if married, both as a community and as a sole and separate
obligation. "Holder" means the original payee of this note and its successors
and assigns as owners and holder of this note.
10. CHOICE OF LAW. This note shall be governed by and construed and
enforced under applicable federal law and by the laws of the State of
Connecticut.
11. SECURITY. This note is secured by a security interest in certain
collateral, and may be secured by other, additional security interests in other
collateral or by a lien or liens on real property owned by Maker.
California Beach Restaurants, Inc.
as Maker
By: /s/ Samuel E. Chilakos
------------------------------------
Title: Vice President Finance
Witness/Attest:
By: /s/ Martin Sniewski
------------------------------------
Name: Martin Sniewski
Title:
------------------------------------
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GUARANTY
THIS GUARANTY (the "Guaranty") is made and delivered by Sea View
Restaurants, Inc. a California corporation (the "Guarantor") for the benefit of
Lyon Credit Corporation (the "Guaranteed Party") to induce Guaranteed Party to
enter into that certain Security Agreement No. 30-00095 with California Beach
Restaurants, (the "Obligor") dated as of even date herewith (the "Security
Agreement").
WITNESSETH
1. GUARANTY.
a) Guarantor (and each of them if there are more than one) for valuable
consideration, the receipt whereof is hereby acknowledged, jointly and
severally irrevocable guarantees due and punctual payment and performance
to Guaranteed Party at its office at 1266 East Main Street, Stamford,
Connecticut 06902, or at such other place as Guaranteed Party shall from
time to time advise in writing, on demand, in lawful money of the United
States, of any and all Indebtedness (as defined below) of Obligor no matter
how acquired by Guaranteed Party.
b) For the purposes of this Guaranty, "Indebtedness" shall include, but is not
limited to, Indebtedness of Obligor as defined in the Security Agreement,
any and all advances, loans, debts, lease obligations, performance
obligations, notes, security agreements and liabilities of Obligor,
heretofore, now, or hereafter made, entered into, incurred, created or
owing, whether voluntary or involuntary and however arising, whether due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether Obligor may be liable individually or jointly
with others, or whether recovery upon such Indebtedness may be or hereafter
become barred by any statute of limitations, or whether such Indebtedness
may be or hereafter become otherwise unenforceable. This Guaranty is a
guaranty of payment and performance and not of collection.
c) This Guaranty is a continuing guaranty relating to any Indebtedness,
including Indebtedness arising under successive transactions which shall
either continue the Indebtedness, renew it from time to time after it has
been satisfied or create new Indebtedness.
d) The obligations hereunder are joint and several, independent of the
obligations of Obligor or the obligations of any other persons or
guarantors who may be liable to Guaranteed Party in whole or in part for
the Indebtedness, and a separate action or actions may be brought and
prosecuted against Guarantor or any of them (if there are more than one)
whether action is brought against Obligor alone or whether Obligor be
joined in any such action or actions, and Guarantor waives the benefit of
any statute of limitations affecting its liability hereunder or the
enforcement thereof.
2. OBLIGATIONS UNCONDITIONAL. Guarantor's obligations hereunder shall be
unconditional (and shall not be subject to any defense, setoff, counterclaim or
recoupment whatsoever) irrespective of the genuineness, validity, regularity or
enforceability of the Indebtedness or the Security Agreement or any conduct of
Obligor and/or Guaranteed Party which might constitute a legal or equitable
discharge of a surety, guarantor or guaranty and shall remain in full force and
effect without regard to any circumstance whatsoever (whether or not Guarantor
shall have any knowledge or notice thereof), including, without limitation: (i)
any failure, omission or delay on the part of Obligor or Guaranteed Party to
conform or comply with any term of the Security Agreement; (ii) any waiver,
consent, extension, indulgence, compromise, release or other action or inaction
under or in respect of the Security Agreement or any obligation or liability of
Obligor or Guaranteed Party, or any exercise or non-exercise of any right,
remedy, power or privilege under or in respect to any such instrument or
agreement or any such obligation or liability; (iii) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, liquidation or similar proceeding
with respect to Obligor or Guaranteed Party or any of their respective
properties, or any action taken by any trustee or receiver or by any court in
any such proceeding; (iv) any merger or consolidation of Obligor or Guarantor
into or with any other corporation or any sale, lease or transfer of all or any
of the assets of Obligor or Guarantor to any other entity; or (v) any change in
the ownership of Obligor. The obligations of Guarantor set forth herein
constitute full recourse obligations of Guarantor enforceable against him to the
full extent of all his assets and properties. Without limiting the generality of
the foregoing, Guarantor agrees that (i) repeated and successive demands may be
made and recoveries may be had hereunder as and when, from time to time, Obligor
shall default under or fail to comply with the terms of the Security Agreement
and that notwithstanding the recovery hereunder for or in respect of any given
default or failure to so comply by Obligor under the Security Agreement, this
Guaranty shall remain in force and effect and shall apply to each and every
subsequent default, and (ii) in the event that any Indebtedness is paid by
Obligor, and thereafter all or any part of such payment is recovered from
Guaranteed Party to whom paid, as a preferential or fraudulent transfer under
the Federal Bankruptcy Code, any applicable state insolvency law, or any other
similar Federal or state law now or hereafter in effect, the
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liability of Guarantor hereunder with respect to such Indebtedness so paid and
recovered shall continue and remain in full force and effect as if, to the
extent of such recovery, such payment had not been made. If (i) an event
permitting the exercise of remedies under the Security Agreement shall at any
time have occurred and be continuing and (ii) such exercise, or any consequences
thereof provided in the Security Agreement shall at any time be prevented by
reason of the pendency against Obligor of a case or proceeding under the
bankruptcy or insolvency law, Guarantor agrees that, solely for purposes of this
Guaranty and its obligations hereunder, the Security Agreement shall be deemed
to have been declared in default and all amounts thereunder shall be deemed to
be due and payable, with all the attendant consequences as provided in the
Security Agreement, as if declaration of default and the consequence thereof had
been accomplished in accordance with the terms thereof, and Guarantor shall
forthwith pay any amounts guaranteed hereunder.
3. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and warrants
that
a) Guarantor is duly organized and validly existing in good standing under the
laws of the State of and has all requisite corporate power and authority to
enter into and perform its obligations provided under this Guaranty,
b) this Guaranty has been duly authorized by all necessary corporate action,
and has been duly executed and delivered by Guarantor and is a legal, valid
and binding obligation of Guarantor, enforceable in accordance with its
terms except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors rights generally and general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law,
c) the execution and delivery by Guarantor of this Guaranty is not, and the
performance by it of its obligations hereunder will not be, inconsistent
with Guarantor's other activities, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to Guarantor,
and do not and will not contravene any provision of, or constitute a
default under, its certificate of incorporation or by laws or any
indenture, mortgage, contract or other instrument to which Guarantor is a
party or by which it is bound,
d) no consent or approval of, giving of notice to, registration with, or
taking of any other action in respect to or by, any Federal, national,
state or local governmental authority or agency or other entity is required
with respect to the execution, delivery and performance by Guarantor of
this Guaranty, or if any such approval, notice, registration or action is
required, it has been duly given or obtained,
e) there are no suits or proceedings pending or threatened in any court or
before any commission, board or other administrative agency against or
affecting Guarantor, which will have a material adverse effect on the
ability of Guarantor to fulfill its obligations under this Guaranty.
3A. EXISTENCE, ETC. Guarantor agrees that, so long as this Guaranty is in
effect, Guarantor shall (i) preserve and maintain its corporate existence, (ii)
preserve and maintain all of its material rights, privileges and franchises,
except where the failure to preserve and maintain any such right, privilege or
franchise would not materially and adversely affect the ability of Guarantor to
perform its obligations under this Guaranty, and (iii) comply with all the
requirements of all applicable laws, rules, regulations and orders of
governmental or regulatory authorities except where the failure to comply with
any such requirement would not materially and adversely affect the ability of
Guarantor to perform its obligations under this Guaranty.
4. CERTAIN RIGHTS AND POWERS OF GUARANTEED PARTY.
a) Guarantor authorizes Guaranteed Party, without notice or consent and
without affecting, impairing or discharging in whole or in part its
liability hereunder, from time to time to (i) renew, modify, amend,
compromise, extend, accelerate, discharge or otherwise change the time for
payment of, or otherwise change the terms or provisions of the Indebtedness
or any part thereof, including increase or decrease of the rate of interest
thereon; (ii) take and hold security for the payment of this Guaranty or
the Indebtedness guaranteed, and exchange, enforce, waive, and release any
such security; (iii) apply such security and direct the order or manner of
sale thereof as Guaranteed Party in its discretion may determine; and (iv)
release or substitute in whole or in part any one or more of the endorsers,
Guarantor or anyone else who may be partially or wholly liable for any part
of the Indebtedness. Guaranteed Party may without notice assign this
Guaranty in whole or in part. At the option of Guaranteed Party and upon
notice to Guarantor, Guarantor may be joined in an action or proceeding
commenced by Guaranteed Party against Obligor in respect of any
Indebtedness.
b) Guaranteed Party shall have a lien and security interest upon and a right
of setoff against all moneys, securities and other property of Guarantor
now or hereafter in the possession of Guaranteed Party whether held in a
special account, for safekeeping or otherwise; and every lien and security
interest and right of setoff may be exercised without demand upon Guarantor
or notice by Guaranteed Party. No lien or right of setoff may be deemed to
have
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been waived by any act or conduct on the part of Guaranteed Party or by any
neglect to exercise such right of setoff or to enforce such lien or
security interest or by any delay in so doing, and every right of setoff,
lien or security interest and shall continue in full force and effect until
such right of setoff, lien or security interest is specifically waived or
released by an instrument in writing executed by Guaranteed Party.
