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EXHIBIT 10.11
EXECUTION VERSION
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (this "AGREEMENT"), dated as of July 7,
2003, is entered into by and among MORTON'S RESTAURANT GROUP, INC., a Delaware
corporation ("BORROWER"), and each of Borrower's undersigned subsidiaries
(Borrower and such subsidiaries, each a "PLEDGOR", and individually and
collectively, and jointly and severally, the "PLEDGORS") and WELLS FARGO
FOOTHILL, INC., a California corporation ("LENDER"), in light of the following:
WHEREAS, Borrower and the Lender are, contemporaneously herewith,
entering into that certain Loan and Security Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, the
"LOAN AGREEMENT");
WHEREAS, contemporaneously herewith, each Pledgor other than Borrower
has executed and delivered that certain General Continuing Guaranty (as amended,
restated, supplemented or otherwise modified from time to time, the "GUARANTY")
in favor of Lender and the Bank Product Providers respecting certain obligations
of the Borrower to Lender and the Bank Product Providers in connection with the
Loan Agreement;
WHEREAS, each Pledgor beneficially owns the specified Equity Interests
identified as Pledged Interests in the Persons identified as Issuers listed on
SCHEDULE A attached hereto (or any addendum thereto); and
WHEREAS, to induce Lender to make the financial accommodations
provided to Borrower pursuant to the Loan Agreement, each Pledgor desires to
pledge, grant, transfer, and assign to Lender, for its benefit and the benefit
of the Bank Product Providers, a security interest in the Pledged Collateral (as
hereinafter defined) to secure the Secured Obligations (as hereinafter defined),
as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
(a) DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
The following terms, as used in this Agreement, shall have the following
meanings:
"AGREEMENT" has the meaning set forth in the preamble hereto.
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
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EXECUTION VERSION
"CHIEF EXECUTIVE OFFICE" means the address of the chief executive
office of each Pledgor set forth on SCHEDULE B to this Agreement.
"DESIGNATED NUMBER" means, with respect to any Foreign Issuer,
the largest whole number of Equity Interests of such Foreign Issuer
representing not greater than sixty-five (65%) of all of the fully diluted
issued and outstanding Equity Interests of such Foreign Issuer (whether or
not owned by Pledgor).
"DOMESTIC ISSUER" means, individually and collectively, each
Issuer which is not a Foreign Issuer.
"EQUITY INTERESTS" means all shares, units, options, warrants,
interests, participations, or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company,
or equivalent entity, whether voting or nonvoting, including general
partner partnership interests, limited partner partnership interests,
common stock, preferred stock, or any other "equity security" (as such term
is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"FOREIGN ISSUER" means, individually and collectively, any
Subsidiary of any Pledgor which is formed in a jurisdiction other than the
United States or any political subdivision thereof.
"FUTURE RIGHTS" means:
(a) with respect to each Domestic Issuer, (i) all Equity
Interests (other than Pledged Interests) of such Domestic Issuer, and all
securities convertible or exchangeable into, and all warrants, options, or
other rights to purchase, Equity Interests of such Domestic Issuer; (ii) to
the extent of any Pledgor's interest therein, all shares of, all securities
convertible or exchangeable into, and all warrants, options, or other
rights to purchase Equity Interests of any Person in which any Pledgor,
after the date of this Agreement, acquires a direct equity interest,
irrespective of whether such Person is or becomes a Subsidiary of any
Pledgor; and (iii) the certificates or instruments representing such
additional Equity Interests, convertible or exchangeable securities,
warrants, and other rights and all dividends, cash, options, warrants,
rights, instruments, and other property or proceeds from time to time
received, receivable, or otherwise distributed in respect of or in exchange
for any or all of such Equity Interests; and
(b) with respect to each Foreign Issuer, (i) all Equity
Interests (other than Pledged Interests) of such Foreign Issuer, and all
securities convertible or
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EXECUTION VERSION
exchangeable into, and all warrants, options, or other rights to purchase,
Equity Interests of such Foreign Issuer; (ii) to the extent of any
Pledgor's interest therein, all shares of, all securities convertible or
exchangeable into, and all warrants, options, or other rights to purchase
Equity Interests of any Person in which any Pledgor, after the date of this
Agreement, acquires a direct equity interest, irrespective of whether such
Person is or becomes a Subsidiary of any Pledgor; and (iii) the
certificates or instruments representing such additional Equity Interests,
convertible or exchangeable securities, warrants, and other rights and all
dividends, cash, options, warrants, rights, instruments, and other property
or proceeds from time to time received, receivable, or otherwise
distributed in respect of or in exchange for any or all of such Equity
Interests, PROVIDED, HOWEVER, that Future Rights under the preceding
clauses (b)(i), (b)(ii), and (b)(iii) shall exclude any Future Rights to
the extent and only to the extent that their inclusion would cause the
number of Equity Interests pledged hereunder to exceed the Designated
Number after giving effect to the issuance of such Future Rights and any
related issuances.