c) Any Indebtedness of Obligor now or hereafter held by or owing to Guarantor
is hereby subordinated to the Indebtedness of Obligor to Guaranteed Party;
and such Indebtedness of Obligor to Guarantor, if Guaranteed Party so
requests, shall be collected, enforced and received by Guarantor as trustee
for Guaranteed Party and be paid over to Guaranteed Party on account of the
Indebtedness of Obligor to Guaranteed Party but without reducing or
affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty. In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets of Obligor or the
proceed thereof to the creditors of Obligor, or upon any Indebtedness of
Obligor, by reason of dissolution, liquidation or other winding up of
Obligor or its business, or compromise or settlement with its creditors, or
any sale, receivership, insolvency or bankruptcy proceeding or assignment
for the benefit of creditors, or any proceeding by or against Obligor for
any relief under any provisions of the Federal Bankruptcy Code, any
applicable state insolvency law, or any other similar Federal or state law
now or hereafter in effect, then and in any such event any payment or
distribution of any kind or character, which shall be payable or
deliverable with respect to any and all Indebtedness due to Guarantor by
Obligor, shall be paid or delivered directly to Guaranteed Party for
application on any Indebtedness to Guaranteed Party until such Indebtedness
shall have been first and fully paid. Guarantor hereby sells, assigns,
transfers and sets over to Guaranteed Party all of its rights to any and
all such distributions.
5. WAIVER OF DEMANDS, NOTICES AND CERTAIN RIGHTS OF GUARANTOR. Guarantor
waives any right to require Guaranteed Party to (a) proceed with or exhaust
remedies against Obligor; (b) proceed against or exhaust any security held from
Obligor or Guarantor; (c) pursue any other remedy available to Guaranteed Party
whatsoever; or (d) proceed against any other persons or guarantors who may be
liable to Guaranteed Party in whole or in part for the Indebtedness. Guarantor
waives any defense arising by reason of any disability or other defense of
Obligor or by reason of the cessation or modification from any cause whatsoever
of the liability of Obligor. Guarantor shall have no right to subrogation, and
waives any right to enforce any remedy which Guaranteed Party now has or may
hereafter have against Obligor, and waives any benefit of, and any right to
participate in any security now or hereafter held by Guaranteed Party. Guarantor
waives diligence, all presentments, demands for performance, notices of
non-performance, default, protests, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty and of the existence, creation, or
incurring of new, changes, modified, increased or additional Indebtedness, all
other notices of every and any kind. Guarantor hereby further agrees that no
payment or performance hereunder by Guarantor shall give rise to any claim of
Guarantor against Guaranteed Party.
a) Where there is but a single Obligor, or where a single Guarantor executes
this Guaranty, then all words used herein in the plural shall be deemed to
have been used in the singular where the context and construction so
require; and when there is more than one Obligor named herein, or when this
Guaranty is executed by more than one Guarantor, the words "Obligor" and
"Guarantor" respectively shall mean all and any one or more of them.
b) Guarantor agrees to pay on demand to Guaranteed Party all costs and
expenses of collection (including, without limitation, the fees and
disbursements of counsel) incident to the enforcement, protection on
preservation of any right or claim of Guaranteed Party under this Guaranty
against Guarantor as a result of breach of this Guaranty by Guarantor.
c) If any provision of this Guaranty shall contravene or be invalid under
applicable law or regulation (including Federal law and regulation), such
contravention or invalidity shall not affect the entire Guaranty, the
provisions held to be invalid to be deemed deleted or modified and the
Guaranty interpreted and construed as though such invalid provision or
provisions were not part hereof or conformed thereto.
d) Guaranteed Party may give notice to Guarantor or make a request of
Guarantor in the U.S. mail, first class postage prepaid, addressed to
Guarantor at its address below, or an address furnished by Guarantor to
Guaranteed Party. All notices to be given by Guarantor hereunder shall be
deemed adequately given if sent by registered or certified mail to
Guaranteed Party at the address of Guaranteed Party stated herein, or at
such other place as Guaranteed Party may designate to Guarantor in writing.
e) This Guaranty shall be binding upon successors and assigns of Guarantor,
but no assignment hereof, or of any right to any funds due or to become due
under this Guaranty, shall in any event relieve Guarantor of its
obligations hereunder.
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f) This Guaranty constitutes the entire agreement of the parties with respect
to the subject matter hereof. ANY VARIATION OR MODIFICATION OF THIS
GUARANTY AND ANY WAIVER OF ANY OF ITS PROVISIONS SHALL NOT BE VALID UNLESS
IN WRITING AND SIGNED BY AN AUTHORIZED OFFICER OR MANAGER OF GUARANTEED
PARTY.
g) GUARANTOR WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING
HEREFROM OR IN RELATION HERETO.
h) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, Guarantor (and each of them if there are more than
one), has caused this Guaranty to be executed and delivered by its officer
hereunder duly authorized independent of any other party and not relying upon or
in consideration of the execution hereof by any other party, this 27th day of
April, 1999.
Sea View Restaurants, Inc.
Guarantor
By: /s/ Samuel E. Chilakos
------------------------------------
Name: Samuel E. Chilakos
Title: Vice President, Finance
By: /s/ Martin Sniewski
------------------------------------
Name: Martin Sniewski
Title:
---------------------------------
----------------------------------------
(Seal)
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SECURITY AGREEMENT
Security Agreement No. 30-00095
THIS SECURITY AGREEMENT (the "Security Agreement"), dated as of March 15,
1999 made by and between LYON CREDIT CORPORATION, a Delaware corporation, with
an office address at 1266 East Main Street, Stamford, Connecticut 06902-3546
(together with its successors and assigns, if any, "Secured Party") and
California Beach Restaurants, a Corporation with its residence, mailing address
and principal place of business at 17383 Sunset Blvd., Suite 140, Pacific
Palisades, CA 90272 ("Borrower");
WITNESSETH:
1. GRANT OF SECURITY INTEREST: To secure payment on each Note made by Borrower
in the form attached hereto as Exhibit "A" together with any extensions or
renewals thereof, and any amendments or modifications thereto (each, a "Note",
and collectively, the "Notes"), and also to secure any other indebtedness,
obligation, or liability of the Borrower to the Secured Party, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising and no matter how acquired by Secured Party, including, but
not limited to, all future advances or loans which may be made at the option of
the Secured Party to or on behalf of Borrower (all the foregoing hereinafter
called the "Indebtedness"), Borrower hereby grants and conveys to the Secured
Party a first security interest in, and mortgages to the Secured Party, each
unit of property (such unit, an "Item") described in a Schedule in the form
attached hereto as Exhibit "B" (a "Schedule") and accepted by Borrower in any
Delivery and Acceptance Certificate in the form attached to such Schedule (a
"Certificate"), all products and proceeds thereof, if any, all additions,
attachments, accessories and accessions thereto and any and all substitutions,
replacements or exchanges thereto, and any and all insurance and/or other
proceeds thereof, including, but not limited to, every permitted lease or
sublease, howsoever designated, covering all or any part thereof (all or any of
the foregoing hereinafter collectively called the "Collateral").
TO HAVE AND TO HOLD the Collateral with the power and authority and subject
to the terms and conditions set forth in this Security Agreement.
2. REPAYMENT: Borrower will duly and punctually pay the Indebtedness secured
by this Security Agreement in accordance with the terms of the Notes and this
Security Agreement. Payments of Indebtedness shall be made to Secured Party at
its office address stated above, except as otherwise directed by Secured Party,
and shall not be prorated for any cause or reason except as herein may be
specifically provided. Payments shall be due periodically as specified in the
applicable Note, except that in the event any month in which a payment is due
does not contain a numbered day equal to such payment day specified, payment
shall be made on the last day of such month. If any payment is not made within
ten (10) days after due date, Borrower agrees to pay a late charge of five cents
(5cents) per dollar on, and in addition to, the amount of such payment, but not
exceeding the lawful maximum, if any.
3. OBLIGATIONS ABSOLUTE: The obligations of Borrower under this Security
Agreement shall be absolute and unconditional under all circumstances
whatsoever, including, but not limited to, the existence of any claim, set-off,
defense, counterclaim or recoupment to any present or future claim of Borrower
against Secured Party under this Security Agreement or otherwise, against the
manufacturer or seller of any of the Collateral or against any other person or
entity for whatever reason. This Security Agreement shall not terminate, nor
shall the obligations of Borrower be affected, by reason of any defect in title
to, damage to or any loss or destruction of, the Collateral from whatsoever
cause, or the interference with the use thereof by any person or entity, or the
invalidity or unenforceability or lack of due authorization in respect of this
Security Agreement or any lack of right, power or authority of the
12
Secured Party to enter into this Security Agreement, or any failure of Secured
Party to perform any obligation of Secured Party or Borrower or any other person
or entity under this Security Agreement or any instrument or document executed
in connection herewith, or for any other cause, whether similar or dissimilar to
the foregoing, any present or future law or regulation to the contrary
notwithstanding, it being the express intention of Secured Party and Borrower
that all payments by Borrower shall be, and continue to be, payable in all
events unless the obligation to pay the same shall be terminated pursuant to the
express provisions of this Security Agreement.
4. REPRESENTATIONS AND WARRANTIES: Borrower represents and warrants as of the
date of this Security Agreement that:
a) Borrower is a Corporation duly organized and validly existing in good
standing under the laws of its state of organization and has the
[Corporate, Partnership] power to enter into and perform its
obligations under this Security Agreement,
b) this Security Agreement has been duly authorized, executed and
delivered by Borrower and, assuming due authorization, execution and
delivery by Secured Party, is a legal, valid and binding obligation of
Borrower, enforceable in accordance with its terms except as may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors
generally, and general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law,
c) the execution and delivery by Borrower of this Security Agreement is
not, and the performance by it of its obligations hereunder will not
be, inconsistent with Borrower's [articles or certificate of
incorporation or by-laws] [partnership agreement], do not and will not
contravene any law, governmental rule or regulation, judgment or order
applicable to Borrower, and do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage,
contract or other instrument to which Borrower is a party or by which
it is bound,
d) no consent or approval of, giving of notice to, registration with, or
taking of any other action in respect to or by, any federal, state or
local governmental authority or agency or other entity is required
with respect to the execution, delivery and performance by Borrower of
this Security Agreement, or if any such approval, notice, registration
or action is required, it has been duly given or obtained,
e) there are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or
affecting Borrower, which will have a material adverse effect on the
ability of Borrower to fulfill its obligations under this Security
Agreement,
f) each financial statement and other related information furnished to
Secured Party by Borrower has been prepared in accordance with
generally accepted accounting principles and, since the date of the
most recent financial statement so delivered, there has been no
material adverse change (as that term is defined in paragraph 12 (k)
below),
g) this Security Agreement shall be effective against all creditors of
Borrower under applicable law, including, without limitations,
fraudulent conveyance and bulk transfer laws, and
h) the Collateral will at all times be used solely in the conduct of the
business of Borrower and be and remain in the possession and control
of Borrower.
i) Borrower shall be "Year 2000 Compliant" by January 1, 2000. For
purposes of this paragraph, "Year 2000 Compliant" means that all
software, embedded microchips and other processing capabilities
utilized by, and material to the business operations or
13
financial condition of Borrower are able to interpret, store,
transmit, receive and manipulate data on and involving all calendar
dates in and after the Year 2000. From time to time, at the request of
the Lender, Borrower shall provide to Lender such information as is
requested regarding the status of its efforts to become Year 2000
compliant.
5. LIENS: Borrower is the lawful owner of the Collateral. Borrower shall keep
the Collateral free and clear from all liens, charges, encumbrances and security
interests of any kind ("Liens"), except for
(i) the Lien of Secured Party, as provided in this Security Agreement,
(ii) Liens for taxes either not yet due or being contested by Borrower in
good faith with due diligence and by appropriate proceedings, so long
as such proceedings do not, in the opinion of Secured Party, involve
any material danger of sale, forfeiture or loss of Collateral or any
part thereof or title thereto or interest therein,
(iii) inchoate materialmen's, mechanics', workmen's, repairmen's,
employees', carriers', warehousemen's or other like Liens arising in
the ordinary course of business of Borrower and not delinquent and
Borrower shall be maintaining adequate reserves therefor. Secured
Party shall, at its own cost and expense, promptly take such action as
may be necessary to discharge duly all Secured Party's Liens upon full
payment and satisfaction of all Indebtedness.
6. USE AND OPERATION:
(a) Borrower shall not assign, sublet, mortgage, hypothecate or alter any
of the Collateral or any interest in this Security Agreement, nor
shall Borrower remove any of the Collateral from the specified place
of Collateral location, without the prior written consent of Secured
Party, and any attempt so to assign, sublet, mortgage, hypothecate,
alter or remove any of the Collateral without the prior written
consent of the Secured Party shall be void and without effect.
(b) Borrower will not, without the prior written consent of Secured Party,
affix or install any accessory, equipment, or device on any Collateral
if such addition will impair the originally intended function or use
of any such Collateral or its value in place. Borrower agrees that
each Item of Collateral shall prior to its installation be personal
property under applicable law. Borrower agrees to take such action as
shall be required by Secured Party from time to time to protect the
rights and interests of Secured Party in each such item. Borrower will
not, without the prior written consent of Secured Party and subject to
such conditions as Secured Party may impose for its protection, affix
or install any Collateral to or in any other personal property.
Secured Party and Borrower agree that each Item of Collateral and
every part thereof is severed from any real property and, even if
physically attached to any real property, it is the intention of
Secured Party and Borrower that such Item
(i) shall retain the character of personal property,
(ii) shall be removable,
(iii) shall be treated as personal property with respect to the rights
of all persons and entities,
(iv) shall not become part of any real property, and
(v) by virtue of its nature as personal property, shall not be
affected in any way by any instrument dealing with any real
property.
14
Borrower represents that it has not entered into, and agrees that it will not
enter into, any agreement or other arrangement which prohibits or restricts in
any manner the right of Secured Party or Borrower to sever Items of Collateral
from the real property on which they are located, to sever Items of Collateral
from any other equipment or personal property to which such Items are attached
or to remove Items of Collateral from the place where they are then located.
7. MAINTENANCE AND SERVICE:
(a) Items of Collateral shall be used only in the manner for which they
were designed and intended and Borrower will at its sole expense at
all times maintain Collateral in good operating order, repair,
condition and appearance and keep Collateral protected from the
elements, ordinary wear and tear excepted. Borrower will, at all
times, operate and maintain each Item of Collateral in accordance with
(i) the standards applied by Borrower with respect to similar
equipment owned or leased by it and
(ii) prudent operating and maintenance standards and manufacturer's
requirements. Borrower will not use or operate any Item of
Collateral in violation of applicable laws and regulations
(including all applicable environmental and occupational safety
laws).
(b) Any alterations or modifications with respect to Collateral that may
at any time prior to full repayment of the Indebtedness secured hereby
be required to comply with any applicable law or any governmental rule
or regulation shall be made by Borrower as required and at the sole
expense of Borrower.
8. REPORTS:
(i) Borrower agrees that Secured Party shall not be responsible for
any loss or damage to Borrower, its customers or any other third
parties caused by the Collateral, any failure thereof or defect
therein, or otherwise. Nevertheless, Borrower will immediately
notify Secured Party in reasonable detail of each accident
arising out of any alleged or apparent improper manufacturing,
functioning or operation of any Collateral;
(ii) Borrower will notify Secured Party in writing within ten (10)
days after any day in which any Lien shall attach to any
Collateral not expressly permitted hereby of the full particulars
thereof and of the then location of such Collateral on such day;
(iii) Borrower will notify Secured Party forthwith in writing of the
location of any Collateral moved by Borrower from the place where
delivered to Borrower or from the location specified in this
Security Agreement or any subsequent agreement executed by the
parties and Borrower will not change or discontinue its place or
places of business and/or residence and/or name;
(iv) Borrower will within ninety (90) days of the close of each of its
fiscal years deliver to Secured Party Borrower's balance sheet
and profit and loss statement prepared in accordance with
generally accepted accounting principles and, to the extent
available, certified to by a recognized firm of certified public
accountants. Borrower will deliver to Secured Party, within sixty
(60) days of the close of each of its fiscal quarters, Borrower's
quarterly financial report (which shall be in reasonable detail)
prepared in accordance with generally accepted accounting
principles and certified to by the chief financial officer of
Borrower; and
15
(v) Borrower will permit Secured Party to inspect and examine
Collateral at such times and from time to time during normal
business hours as Secured Party may wish (and at such other times
as may be mutually agreeable) and without any requirement for
advance notice, provided that such examination and inspection
shall not unreasonably interfere with Borrower's normal business
operations.
9. RISK OF LOSS:
a) Borrower is solely responsible for the entire risk of use and
operation, and for each and every cause or hazard, and all loss and
damage to any and all Collateral whether arising through operation or
otherwise. In the event of damage to any Item of Collateral, Borrower,
at its cost and expense, shall promptly repair the Item, restoring it
to its previous condition or the condition in which it was required to
be assuming Borrower had met all its obligations for maintenance of
the Collateral. Upon the occurrence of an Event of Loss (defined
below) with respect to any Item, Borrower shall prepay to Secured
Party an amount of Indebtedness under the Note relating to the
Schedule hereto in which such Item is described equal to the sum of
(i) all interest theretofore accruing, and unpaid thereon, with
respect to such Item, plus
(ii) the unpaid principal balance of the Note with respect such item,
plus
(iii) an amount equal to two (2%) percent of the unpaid principal
balance of the Note with respect to such Item.
Provided Borrower is not in breach or default of this Security Agreement, any
proceeds of insurance received by Secured Party with respect to any such loss
shall be paid to Borrower to the extent necessary to reimburse Borrower costs
incurred and paid by Borrower in repairing damaged Equipment or as a credit
against total amount payable by Borrower with respect to the Collateral
involved, as the case may be, all as provided in this Security Agreement.
b) For the Purpose hereof "Event of Loss" shall mean, with respect to any
Item of Collateral, if such Item is
(i) destroyed, condemned, irreparably damaged or damaged beyond
economic repair,
(ii) requisitioned for use by a governmental entity for an indefinite
period or stated period extending beyond a period in excess of
ninety (90) consecutive days or the final installment payment
date stated on the applicable Note, whichever is earlier,
(iii) the subject of an insurance settlement with respect to such Item
of Collateral on the basis of a constructive total loss,
(iv) stolen or lost and not recovered within thirty (30) days,
(v) the subject of a condemnation or requisition of title by a
governmental entity, or
(vi) prohibited by applicable law from being used by Borrower for a
period of ninety (90) consecutive days or the final installment
payment date on the applicable Note, whichever is earlier.