"GUARANTY" has the meaning set forth in the recitals to this
Agreement.
"HOLDER" and "HOLDERS" have the respective meanings set forth in
SECTION 3 of this Agreement.
"ISSUER" means each of the Persons identified as an Issuer on
SCHEDULE A attached hereto (or any addendum thereto), and any successors
thereto, whether by merger or otherwise.
"LENDER" has the meaning set forth in the preamble to this
Agreement.
"LOAN AGREEMENT" has the meaning set forth in the recitals to
this Agreement.
"PLEDGED COLLATERAL" means the Pledged Interests, the Future
Rights, and the Proceeds, collectively.
"PLEDGED INTERESTS" means (a) with respect to each Domestic
Issuer, all of the Equity Interests identified as Pledged Interests of such
Domestic Issuer on Schedule A attached hereto (or any addendum thereto);
and (b) with respect to each Foreign Issuer, the Designated Number of
Equity Interests identified as Pledged Interests of such Foreign Issuer on
Schedule A attached hereto (or any addendum thereto).
"PLEDGOR" and "PLEDGORS" have the respective meanings set forth
in the preamble to this Agreement.
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EXECUTION VERSION
"PROCEEDS" means all proceeds (including proceeds of proceeds) of
the Pledged Interests and Future Rights including all: (a) rights,
benefits, distributions, premiums, profits, dividends, interest, cash,
instruments, documents of title, accounts, contract rights, inventory,
equipment, general intangibles, deposit accounts, chattel paper, and other
property from time to time received, receivable, or otherwise distributed
in respect of or in exchange for, or as a replacement of or a substitution
for, any of the Pledged Interests, Future Rights, or proceeds thereof
(including any cash, Equity Interests, or other securities or instruments
issued after any recapitalization, readjustment, reclassification, merger
or consolidation with respect to the Issuers and any security entitlements,
as defined in the Code, with respect thereto); (b) "proceeds," as such term
is defined in the Code; (c) proceeds of any insurance, indemnity, warranty,
or guaranty (including guaranties of delivery) payable from time to time
with respect to any of the Pledged Interests, Future Rights, or proceeds
thereof; (d) payments (in any form whatsoever) made or due and payable to
Pledgor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Pledged
Interests, Future Rights, or proceeds thereof; and (e) other amounts from
time to time paid or payable under or in connection with any of the Pledged
Interests, Future Rights, or proceeds thereof.
"SEC" means the United States Securities and Exchange Commission
and any successor thereto.
"SECURED OBLIGATIONS" means, with respect to each Pledgor, all
liabilities, obligations, or undertakings owing by such Pledgor to Lender
or any Bank Product Provider of any kind or description arising out of or
outstanding under, advanced or issued pursuant to, or evidenced by the
Guaranty, the Loan Agreement, this Agreement, or any of the other Loan
Documents, irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, voluntary or
involuntary, whether now existing or hereafter arising, and including all
interest, costs, indemnities, fees (including attorneys fees), and expenses
(including interest, costs, indemnities, fees, and expenses that, but for
the provisions of the Bankruptcy Code, would have accrued irrespective of
whether a claim therefor is allowed) and any and all other amounts which
such Pledgor is required to pay pursuant to any of the foregoing, by law,
or otherwise.