10. INSURANCE:
(a) Borrower, at its own cost and expense shall obtain, maintain and shall
keep the Collateral insured against all risks of loss or damage from
every cause whatsoever in an amount not less than the greater of
actual cash value or the aggregate amount of all unpaid
16
Indebtedness as at any time, without deductible and without
co-insurance (except as Secured Party may approve in writing).
Borrower shall also obtain and maintain, in accordance with industry
standards, until repayment in full of the Indebtedness, public
liability insurance covering liability for bodily injury, including
death, and property damage resulting from the purchase, ownership,
leasing, maintenance, use or operation of the Collateral in an amount
of at least $1,000,000 [WITH RESPECT TO EACH SEPARATE SCHEDULE
HERETO], or in such greater amounts as Secured Party may from time to
time require. Secured Party shall be the sole named loss-payee with
respect to damage or loss to the Collateral and shall be a named
additional insured on the public liability insurance. All insurance
shall be with insurers and in form satisfactory to Secured Party;
shall provide for at least thirty (30) days advance written notice to
Secured Party before any cancellation or material modification
thereof; shall waive any claim for premium against Secured Party; and
shall not be invalidated or the insurer's liability to or for or on
behalf of Secured Party be diminished or affected by any breach of
warranty or representation or other act or omission of the Borrower.
Upon request, Borrower shall deliver to Secured Party the original
policy or policies of insurance, certificates of insurance or other
evidence satisfactory to Secured Party evidencing the insurance
required hereby. Secured Party may, at its option, apply proceeds of
insurance, in whole or in part, to
(A) repair or replace Collateral or any portion thereof, or (B)
satisfy any obligation of Borrower to Secured Party hereunder.
(b) Secured Party is authorized, but under no duty, to obtain such
insurance upon failure of the Borrower to do so. Borrower shall give
immediate written notice to the Secured Party and to insurers of loss
or damage to the Collateral and shall promptly file proofs of loss
with insurers. Borrower hereby irrevocably appoints the Secured Party
as attorney-in-fact, coupled with an interest, for the Borrower in
obtaining, adjusting and canceling any such insurance and endorsing
settlement drafts and hereby assigns to the Secured Party all sums
which may become payable under such insurance, including return
premiums and dividends, as additional security for the Indebtedness.
11. EXPENSES; INDEMNIFICATION:
(a) Expenses. Borrower shall pay to Secured Party on demand any and all
expenses, including reasonable attorneys' fees and legal expenses,
which are incurred by Secured Party (i) in the prosecution or defense
of any action arising out of or connected with the subject matter of
this Security Agreement, the Indebtedness, the Collateral or any of
Secured Party's rights therein, and (ii) in connection with the
custody, preservation, protection, use, operation, preparation for
sale or sale of any Collateral, the incurring of all of which are
hereby authorized to the extent Secured Party deems the same
advisable.
(b) Indemnification. Borrower hereby agrees to indemnify Secured Party and
its affiliates, and their respective directors, officers, employees,
agents, counsel and other advisors (each an "Indemnified Person")
against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable attorneys' fees and legal expenses,
to an Indemnified Person, which may be imposed on, incurred by, or
asserted against any Indemnified Person, in any way relating to or
arising out of the Collateral, this Security Agreement or the
transactions contemplated hereby or any action taken or omitted to be
taken by it hereunder (the "Indemnified Liabilities"); provided that
Borrower shall not be liable to a particular Indemnified Person for
any portion of such Indemnified Liabilities to the extent such
Indemnified Person is found by
17
a final decision of a court of competent jurisdiction to have resulted
from such Indemnified Person's gross negligence or willful misconduct.
If and to the extent that the foregoing indemnification is for any
reason held unenforceable, Borrower agrees to make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
12. DEFAULT; REMEDIES: If any of the following (herein an "Event of Default")
shall occur:
(a) Borrower shall default in the payment of Indebtedness to Secured Party
or in making any other payment hereunder or under any Note when due,
and such default shall continue for a period of ten (10) days without
its cure by Borrower, or
(b) Borrower shall default in the payment when due of any obligations of
Borrower, whether or not to Secured Party, arising independently of
this Security Agreement or any Note, and such default shall continue
for a period of ten (10) days without its cure by Borrower, or
(c) Borrower shall default in the performance of any other covenant
contained herein (including any Schedule hereto), any Certificate in
respect hereof or any Note or any other document entered into in
connection with this Security Agreement and such default shall
continue for fifteen (15) days after written notice thereof to
Borrower by Secured Party, or
(d) Borrower shall breach any of its insurance obligations under paragraph
10 hereof,
(e) any representation or warranty made by Borrower in this Security
Agreement or any other documents entered into in connection with this
Security Agreement shall prove to be incorrect in any material respect
when any such representation or warranty was made or given, or
(f) Borrower shall become insolvent or make an assignment for the benefit
of creditors, or
(g) Borrower shall apply for or consent to the appointment of a receiver,
trustee or liquidator for a substantial part of its property or such
receiver, trustee or liquidator is appointed without the application
or consent of Borrower, or
(h) a petition shall be filed by or against Borrower under the Federal
bankruptcy laws (including, without limitation, a petition for
reorganization, arrangement or extension) or under any other
insolvency law or law providing for the relief of debtors, if such
petition is not dismissed within thirty (30) days, or
(i) there is, without the prior consent of Secured Party, a change in
control (defined to be a change in the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of Borrower, whether through the ownership of
voting securities, by contract or otherwise), or
(j) there is a material adverse change (defined to be a decrease of at
least one-third (1/3) of net worth, as determined in accordance with
generally accepted accounting principles) in Borrower's or any
guarantor's financial condition;
then, to or more the extent permitted by applicable law, Secured Party shall
have the right to exercise any one of the following remedies one or more times:
A) declare this Security Agreement in default, such declaration being
applicable to all Schedules hereunder except as specifically excepted
by Secured Party;
B) declare the entire amount of unpaid total Indebtedness immediately due
and payable;
18
C) declare due and payable in addition to any unpaid Indebtedness due on
or before Secured Party declares this Security Agreement in default,
as liquidated damages for loss of a bargain and not as a penalty, an
amount calculated in accordance with the provisions of paragraph 9 as
though the Collateral had suffered an Event of Loss, as of the date
that Secured Party declares this Security Agreement in default;
D) declare due and payable the amount of any indemnification hereunder if
then determinable, with interest as provided herein;
E) upon notice to any lessees or sublessees permitted pursuant to
paragraph 6(a) to obtain and retain all rentals thereafter due, paid
and/or payable;
F) without demand or legal process enter into premises where the
Collateral may be found and take possession of and remove the same,
whereupon all rights of Borrower in the Collateral shall terminate
absolutely, and either
(i) retain all prior payments of Indebtedness and sell the Collateral
at public or private sale, with or without having the Collateral
at the sale, at which sale Secured Party may purchase all or any
of the Collateral, the proceeds of such sale, less expenses of
retaking, storage, repairing and reselling, and reasonable
attorneys' fees incurred by Secured Party, to be applied to the
payment of the unpaid total Indebtedness, Borrower remaining
liable for the balance of said unpaid total Indebtedness, and any
surplus thereafter remaining to be for the account of Borrower
(except as otherwise provided under applicable law) or
(ii) retain the Collateral and all prior payments of Indebtedness, in
satisfaction of the remaining unpaid Indebtedness;
G) pursue any other remedy then available to Secured Party at law or in
equity. Borrower hereby covenants and agrees to notify Secured Party
immediately of the occurrence of any default specified in this
paragraph 12.
13. REMEDIES CUMULATIVE: Time of performance of Borrower's obligations
hereunder is of the essence. All remedies of Secured Party hereunder are
cumulative, and may, to the extent permitted by law, be exercised concurrently
or separately, and the exercise of any one remedy shall not be deemed to be an
election of such remedy to the exclusion of any other remedy or to preclude the
exercise of any other remedy at any other time. Failure on the part of the
Secured Party to exercise, or delay in exercising, any right or remedy hereunder
or Secured Party's failure at any time to restrict performance by Borrower of
any of the provisions hereof shall not operate as a waiver thereof; nor shall
any single or partial exercise by Secured Party of any right or remedy hereunder
preclude any other further exercise thereof or the exercise of any other right
or remedy.
14. ASSIGNMENT: Borrower acknowledges, and understands that Secured Party may
assign this Security Agreement, any Schedule or Certificate or any Note to a
bank or any other lending institution or any other person, organization or
agency, and Borrower shall
(a) recognize any such assignment,
(b) accept the lawful demands of such assignee,
(c) surrender assigned Collateral only to such assignee,
(d) pay all Indebtedness payable hereunder and do any and all things
required of Borrower hereunder, notwithstanding any default of
the Secured Party or the existence of any claim, defense or
offset between Borrower and Secured Party, and
19
(e) not require any assignee of the Security Agreement to perform any
duty, covenant or condition required to be performed by Secured
Party under the terms of this Security Agreement provided that
Secured Party shall remain liable for such performance. The
obligations of Borrower shall not be subject, as against any such
assignee or transferee, to any defense, set-off or counterclaim
available to Borrower against Secured Party and any such defense,
set-off or counterclaim may be asserted only against Secured
Party.
15. FILINGS:
(a) Borrower agrees to execute any instrument or instruments necessary or
expedient for filing, recording, perfecting, or notifying of the interest of
Secured Party upon request of, and as determined by, Secured Party. Borrower
hereby specifically authorizes Secured Party to file financing statements not
signed by Borrower or to execute same for and on behalf of Borrower as
Borrower's attorney-in-fact, irrevocably and coupled with an interest, for such
purposes. A carbon, photographic or other reproduction of the Security Agreement
or a financing statement shall be sufficient as a financing statement for filing
purposes.
(b) Without limiting the foregoing paragraph (a), Borrower hereby acknowledges
and agrees that the normal practice of Secured Party is to electronically file
financing statements through computerized filing services such as CSC- The
United States Corporation Company ("Filing Service"). The Filing Service
pursuant to a Power of Attorney delivered by Secured Party will execute the
financing statement on behalf of both Borrower (and Secured Party where
applicable or where desired by Secured Party as not all states require execution
of Secured Party on financing statements). The names of Borrower and Secured
Party, addresses, and collateral description on the computerized financing
statement filing shall be the same as on the financing statement executed by
Borrower but the format and spacing may vary in non-material ways. Borrower
acknowledges that the original financing statement executed by Borrower shall be
retained in the collateral files of Secured Party but may be filed by Secured
Party should it deem it necessary. In connection with the foregoing process,
Borrower hereby authorizes and appoints Secured Party and the applicable Filing
Service as Borrower's agent and attorney-in-fact, irrevocably and coupled with
an interest for the execution and filing of the financing statements and fully
acknowledges and agrees and has initialed this paragraph as additional
affirmation as to the full enforceability of this power of attorney for such
purposes.
BORROWER
-------------
INT.
16. MISCELLANEOUS:
(a) In case of failure of Borrower to comply with any provision of
this Security Agreement, Secured Party shall have the right, but
shall not be obligated, to effect such compliance in whole or in
part, and all moneys spent and expenses and obligations incurred
or assumed by Secured Party in effecting such compliance
(including but not limited to, attorneys' fees and costs incurred
in attempting to effect compliance against Borrower and/or
others) shall constitute additional Indebtedness hereby secured
due to Secured Party five (5) days after the date Secured Party
sends notice to Borrower requesting payment. Secured Party's
effecting such compliance shall not be waiver of Borrower's
default. Interest on any payments made by Secured Party hereunder
on amounts due after Secured Party declares default under
paragraph 12 and interest on any overdue payment under paragraph
11 shall be at the default rate prescribed in the Note, (or, if
there is more than one Note, at the highest among the default
rates prescribed in such Notes), but not to exceed the maximum
lawful rate. Any
20
provisions in this Security Agreement, any Schedule hereto or
Certificate in respect hereof which are in conflict with any
statute, law or rule applicable shall be deemed omitted, modified
or altered to conform thereto.
(b) If any provision of this Security Agreement shall contravene or
be invalid under applicable law or regulation (including federal
law and regulation), such contravention or invalidity shall not
affect the entire Security Agreement, the provisions held to be
invalid to be deemed deleted or modified and the Security
Agreement interpreted and construed as though such invalid
provision or provisions were not part hereof or conformed
thereto.
(c) Any notice, report or other communication required or permitted
to be given or made under this Security Agreement by one of the
parties hereto to the other shall be in writing and shall be
deemed to have been sufficiently given or made for all purposes
if (i) sent by facsimile, or (ii) sent by U.S. mail, first class,
postage prepaid, addressed to such other party at its respective
address as set forth herein or to such other address as the
addressee shall theretofore furnish in writing to the addressor.
All such notices, reports and other communications shall be
effective when received.
(d) This Security Agreement, any addendum hereto attached and signed
by Secured Party and Borrower, any Schedule hereto and any
Certificate in respect hereof, constitute the entire agreement of
the parties with respect to the subject matter hereof. THIS
SECURITY AGREEMENT, ANY VARIATION OR MODIFICATION OF THIS
SECURITY AGREEMENT, ANY WAIVER OF ANY OF ITS PROVISIONS OR
CONDITIONS AND ALL SCHEDULES SHALL NOT BE VALID UNLESS IN WRITING
AND SIGNED BY AN AUTHORIZED OFFICER OR MANAGER OF SECURED PARTY.
(e) BORROWER WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION
ARISING HEREFROM OR IN RELATIONS HERETO.
(f) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT, WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES.
(g) BORROWER IRREVOCABLY (A) AGREES THAT ANY LEGAL OR EQUITABLE
PROCEEDING AGAINST IT OR RELATING TO THIS SECURITY AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY OR THE SUBJECT MATTER HEREOF
MAY BE INSTITUTED IN THE U.S. DISTRICT COURT FOR THE DISTRICT OF
CONNECTICUT OR, IN THE EVENT THAT COURT LACKS JURISDICTION, ANY
CONNECTICUT STATE COURT IN THE COUNTY OF FAIRFIELD, (B) WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAY OF
VENUE OF ANY PROCEEDING BROUGHT IN SUCH COURT, (C) SUBMITS ITSELF
GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH
COURT FOR PURPOSES OF ANY PROCEEDING, WITH RESPECT TO ITS PERSON
AND PROPERTY, AND (D)WAIVES PERSONAL SERVICE OF PROCESS AND
AGREES THAT SERVICE MAY BE MADE BY PERSONAL DELIVERY OR BY
MAILING BY CERTIFIED MAIL, POSTAGE PREPAID, ADDRESSED TO BORROWER
AT ITS ADDRESS.
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as of the date first above written.
21
California Beach Restaurants,
as Borrower
By: /s/ Samuel E. Chilakos
------------------------------------
Name: Samuel E. Chilakos
-----------------------------------
Title: Vice President, Finance
----------------------------------
LYON CREDIT CORPORATION,
as Secured Party
By: /s/ Stephen B. Peterson
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Name: Stephen B. Peterson
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Title: Assistant Vice President
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SECURITY AGREEMENT
Security Agreement No. ____________
THIS SECURITY AGREEMENT (the "Security Agreement"), dated as of __ April
27, 1999 made by and between LYON CREDIT CORPORATION, a corporation organized
and existing under the laws of the State of Delaware, with an office address at
1266 East Main Street, Stamford, Connecticut 06902-3546 (together with its
successors and assigns, if any, "Secured Party") and Sea View Restaurants, Inc.
dba: Gladstones 4 Fish, corporation organized and existing under the laws of the
State of California with its residence, mailing address and principal place of
business at 17383 Sunset Blvd., Pacific Palisades, CA 90272 ("Guarantor");
WITNESSETH:
1. GRANT OF SECURITY INTEREST: The security interest granted below is given (i)
to secure payment on each Note made by California Beach Restaurants, Inc.
("Borrower") in the original stated principal amount of $1,200,000.00 together
with any extensions or renewals thereof, and any amendments or modifications
thereto (each, a "Note", and collectively, the "Notes"), (ii) to secure the
obligations of Guarantor under and in connection with that certain Guaranty,
dated as of _____________ _______, 1999, guaranteeing the payment and
performance of the Note, Security Agreement, dated on even date therewith,
executed by Borrower for the benefit of Secured Party ("Borrower Security
Agreement") and the "Indebtedness" as further described in the Borrower Security
Agreement, and all related documentation ("Loan Documents"), and (iii) also to
secure any other indebtedness, obligation, or liability of the Guarantor to the
Secured Party, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising and no matter how acquired by
Secured Party, including, but not limited to, all future advances or loans which
may be made at the option of the Secured Party to or on behalf of Borrower
and/or Guarantor [all the foregoing in (i), (ii), and (iii) hereinafter called
the "Indebtedness"], Guarantor hereby grants and conveys to the Secured Party a
first security interest in, and mortgages to the Secured Party, any and all
furniture, equipment, fixtures, trade fixtures, furnishings, and all other
tangible personal property now owned or hereafter acquired by Guarantor,
together with all products and proceeds thereof, if any, all additions,
attachments, accessories and accessions thereto and any and all substitutions,
replacements or exchanges thereto, and any and all insurance and/or other
proceeds thereof, including, but not limited to, every permitted lease or
sublease, howsoever designated, covering all or any part thereof (all or any of
the foregoing hereinafter collectively called the "Collateral"). The purpose of
the Security Agreement is to ensure that Secured Party has a first lien security
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interest in any and all furniture, equipment, fixtures, trade fixtures,
furnishings, and all other tangible personal property, now owned or hereafter
acquired, used in and in connection with the operation of that certain
restaurant entitled Gladstones 4 Fish, located at 17300 Pacific Coast Highway,
Pacific Palisades, California 90272
TO HAVE AND TO HOLD the Collateral with the power and authority and
subject to the terms and conditions set forth in this Security Agreement.
2. PAYMENT: Guarantor will duly and punctually pay the Indebtedness secured by
this Security Agreement in accordance with the terms of the Guaranty. In no
event shall any payments be refunded to Guarantor.