"SECURITIES ACT" has the meaning set forth in SECTION 9(c) of
this Agreement.
(b) CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the terms "include" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The
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EXECUTION VERSION
words "hereof," "herein," "hereby," "hereunder," and other similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Section, subsection, clause, schedule and exhibit references
herein are to this Agreement unless otherwise specified. All of the exhibits or
schedules attached to this Agreement shall be deemed incorporated herein by
reference. Any reference in this Agreement to any of the following documents
includes any and all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
thereto or thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth therein): the
Loan Agreement; this Agreement; the Guaranty; and the other Loan Documents.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against Lender, any Bank Product Provider, or any Pledgor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each Pledgor, Lender, and the Bank Product
Providers, and their respective counsel, and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of Lender, any Bank Product Provider and each
Pledgor. Any reference herein to the payment in full of the Secured Obligations
shall mean the payment in full in cash of all Secured Obligations other than
contingent indemnification Secured Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and are not required to be repaid or cash
collateralized pursuant to the provisions of the Loan Agreement and the
termination of all Commitments of Lender under the Loan Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. In the event of any direct conflict between the
express terms and provisions of this Agreement and of the Loan Agreement, the
terms and provisions of the Loan Agreement shall control; provided, however,
that the inclusion herein of additional obligations on the part of any Pledgor
and supplemental rights and remedies in favor of Lender, in each case with
respect to the Pledged Collateral, shall not be deemed a conflict with the Loan
Agreement.
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EXECUTION VERSION
2. PLEDGE. Each Pledgor hereby pledges, grants, transfers, and assigns to
Lender, for the benefit of Lender and the Bank Products Providers, a security
interest in all of such Pledgor's right, title, and interest in and to the
Pledged Collateral in order to secure prompt repayment of any and all of the
Secured Obligations in accordance with the terms and conditions of the Loan
Documents to which such Pledgor is a party, and in order to secure prompt
performance by such Pledgor of such Pledgor's covenants and duties under each
Loan Document to which such Pledgor is a party. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, no Pledgor has any authority, express or implied, to
dispose of any item or portion of the Pledged Collateral.
3. DELIVERY AND REGISTRATION OF PLEDGED COLLATERAL.
(a) All certificates or instruments representing or evidencing the
Pledged Collateral shall be promptly delivered by each Pledgor to Lender or
Lender's designee pursuant hereto at a location designated by Lender and shall
be held by or on behalf of Lender pursuant hereto, and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance reasonably
satisfactory to Lender.
(b) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right, at any time in its discretion and without
notice to any Pledgor, to transfer to or to register on the books of the Issuers
(or of any other Person maintaining records with respect to the Pledged
Collateral) in the name of Lender or any of its nominees any or all of the
Pledged Collateral. In addition, Lender shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
(c) If, at any time and from time to time, any Pledged Collateral
(including any certificate or instrument representing or evidencing any Pledged
Collateral) is in the possession of a Person other than Lender or a Pledgor (a
"HOLDER") other than as the result of an action taken by Lender, then the
applicable Pledgor shall promptly, at Lender's option, either cause such Pledged
Collateral to be delivered into Lender's possession, or execute and deliver to
such Holder a written notification/instruction, and take all other steps
necessary to perfect the security interest of Lender in such Pledged Collateral,
including obtaining from such Holder a written acknowledgment that such Holder
holds such Pledged Collateral for Lender, all pursuant to the Code or other
applicable law governing the perfection of Lender's security interest in the
Pledged Collateral in the possession of such Holder. Each such
notification/instruction and acknowledgment shall be in form and substance
reasonably satisfactory to Lender.
(d) Any and all Pledged Collateral (including dividends, interest, and
other cash distributions) at any time received or held by any Pledgor shall be
so received or held in
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EXECUTION VERSION
trust for Lender, shall be segregated from other funds and property of such
Pledgor and shall be forthwith delivered to Lender in the same form as so
received or held, with any necessary endorsements; PROVIDED that cash dividends
or distributions received by any Pledgor, if and to the extent they are not
prohibited by the Loan Agreement, may be retained by such Pledgor in accordance
with SECTION 4 and used in the ordinary course of such Pledgor's business.