3. OBLIGATIONS ABSOLUTE: The obligations of Guarantor under this Security
Agreement shall be absolute and unconditional under all circumstances
whatsoever, including, but not limited to, the existence of any claim, set-off,
defense, counterclaim or recoupment to any present or future claim of Guarantor
against Secured Party under this Security Agreement or otherwise, against the
manufacturer or seller of any of the Collateral or against any other person or
entity for whatever reason. This Security Agreement shall not terminate, nor
shall the obligations of Guarantor be affected, by reason of any defect in title
to, damage to or any loss or destruction of, the Collateral from whatsoever
cause, or the interference with the use thereof by any person or entity, or the
invalidity or unenforceability or lack of due authorization in respect of this
Security Agreement or any lack of right, power or authority of the Secured Party
to enter into this Security Agreement, or any failure of Secured Party to
perform any obligation of Secured Party or Guarantor or any other person or
entity under this Security Agreement or any instrument or document executed in
connection herewith, or for any other cause, whether similar or dissimilar to
the foregoing, any present or future law or regulation to the contrary
notwithstanding, it being the express intention of Secured Party and Guarantor
that all payments by Guarantor shall be, and continue to be, payable in all
events unless the obligation to pay the same shall be terminated pursuant to the
express provisions of this Security Agreement.
4. REPRESENTATIONS AND WARRANTIES: Guarantor represents and warrants as of the
date of this Security Agreement that:
a) Guarantor is a corporation duly organized and validly existing in good
standing under the laws of its state of organization and has the
requisite power to enter into and perform its obligations under this
Security Agreement,
b) this Security Agreement has been duly authorized, executed and
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delivered by Guarantor and, assuming due authorization, execution and
delivery by Secured Party, is a legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights of creditors generally, and
general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law,
c) the execution and delivery by Guarantor of this Security Agreement is
not, and the performance by it of its obligations hereunder will not be,
inconsistent with Guarantor's (articles or certificate of incorporation
or by-laws), do not and will not contravene any law, governmental rule
or regulation, judgment or order applicable to Guarantor, and do not and
will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument to which Guarantor is
a party or by which it is bound,
d) no consent or approval of, giving of notice to, registration with, or
taking of any other action in respect to or by, any federal, state or
local governmental authority or agency or other entity is required with
respect to the execution, delivery and performance by Guarantor of this
Security Agreement, or if any such approval, notice, registration or
action is required, it has been duly given or obtained,
e) there are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or
affecting Guarantor, which will have a material adverse effect on the
ability of Guarantor to fulfill its obligations under this Security
Agreement,
f) each financial statement and other related information furnished to
Secured Party by Guarantor has been prepared in accordance with
generally accepted accounting principles and, since the date of the most
recent financial statement so delivered, there has been no material
adverse change (as that term is defined in paragraph 12 (k) below),
g) this Security Agreement shall be effective against all creditors of
Guarantor under applicable law, including, without limitations,
fraudulent conveyance and bulk transfer laws, and
h) the Collateral will at all times be used solely in the conduct of the
business of Guarantor and be and remain in the possession and control of
Guarantor.
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5. LIENS: Unless owned by Borrower, Guarantor is the lawful owner of the
Collateral. Guarantor shall keep the Collateral free and clear from all liens,
charges, encumbrances and security interests of any kind ("Liens") , except for
a) the Lien of Secured Party, as provided in this Security
Agreement or in the Borrower Security Agreement,
b) Liens for taxes either not yet due or being contested by
Guarantor in good faith with due diligence and by appropriate
proceedings, so long as such proceedings do not, in the opinion
of Secured Party, involve any material danger of sale,
forfeiture or loss of Collateral or any part thereof or title
thereto or interest therein,
c) inchoate materialmen's, mechanics', workmen's, repairmen's,
employees', carriers', warehousemen's or other like Liens
arising in the ordinary course of business of Guarantor and not
delinquent and Guarantor shall be maintaining adequate reserves
therefor. Secured Party shall, at its own cost and expense,
promptly take such action as may be necessary to discharge duly
all Secured Party's Liens upon full payment and satisfaction of
all Indebtedness.
6. USE AND OPERATION:
a) Guarantor shall not assign, sublet, mortgage, hypothecate or
alter any of the Collateral or any interest in this Security
Agreement, nor shall Guarantor remove any of the Collateral from
the specified place of Collateral location, without the prior
written consent of Secured Party, and any attempt so to assign,
sublet, mortgage, hypothecate, alter or remove any of the
Collateral without the prior written consent of the Secured
Party shall be void and without effect.
b). Guarantor will not, without the prior written consent of Secured
Party, affix or install any accessory, equipment, or device on
any Collateral if such addition will impair the originally
intended function or use of any such Collateral or its value in
place. Guarantor agrees that each Item of Collateral shall prior
to its installation be personal property under applicable law.
Guarantor agrees to take such action as shall be required by
Secured Party from time to time to
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protect the rights and interests of Secured Party in each such
Item. Guarantor will not, without the prior written consent of
Secured Party and subject to such conditions as Secured Party
may impose for its protection, affix or install any Collateral
to or in any other personal property. Secured Party and
Guarantor agree that each Item of Collateral and every part
thereof is severed from any real property and, even if
physically attached to any real property, it is the intention of
Secured Party and Guarantor that such Item
i. shall retain the character of personal property,
ii. shall be removable,
iii. shall be treated as personal property with respect to
the rights of all persons and entities,
iv. shall not become part of any real property, and
v. by virtue of its nature as personal property, shall not
be affected in any way by any instrument dealing with
any real property.
Guarantor represents that it has not entered into, and agrees that it will not
enter into, any agreement or other arrangement which prohibits or restricts in
any manner the right of Secured Party or Guarantor to sever Items of Collateral
from the real property on which they are located, to sever Items of Collateral
from any other equipment or personal property to which such Items are attached
or to remove Items of Collateral from the place where they are then located.
7. MAINTENANCE AND SERVICE:
a) Items of Collateral shall be used only in the manner for which
they were designed and intended and Guarantor will at its sole
expense at all times maintain Collateral in good operating
order, repair, condition and appearance and keep Collateral
protected from the elements, ordinary wear and tear excepted.
Guarantor shall, if at any time requested to do so by Secured
Party, affix in a prominent position on
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each Item of Collateral plates, tags or other identifying labels
showing the interest of Secured Party in the Collateral.
Guarantor will, at all times, operate and maintain each Item of
Collateral in accordance with
i. the standards applied by Guarantor with respect
to similar equipment owned or leased by it and
ii. prudent operating and maintenance standards and
manufacturer's requirements. Guarantor will not
use or operate any Item of Collateral in
violation of applicable laws and regulations
(including all applicable environmental and
occupational safety laws).
b) Any alterations or modifications with respect to Collateral that
may at any time prior to full repayment of the Indebtedness
secured hereby be required to comply with any applicable law or
any governmental rule or regulation shall be made by Guarantor
as required and at the sole expense of Guarantor.
8. REPORTS:
a) Guarantor agrees that Secured Party shall not be responsible for
any loss or damage to Guarantor, its customers or any other
third parties caused by the Collateral, any failure thereof or
defect therein, or otherwise. Nevertheless, Guarantor will
immediately notify Secured Party of each accident arising out of
any alleged or apparent improper manufacturing, functioning or
operation of any Collateral, the time, place and nature of the
accident and damage, the names and addresses of parties
involved, persons injured, witnesses and owners of property
damaged, and such other information as may be known, and
promptly advise Secured Party of all correspondence, papers,
notices and documents whatsoever received by Guarantor in
connection with any claim or demand involving or relating to
improper manufacturing, operation or functioning of any
Collateral or charging Secured Party with liability;
b) Guarantor will notify Secured Party in writing within ten (10)
days after any day in which any Lien shall attach to any
Collateral not expressly permitted hereby of the full
particulars thereof and of the then location of such Collateral
on such day;
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c) Guarantor will notify Secured Party forthwith in writing of the
location of any Collateral moved by Guarantor from the place
where delivered to Guarantor or from the location specified in
this Security Agreement or any subsequent agreement executed by
the parties and Guarantor will not change or discontinue its
place or places of business and/or residence and/or name;
d) Guarantor will within ninety (90) days of the close of each of
its fiscal years deliver to Secured Party Guarantor's balance
sheet and profit and loss statement prepared in accordance with
generally accepted accounting principles and, to the extent
available, certified to by a recognized firm of certified public
accountants. Guarantor will deliver to Secured Party, within
sixty (60) days of the close of each of its fiscal quarters,
Guarantor's quarterly financial report (which shall be in
reasonable detail) prepared in accordance with generally
accepted accounting principles and certified to by the chief
financial officer of Guarantor; and
e) Guarantor will permit Secured Party to inspect and examine
Collateral at such times and from time to time during normal
business hours as Secured Party may wish (and at such other
times as may be mutually agreeable) and without any requirement
for advance notice, provided that such examination and
inspection shall not unreasonably interfere with Guarantor's
normal business operations.
9. RISK OF LOSS:
a) Guarantor is solely responsible for the entire risk of use and
operation, and for each and every cause or hazard, and all loss
and damage to any and all Collateral whether arising through
operation or otherwise. In the event of damage to any Item of
Collateral, Guarantor, at its cost and expense, shall promptly
repair the Item, restoring it to its previous condition or the
condition in which it was required to be assuming Guarantor had
met all its obligations for maintenance of the Collateral. Upon
the occurrence of an Event of Loss (defined below) with respect
to any Item, Guarantor shall prepay to Secured Party an amount
of Indebtedness under the Note relating to the Schedule hereto
in which such Item is described equal to the sum of
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i. all interest theretofore accruing, and unpaid thereon,
with respect to such Item, plus
ii. the unpaid principal balance of the Note with respect
such item, plus
iii. an amount equal to two (2%) percent of the unpaid
principal balance of the Note with respect to such Item.
Provided Guarantor is not in breach or default of this Security Agreement, any
proceeds of insurance received by Secured Party with respect to any such loss
shall be paid to Guarantor to the extent necessary to reimburse Guarantor costs
incurred and paid by Guarantor in repairing damaged Equipment or as a credit
against total amount payable by Guarantor with respect to the Collateral
involved, as the case may be, all as provided in this Security Agreement.
(b) For the Purpose hereof "Event of Loss" shall mean, with respect
to any Item of Collateral, if such Item is
i. destroyed, condemned, irreparably damaged or damaged
beyond economic repair,
ii. requisitioned for use by a governmental entity for an
indefinite period or stated period extending beyond a
period in excess of ninety (90) consecutive days or the
final installment payment date stated on the applicable
Note, whichever is earlier,
iii. the subject of an insurance settlement with respect to
such Item of Collateral on the basis of a constructive
total loss,
iv. stolen or lost and not recovered within thirty (30)
days,
v. the subject of a condemnation or requisition of title by
a governmental entity, or
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vi. prohibited by applicable law from being used by
Guarantor for a period of ninety (90) consecutive days
or the final installment payment date on the applicable
Note, whichever is earlier.
10. INSURANCE:
(a) Guarantor, at its own cost and expense shall obtain, or shall
cause Borrower, at Borrower's own cost and expense, to (i)
maintain and keep the Collateral insured against all risks of
loss or damage from every cause whatsoever in an amount not less
than the greater of actual cash value or the aggregate amount of
all unpaid Indebtedness as at any time, without deductible and
without co-insurance (except as Secured Party may approve in
writing) and (ii) obtain and maintain, until repayment in full
of the Indebtedness public liability insurance covering
liability for bodily injury, including death, and property
damage resulting from the purchase, ownership, leasing,
maintenance, use or operation of the Collateral in an amount of
at least $1,000,000, or in such greater amounts as Secured Party
may from time to time require. Secured Party shall be the sole
named loss-payee with respect to damage or loss to the
Collateral and shall be a named additional insured on the public
liability insurance. All insurance shall be with insurers and in
form satisfactory to Secured Party; shall provide for at least
thirty (30) days advance written notice to Secured Party before
any cancellation or material modification thereof; shall waive
any claim for premium against Secured Party; and shall not be
invalidated or the insurer's liability to or for or on behalf of
Secured Party be diminished or affected by any breach of
warranty or representation or other act or omission of the
Guarantor. Guarantor shall deliver to Secured Party the original
policy or policies of insurance, certificates of insurance or
other evidence satisfactory to Secured Party evidencing the
insurance required hereby along with proof satisfactory to
Secured Party of the payment of the premium therefor. Secured
Party may, at its option, apply proceeds of insurance, in whole
or in part, to (A) repair or replace Collateral or any portion
thereof, or (B) satisfy any obligation of Guarantor to Secured
Party hereunder.
(b) Secured Party is authorized, but under no duty, to obtain such
insurance upon failure of the Guarantor to do so. Guarantor
shall
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give immediate written notice to the Secured Party and to
insurers of loss or damage to the Collateral and shall promptly
file proofs of loss with insurers. Guarantor hereby irrevocably
appoints the Secured Party as attorney-in-fact, coupled with an
interest, for the Guarantor in obtaining, adjusting and
canceling any such insurance and endorsing settlement drafts and
hereby assigns to the Secured Party all sums which may become
payable under such insurance, including return premiums and
dividends, as additional security for the Indebtedness.
11. INDEMNIFICATION: Guarantor hereby agrees to indemnify, save and keep
harmless Secured Party, its agents, employees, successors and assigns, from and
against any and all losses, damages (including indirect, special or
consequential), penalties, injuries, claims, actions and suits including,
without limitation, legal expenses, of whatsoever kind and nature (including,
without limitation, costs and expenses incurred by Secured Party in defending
claims or suits brought against it by Guarantor in violation of or contrary to
the provisions of this Security Agreement), in contract or tort, including, but
in no way limited to, Secured Party's strict liability in tort, unless and
except to the extent Secured Party's gross negligence or willful misconduct is
the proximate cause of any such loss, damage, penalty, injury claim, action, or
suit, and Guarantor shall at its own expense defend any and all such actions,
arising out of the selection, modification, purchase, ownership, acceptance or
rejection of any Item of Collateral and the delivery, possession, maintenance,
use, condition (including, without limitation, latent and other defects, whether
or not discoverable by Secured Party or Guarantor, and any claim for patent,
trademark or copyright infringement), or operation of any Item of Collateral by
whomsoever used or operated or arising out of or resulting from the condition of
any Item of Collateral sold or disposed of after use by Guarantor, any lessee,
sublessee or employees of Guarantor. The indemnities and assumptions of
liability herein provided for shall continue in full force and effect
notwithstanding the termination of this Security Agreement whether by expiration
of time, operation or law or otherwise. GUARANTOR AGREES THAT SECURED PARTY
SHALL NOT BE LIABLE TO GUARANTOR FOR ANY CLAIM CAUSED DIRECTLY OR INDIRECTLY BY
THE INADEQUACY OF ANY ITEM OF COLLATERAL FOR ANY PURPOSE OR ANY DEFICIENCY OR
DEFECT THEREIN OR THE USE OR MAINTENANCE THEREOF OR ANY REPAIRS, SERVICING OR
ADJUSTMENTS THERETO OR ANY DELAY IN PROVIDING OR FAILURE TO PROVIDE ANY THEREOF
OR ANY INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF OR ANY LOSS OF BUSINESS,
ALL OF WHICH SHALL BE THE SOLE RISK AND RESPONSIBILITY OF GUARANTOR.
12. DEFAULT; REMEDIES: If any of the following (herein an "Event of Default")
shall occur:
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(a) Borrower shall default in the payment of Indebtedness to Secured
Party or in making any other payment hereunder or under any Note
when due, and such default shall continue for a period of ten
(10) days without its cure by Borrower, or Guarantor shall
default in the payment or performance of any of its obligations
under the Guaranty after demand is made by Secured Party under
the Guaranty, or
(b) Guarantor shall default in the payment when due of any
obligations of Guarantor, whether or not to Secured Party,
arising independently of this Security Agreement or any Note,
and such default shall continue for a period of ten (10) days
without its cure by Guarantor, or
(c) Guarantor shall default in the performance of any other covenant
contained herein or in the Guaranty or any other document
entered into in connection with this Security Agreement and such
default shall continue for five (5) days after written notice
thereof to Guarantor by Secured Party, or
(d) Guarantor shall breach any of its insurance obligations under
paragraph 10 hereof,
(e) any representation or warranty made by Guarantor in this
Security Agreement or any other documents entered into in
connection with this Security Agreement shall prove to be
incorrect in any material respect when any such representation
or warranty was made or given, or
(f) Guarantor shall become insolvent or make an assignment for the
benefit of creditors, or
(g) Guarantor shall apply for or consent to the appointment of a
receiver, trustee or liquidator for a substantial part of its
property or such receiver, trustee or liquidator is appointed
without the application or consent of Guarantor, or
(h) a petition shall be filed by or against Guarantor under the
Federal
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bankruptcy laws (including, without limitation, a petition for
reorganization, arrangement or extension) or under any other
insolvency law or law providing for the relief of debtors, or
(i) Secured Party shall deem the Collateral or the Indebtedness
insecure, or
(j) there is, without the prior consent of Secured Party, a change
in control (defined to be a change in the possession, directly
or indirectly, of the power to direct or cause the direction of
the management and policies of Guarantor, whether through the
ownership of voting securities, by contract or otherwise), or
(k) there is a material adverse change (defined to be a decrease of
at least one-third (1/3) of net worth, as determined in
accordance with generally accepted accounting principles) in
Guarantor's or any guarantor's financial condition, or
(l) there occurs any Event of Default under the Borrower Security
Agreement or a breach, event of default, or default, however
such terms are defined (but after giving any applicable grace
and/or notice of opportunity to cure period, if any, provided
thereunder) under the Loan Documents;
then, to the extent permitted by applicable law, Secured Party shall have the
right to exercise any one or more of the following remedies one or more times:
A) declare this Security Agreement in default, such declaration
being applicable to all Schedules hereunder except as
specifically excepted by Secured Party;
B) declare the entire amount of unpaid total Indebtedness
immediately due and payable;
C) declare due and payable in addition to any unpaid Indebtedness
due on or before Secured Party declares this Security Agreement
in default, as liquidated damages for loss of a bargain and not
as a penalty, an amount calculated in accordance with the
provisions of paragraph 9 as though the Collateral had suffered
an Event of Loss, as of the date that Secured Party declares
this Security Agreement in default;
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D) declare due and payable the amount of any indemnification
hereunder if then determinable, with interest as provided
herein;
E) upon notice to any lessees or sublessees permitted pursuant to
paragraph 6(a) to obtain and retain all rentals thereafter due,
paid and/or payable;
F) without demand or legal process enter into premises where the
Collateral may be found and take possession of and remove the
same, whereupon all rights of Guarantor in the Collateral shall
terminate absolutely, and either
(i) retain all prior payments of Indebtedness and sell
the Collateral at public or private sale, with or
without notice to Guarantor, with or without having the
Collateral at the sale, at which sale Secured Party may
purchase all or any of the Collateral, the proceeds of
such sale, less expenses of retaking, storage, repairing
and reselling, and reasonable attorneys' fees incurred
by Secured Party, to be applied to the payment of the
unpaid total Indebtedness, Guarantor remaining liable
for the balance of said unpaid total Indebtedness, and
any surplus thereafter remaining to be for the account
of Guarantor (except as otherwise provided under
applicable law) or
(ii) retain the Collateral and all prior payments of
Indebtedness, in satisfaction of the remaining unpaid
Indebtedness;
G) pursue any other remedy then available to Secured Party at law
or in equity. Guarantor hereby covenants and agrees to notify
Secured Party immediately of the occurrence of any default
specified in this paragraph 12.