(e) If at any time and from time to time any Pledged Collateral
consists of an uncertificated security or a security in book entry form, then
the applicable Pledgor shall promptly cause such Pledged Collateral to be
registered or entered, as the case may be, in the name of Lender, or otherwise
cause the security interest held by Lender to be perfected in accordance with
applicable law.
4. VOTING RIGHTS AND DIVIDENDS.
(a) So long as (i) no Event of Default shall have occurred and be
continuing, or (ii) if an Event of Default has occurred and is continuing, no
Pledgor shall have received the written notice from Lender described below in
SECTION 4(b), each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral applicable to it or
any part thereof for any purpose not inconsistent with the terms of the Loan
Documents.
(b) Upon the occurrence and during the continuance of an Event of
Default, at the election of Lender in its Permitted Discretion, upon the receipt
by a Pledgor of written notice of such election by Lender, all rights of such
Pledgor to exercise the voting and other consensual rights or receive and retain
cash dividends or distributions that it would otherwise be entitled to exercise
or receive and retain, as applicable pursuant to SECTION 4(a), shall cease, and
all such rights shall thereupon become vested in Lender, who shall thereupon
have the sole right to exercise such voting or other consensual rights and to
receive and retain such cash dividends and distributions subject to the terms of
the Loan Agreement. Upon the receipt of such written notice, such Pledgor shall
execute and deliver (or cause to be executed and delivered) to Lender all such
proxies and other instruments as Lender may reasonably request for the purpose
of enabling Lender to exercise the voting and other rights which it is entitled
to exercise and to receive the dividends and distributions that it is entitled
to receive and retain pursuant to the preceding sentence. Following the waiver
or cure of any such Event of Default, Lender shall, upon the reasonable request
and at the expense of Pledgor, execute and deliver to Pledgor such agreements or
instruments as Pledgor may reasonably request, to terminate such proxies and
other instruments.
5. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents, warrants,
and covenants to Lender as follows:
(a) Such Pledgor has taken all steps it deems necessary or appropriate
to be informed on a continuing basis of changes or potential changes affecting
the Pledged
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EXECUTION VERSION
Collateral (including rights of conversion and exchange, rights to subscribe,
payment of dividends, reorganizations or recapitalization, tender offers and
voting rights), and such Pledgor agrees that neither Lender nor any Bank Product
Provider shall have any responsibility or liability for informing such Pledgor
of any such changes or potential changes or for taking any action or omitting to
take any action with respect thereto;
(b) All information herein or hereafter supplied to Lender by or on
behalf of such Pledgor in writing with respect to the Pledged Collateral is, or
in the case of information hereafter supplied will be, true and correct in all
material respects;
(c) Such Pledgor is and will be the sole legal and beneficial owner of
the Pledged Collateral (including the Pledged Interests and all other Pledged
Collateral acquired by such Pledgor after the date hereof) free and clear of any
adverse claim, Lien, or other right, title, or interest of any party, other than
the Liens held by Lender for the benefit of Lender and the Bank Product
Providers and the Permitted Liens;
(d) This Agreement, the execution and delivery of the Loan Agreement
by Lender, and the delivery to Lender of the Pledged Interests representing
Pledged Collateral (or the delivery to all Holders of the Pledged Interests
representing Pledged Collateral of the notification/instruction referred to in
SECTION 3 of this Agreement), creates a valid, perfected, and first priority
security interest in one hundred percent (100%) of the Pledged Interests which
are in certificated form in favor of Lender securing payment of the Secured
Obligations, and all actions necessary to achieve such perfection have been duly
taken;
(e) SCHEDULE A to this Agreement is true and correct and complete in
all material respects as of the date hereof; without limiting the generality of
the foregoing, as of the date hereof: (i) except as set forth in SCHEDULE A, all
the Pledged Interests are in certificated form, and, except to the extent
registered in the name of Lender or its nominee pursuant to the provisions of
this Agreement, are registered in the name of the applicable Pledgor; and (ii)
the Pledged Interests as to each of the Issuers constitute at least the
percentage of all the fully diluted issued and outstanding Equity Interests of
such Issuer as set forth in SCHEDULE A to this Agreement;
(f) The Pledged Interests that are interests in general partnerships,
limited partnerships or limited liability companies (i) are not dealt in or
traded on securities exchanges or in securities markets, (ii) do not have terms
expressly providing that they are securities governed by Article 8 of the Code,
and (iii) are not investment company securities, and are not, therefore,
"securities" governed by Article 8 of the Code;
(g) There are no presently existing Future Rights or Proceeds owned by
any Pledgor as of the date hereof;
(h) The Pledged Interests have been duly authorized and validly issued
and are fully paid and nonassessable;
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(i) Neither the pledge of the Pledged Collateral pursuant to this
Agreement nor the extensions of credit represented by the Secured Obligations
violates Regulation T, U or X of the Board of Governors of the Federal Reserve
System; and
(j) Each direct Subsidiary of each Pledgor is an Issuer of Pledged
Interests that have been pledged hereunder.