13. REMEDIES CUMULATIVE: Time of performance of Guarantor's obligations
hereunder is of the essence. All remedies of Secured Party hereunder are
cumulative, and may, to the extent permitted by law, be exercised concurrently
or separately, and the exercise of any one remedy shall not be deemed to be an
election of such remedy to the exclusion of any other remedy or to preclude the
exercise of any other remedy at any other time. Failure on the part of the
Secured Party to exercise, or delay in exercising, any right or remedy hereunder
or Secured Party's failure at any time to restrict performance by Guarantor of
any of the provisions hereof shall not operate as a waiver thereof; nor shall
any single or partial exercise by Secured Party of any right or remedy hereunder
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preclude any other further exercise thereof or the exercise of any other right
or remedy.
14. ASSIGNMENT: Guarantor acknowledges, and understands that Secured Party may
assign this Security Agreement, any Schedule or Certificate or any Note to a
bank or any other lending institution or any other person, organization or
agency, and Guarantor shall
(a) recognize any such assignment,
(b) accept the lawful demands of such assignee,
(c) surrender assigned Collateral only to such assignee,
(d) pay all Indebtedness payable hereunder and do any and all things
required of Guarantor hereunder, notwithstanding any default of
the Secured Party or the existence of any claim, defense or
offset between Guarantor and Secured Party, and
(e) not require any assignee of the Security Agreement to perform
any duty, covenant or condition required to be performed by
Secured Party under the terms of this Security Agreement
provided that Secured Party shall remain liable for such
performance. The obligations of Guarantor shall not be subject,
as against any such assignee or transferee, to any defense,
set-off or counterclaim available to Guarantor against Secured
Party and any such defense, set-off or counterclaim may be
asserted only against Secured Party.
15. FILINGS:
(a) Guarantor agrees to execute any instrument or instruments
necessary or expedient for filing, recording, perfecting, or
notifying of the interest of Secured Party upon request of, and
as determined by, Secured Party. Guarantor hereby specifically
authorizes Secured Party to file financing statements not signed
by Guarantor or to execute same for and on behalf of Guarantor
as Guarantor's agent and attorney-in-fact, irrevocably and
coupled with an interest, for such purposes. A carbon,
photographic or other reproduction of the Security Agreement or
a
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financing statement shall be sufficient as a financing statement
for filing purposes.
(b) Without limiting the foregoing paragraph (a), Guarantor hereby
acknowledges and agrees that the normal practice of Secured
Party is to electronically file financing statements through
computerized filing services such as Lexis Document Services
("Filing Service"). The Filing Service pursuant to a Power of
Attorney delivered by Secured Party will execute the financing
statements (whether one or more as applicable) on behalf of both
Guarantor (and Secured Party where applicable or where desired
by Secured Party as not all states require execution of Secured
Party on financing statements). The names of Guarantor and
Secured Party, addresses, and collateral description on the
computerized financing statement filings shall be the same as on
the financing statements executed by Guarantor but the format
and spacing may vary in non-material ways. Guarantor
acknowledges that the original financing statements executed by
Guarantor shall be retained in the collateral files of Secured
Party but may be filed by Secured Party should it deem it
necessary. In connection with the foregoing process, Guarantor
hereby authorizes and appoints Secured Party and the applicable
Filing Service as Guarantor's agent and attorney-in-fact,
irrevocably and coupled with an interest for the execution and
filing of the financing statements and fully acknowledges and
agrees and has initialed this paragraph as additional
affirmation as to the full enforceability of this power of
attorney for such purposes.
GUARANTOR ___________
INT.
16. NOTES:
(a) Upon written notice by Secured Party to Guarantor that Secured Party
intends to transfer any Note, Guarantor shall, in exchange for the Note
to be transferred, promptly execute a new note in the amount of the
exchanged Note, naming the transferee as payee thereunder, and deliver
to same to such transferee.
(b) If any Note shall become mutilated or shall be destroyed, lost or
stolen,
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Guarantor shall, upon the written request of payee under of such Note,
execute and deliver in replacement thereof, the new Note payable in the
same amount and dated the same date as the Note so mutilated, destroyed,
lost or stolen.
17. MISCELLANEOUS:
(a) In case of failure of Guarantor to comply with any provision of this
Security Agreement, Secured Party shall have the right, but shall not be
obligated, to effect such compliance in whole or in part, and all moneys
spent and expenses and obligations incurred or assumed by Secured Party
in effecting such compliance (including but not limited to, attorneys'
fees and costs incurred in attempting to effect compliance against
Guarantor and/or others) shall constitute additional Indebtedness hereby
secured due to Secured Party five (5) days after the date Secured Party
sends notice to Guarantor requesting payment. Secured Party's effecting
such compliance shall not be waiver of Guarantor's default. Interest on
any payments made by Secured Party hereunder on amounts due after
Secured Party declares default under paragraph 12 and interest on any
overdue payment under paragraph 11 shall be at the default rate
prescribed in the Note, (or, if there is more than one Note, at the
highest among the default rates prescribed in such Notes), but not to
exceed the maximum lawful rate. Any provisions in this Security
Agreement, any Schedule hereto or Certificate in respect hereof which
are in conflict with any statute, law or rule applicable shall be deemed
omitted, modified or altered to conform thereto.
(b) If any provision of this Security Agreement shall contravene or be
invalid under applicable law or regulation (including federal law and
regulation), such contravention or invalidity shall not affect the
entire Security Agreement, the provisions held to be invalid to be
deemed deleted or modified and the Security Agreement interpreted and
construed as though such invalid provision or provisions were not part
hereof or conformed thereto.
(c) Secured Party may give notice to Guarantor or make a request of
Guarantor by depositing such notice or request in the U.S. mail, first
class postage prepaid, addressed to the Guarantor at its address above,
an address furnished by Guarantor to Secured Party, a mailing address of
Guarantor or a place of business of Guarantor. All notices required to
be given by Guarantor hereunder shall be deemed adequately given if sent
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by registered or certified mail to Secured Party at the address of
Secured Party stated herein, or at such other place as Secured Party may
designate to Guarantor in writing.
(d) This Security Agreement, any addendum hereto attached and signed by
Secured Party and Guarantor, any Schedule hereto and any Certificate in
respect hereof, constitute the entire agreement of the parties with
respect to the subject matter hereof. THIS SECURITY AGREEMENT, ANY
VARIATION OR MODIFICATION OF THIS SECURITY AGREEMENT, ANY WAIVER OF ANY
OF ITS PROVISIONS OR CONDITIONS AND ALL SCHEDULES SHALL NOT BE VALID
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED OFFICER OR MANAGER OF
SECURED PARTY.
(e) GUARANTOR WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING
HEREFROM OR IN RELATION HERETO
(f) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT, WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES
(g) GUARANTOR SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY NOTE, OR FOR RECOGNITION
AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NONEXCLUSIVE
GENERAL JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE
OF CONNECTICUT AND APPELLATE COURTS FROM ANY THEREOF; CONSENTS THAT ANY
SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING
WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME; AND AGREES THAT SERVICE MAY BE MADE ON GUARANTOR IN ANY SUCH
PROCEEDING BY DELIVERING A COPY OF PROCESS TO GUARANTOR AT GUARANTOR'S
ABOVE ADDRESS, SUCH SERVICE TO BE EFFECTIVE UPON RECEIPT.
(h) This Security Agreement supplements and is in addition to the Borrower
Security Agreement, and it shall not, and is not in anyway meant to,
limit, impair, replace, or in anyway negate any of the obligations of
Borrower under the Security Agreement, it being understood that the
obligations of
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39
Guarantor as to the Collateral and the representations, warranties,
covenants, and agreements set forth hereunder are joint and several with
the Borrower's obligations. All rights and remedies as to both parties
shall be cumulative, and exercise of one or more remedies as to one
party shall in no way limit the exercise of one or more remedies against
the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as of the date first above written.
Sea View Restaurants, Inc.
dba: Gladstones 4 Fish
as Guarantor
By: /s/ Samuel E. Chilakos
---------------------------------
Printed Name: Samuel E. Chilakos
-----------------------
Title: Vice President, Finance
------------------------------
Affix Corporate Seal here
Attest/Witness:
By: /s/ Martin Sniewski
---------------------------------
Printed Name: Martin Sniewski
-----------------------
Title:
------------------------------
LYON CREDIT CORPORATION
as Secured Party
By: /s/ Stephen B. Peterson
---------------------------------
Printed Name: Stephen B. Peterson
-----------------------
Title: Assistant Vice President
------------------------------
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