6. FURTHER ASSURANCES.
(a) Each Pledgor agrees that from time to time, at the expense of such
Pledgor, it will promptly execute and deliver all further instruments and
documents, and take all further action that may be necessary or reasonably
desirable, or that Lender, on behalf of Lender and the Bank Product Providers,
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Lender, on behalf of Lender and the
Bank Product Providers, to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, each Pledgor will: (i) at the request of Lender,
mark conspicuously each of its records pertaining to the Pledged Collateral with
a legend, in form and substance reasonably satisfactory to Lender, indicating
that such Pledged Collateral is subject to the security interest granted hereby;
(ii) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
reasonably desirable, or as Lender may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby;
(iii) allow inspection of the Pledged Collateral by Lender or Persons designated
by Lender, from time to time hereafter during normal business hours, or at any
time following the occurrence and during the continuance of a Default or an
Event of Default; and (iv) appear in and defend any action or proceeding that
may affect such Pledgor's title to or Lender's security interest in the Pledged
Collateral.
(b) Each Pledgor hereby authorizes Lender, on behalf of Lender and the
Bank Product Providers, to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of such Pledgor where permitted by law. A
carbon, photographic, or other reproduction of this Agreement or any financing
statement covering the Pledged Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) Each Pledgor will furnish to Lender, upon the request of Lender:
(i) a certificate executed by an authorized officer of such Pledgor, and dated
as of the date of delivery to Lender, itemizing in such detail as Lender may
request, the Pledged Collateral which, as of the date of such certificate, has
been delivered to Lender by such Pledgor pursuant to the provisions of this
Agreement; and (ii) such statements and schedules further identifying and
describing the Pledged Collateral and such other reports in connection with the
Pledged Collateral as Lender may request.
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EXECUTION VERSION
7. COVENANTS OF PLEDGOR. Each Pledgor shall:
(a) Perform each and every covenant in the Loan Documents applicable
to such Pledgor;
(b) At all times keep at least one complete set of its records
concerning substantially all of the Pledged Collateral at its Chief Executive
Office as set forth in SCHEDULE B hereto, and not change the location of its
Chief Executive Office or such records without giving Lender at least fifteen
(15) days prior written notice thereof;
(c) To the extent it may lawfully do so, use its best efforts to
prevent the Issuers from issuing Future Rights or Proceeds, except for cash
dividends and any other distributions, if any, that are not prohibited by the
terms of the Loan Agreement to be paid or otherwise distributed by any Issuer;
(d) Upon receipt by such Pledgor of any material notice, report, or
other communication from any of the Issuers or any Holder relating to all or any
part of the Pledged Collateral, deliver such notice, report or other
communication to Lender promptly, but in no event later than five (5) days
following the receipt thereof by such Pledgor.
(e) Not permit any of the Issuers to: (i) authorize the amendment of
or amend the Governing Documents of such Issuer that is a general partnership,
limited partnership or limited liability company to provide that the Stock of
such Issuer is governed by Article 8 of the Code, or (ii) authorize the issuance
of or issue certificates evidencing the Stock of such Issuer that is a general
partnership, limited partnership or limited liability company without the prior
written consent of Lender (such consent not to be unreasonably withheld).
8. LENDER AS EACH PLEDGOR'S ATTORNEY-IN-FACT.
(a) Each Pledgor hereby irrevocably appoints Lender, on behalf of
Lender and the Bank Product Providers, as such Pledgor's attorney-in-fact, with
full authority in the place and stead of such Pledgor and in the name of such
Pledgor, Lender or otherwise, from time to time at Lender's discretion, to take
any action and to execute any instrument that Lender, on behalf of Lender and
the Bank Product Providers, may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including: (i) upon the occurrence
and during the continuance of an Event of Default, to receive, endorse, and
collect all instruments made payable to such Pledgor representing any dividend,
interest payment or other distribution in respect of the Pledged Collateral or
any part thereof to the extent permitted hereunder and to give full discharge
for the same and to execute and file governmental notifications and reporting
forms; (ii) to issue any notifications/instructions Lender deems necessary
pursuant to SECTION 3 of this Agreement; or (iii) to arrange for the transfer of
the Pledged Collateral on the books of any of the Issuers or any other Person to
the name of Lender or to the name of Lender's nominee.
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(b) In addition to the designation of Lender as each Pledgor's
attorney-in-fact in SUBSECTION (a), each Pledgor hereby irrevocably appoints
Lender, on behalf of Lender and the Bank Product Providers, as such Pledgor's
agent and attorney-in-fact with power to, if such Pledgor refuses to, or fails
timely to, make, execute and deliver any and all documents and writings which
may be necessary or appropriate for approval of, or be required by, any
regulatory authority located in any city, county, state or country where such
Pledgor or any of the Issuers engage in business, in order to transfer or to
more effectively transfer any of the Pledged Interests or otherwise enforce the
rights granted hereunder to Lender, and the Bank Product Providers, or Lender
for the benefit thereof.
9. REMEDIES UPON DEFAULT. Upon the occurrence and during the continuance
of an Event of Default:
(a) Lender, on behalf of Lender and the Bank Product Providers, may
exercise in respect of the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Code (irrespective of whether
the Code applies to the affected items of Pledged Collateral), and Lender, on
behalf of Lender and the Bank Product Providers, may also without notice (except
as specified below) sell the Pledged Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's board or at
any of Lender's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Lender may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Pledged Collateral. To the maximum
extent permitted by applicable law, Lender may be the purchaser of any or all of
the Pledged Collateral at any such sale and shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any
portion of the Pledged Collateral sold at any such public sale, to use and apply
all or any part of the Secured Obligations as a credit on account of the
purchase price of any Pledged Collateral payable at such sale. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and each Pledgor hereby waives (to the extent
permitted by law) all rights of redemption, stay, or appraisal that it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) calendar days notice to such
Pledgor of the time and place of any public sale or the time after which a
private sale is to be made shall constitute reasonable notification. Lender
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. Lender may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. To the maximum extent permitted by law, each Pledgor hereby waives
any claims against Lender arising because the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale, even if Lender accepts the first
offer received and does not offer such Pledged Collateral to more than one
offeree.
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EXECUTION VERSION
(b) Each Pledgor hereby agrees that any sale or other disposition of
the Pledged Collateral conducted in conformity with reasonable commercial
practices of banks, insurance companies, or other financial institutions in the
State of New York in disposing of property similar to the Pledged Collateral in
a transaction of a similar type shall be deemed to be commercially reasonable.
(c) Each Pledgor hereby acknowledges that the sale by Lender of any
Pledged Collateral pursuant to the terms hereof in compliance with the
Securities Act of 1933 as now in effect or as hereafter amended, or any similar
statute hereafter adopted with similar purpose or effect (the "SECURITIES ACT"),
as well as applicable "Blue Sky" or other state securities laws may require
strict limitations as to the manner in which Lender or any subsequent transferee
of the Pledged Collateral may dispose thereof. Each Pledgor acknowledges and
agrees that in order to protect Lender's interest it may be necessary to sell
the Pledged Collateral at a price less than the maximum price attainable if a
sale were delayed or were made in another manner, such as a public offering
under the Securities Act. No Pledgor has any objection to sale in such a manner
and agrees that Lender shall have no obligation to obtain the maximum possible
price for the Pledged Collateral so long as the sale is conducted in a
commercially reasonable manner. Without limiting the generality of the
foregoing, each Pledgor agrees that, upon the occurrence and during the
continuation of an Event of Default, Lender may, subject to applicable law, from
time to time attempt to sell all or any part of the Pledged Collateral by a
private placement, restricting the bidders and prospective purchasers to those
who will represent and agree that they are purchasing for investment only and
not for distribution. In so doing, Lender may solicit offers to buy the Pledged
Collateral or any part thereof for cash, from a limited number of investors
deemed by Lender, in its reasonable judgment, to be institutional investors or
other responsible parties who might be interested in purchasing the Pledged
Collateral. If Lender shall solicit such offers and so long as the sale is
conducted in accordance with applicable law, then the acceptance by Lender of
one of the offers shall be deemed to be a commercially reasonable method of
disposition of the Pledged Collateral.
(d) If Lender shall determine to exercise its right to sell all or any
portion of the Pledged Collateral pursuant to this Section, each Pledgor agrees
that, upon request of Lender, such Pledgor will, at its own expense:
(i) use its best efforts to execute and deliver, and
cause the Issuers and the directors and officers thereof to execute and deliver,
all such instruments and documents, and to do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of Lender, advisable to
register such Pledged Collateral under the provisions of the Securities Act, and
to cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the related
prospectuses which, in the opinion of Lender, are necessary or advisable, all in
conformity
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EXECUTION VERSION
with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under the state securities laws or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Pledged Collateral, as
requested by Lender;
(iii) cause the Issuers to make available to their
respective security holders, as soon as practicable, an earnings statement which
will satisfy the provisions of Section 11(a) of the Securities Act;
(iv) execute and deliver, or cause the officers and
directors of the Issuers to execute and deliver, to any person, entity or
governmental authority as Lender may choose, any and all documents and writings
which, in Lender's reasonable judgment, may be necessary or appropriate for
approval, or be required by, any regulatory authority located in any city,
county, state or country where such Pledgor or the Issuers engage in business,
in order to transfer or to more effectively transfer the Pledged Interests or
otherwise enforce Lender's rights hereunder; and
(v) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law.
Each Pledgor acknowledges that there is no adequate remedy at law for failure by
it to comply with the provisions of this Section and that such failure would not
be adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(e) EACH PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY
LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE
TIME LENDER DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS
SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR
MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING
OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS
SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.
10. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, any cash held by Lender as Pledged
Collateral and all cash proceeds received by Lender in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral pursuant to the exercise by Lender of its remedies as a secured
creditor as provided in SECTION 9 shall be applied from time to time by Lender
as provided in the Loan Agreement.
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EXECUTION VERSION
11. DUTIES OF LENDER. The powers conferred on Lender hereunder are solely
to protect its interests in the Pledged Collateral and shall not impose on it
any duty to exercise such powers. Except as provided in Section 9-207 of the
Code, Lender shall have no duty with respect to the Pledged Collateral or any
responsibility for taking any necessary steps to preserve rights against any
Persons with respect to any Pledged Collateral.
12. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. EACH PLEDGOR AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT SUCH PARTY MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 12.
13. AMENDMENTS; ETC. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by Lender and
each Pledgor, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of Lender to exercise, and no delay in exercising any right under this
Agreement, any other Loan Document, or otherwise with respect to any of the
Secured Obligations, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement, any other Loan Document, or
otherwise with respect to any of the Secured Obligations preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided for in this Agreement or otherwise with respect to any of the Secured
Obligations are cumulative and not exclusive of any remedies provided by law.
14. NOTICES. All notices and other communications hereunder to Lender
shall be in writing and shall be mailed, sent or delivered in accordance with
the Loan Agreement and all notices and other communications hereunder to any
Debtor shall be in writing and shall be mailed, sent or delivered in care of
Borrower in accordance with the Loan Agreement.
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EXECUTION VERSION
15. CONTINUING SECURITY INTEREST. This Agreement shall create a continuing
security interest in the Pledged Collateral and shall: (i) remain in full force
and effect until the payment in full of the Secured Obligations (other than
contingent indemnification obligations), including the cash collateralization,
expiration, or cancellation of all Secured Obligations, if any, consisting of
letters of credit, and the full and final termination of any commitment to
extend any financial accommodations under the Loan Agreement; (ii) be binding
upon each Pledgor and its successors and assigns; and (iii) inure to the benefit
of Lender and its successors, transferees, and assigns, in each case other than
as expressly permitted pursuant to the terms of the Loan Documents. Upon the
payment in full of the Secured Obligations (other than contingent
indemnification obligations), including the cash collateralization, expiration,
or cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, the security interests
granted herein shall automatically terminate and all rights to the Pledged
Collateral shall revert to the applicable Pledgor. Upon any such termination,
Lender will, at the Pledgors' expense, execute and deliver to each Pledgor such
documents as such Pledgor shall reasonably request to evidence such termination.
Such documents shall be prepared by the Pledgors and shall be in form and
substance reasonably satisfactory to Lender.
16. SECURITY INTEREST ABSOLUTE. To the maximum extent permitted by law,
all rights of Lender, all security interests hereunder, and all obligations of
each Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Secured
Obligations or any other agreement or instrument relating thereto, including any
of the Loan Documents;
(b) any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any of the Loan Documents, or any
other agreement or instrument relating thereto;
(c) any exchange, release, or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty for all or any of the Secured Obligations; or
(d) any other circumstances that might otherwise constitute a
defense available to, or a discharge of, any Pledgor.
To the maximum extent permitted by law, each Pledgor hereby waives any right to
require Lender to: (A) proceed against or exhaust any security held from such
Pledgor; or (B) pursue any other remedy in Lender's power whatsoever.
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EXECUTION VERSION
17. HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
18. SEVERABILITY. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
19. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, or binding effect hereof.
20. WAIVER OF MARSHALING. Each Pledgor and Lender acknowledge and agree
that in exercising any rights under or with respect to the Pledged Collateral
Lender: (i) is under no obligation to marshal any Pledged Collateral; (ii) may,
in its absolute discretion, realize upon the Pledged Collateral in any order and
in any manner it so elects; and (iii) may, in its absolute discretion, apply the
proceeds of any or all of the Pledged Collateral to the Secured Obligations in
any order and in any manner it so elects in accordance with the terms of the
Loan Documents. Each Pledgor and Lender waive any right to require the
marshaling of any of the Pledged Collateral.
21. WAIVER OF JURY TRIAL. EACH PLEDGOR AND LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PLEDGOR AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Signature page to follow.]
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EXECUTION VERSION
IN WITNESS WHEREOF, each Pledgor and Lender have caused this Agreement
to be duly executed and delivered as of the date first written above.
BORROWER:
MORTON'S RESTAURANT GROUP, INC.,
a Delaware corporation
By: /s/ Thomas J. Baldwin
-------------------------
Name: Thomas J. Baldwin
Title: Executive Vice President and
Chief Financial Officer
GUARANTORS:
PORTERHOUSE, INC., a Delaware corporation
MORTON'S OF CHICAGO, INC., an Illinois corporation
MORTON'S OF CHICAGO/ADDISON, INC., a Delaware corporation
MORTON'S OF CHICAGO/DALLAS, INC., an Illinois corporation
MORTON'S OF CHICAGO HOLDING, INC., a Delaware corporation
MORTON'S OF CHICAGO/HOUSTON, INC., a Delaware corporation
MORTON'S OF CHICAGO/ PITTSBURGH, INC., a Delaware corporation
MORTON'S OF CHICAGO/SAN ANTONIO, INC., a Delaware corporation
ITALIAN RESTAURANTS HOLDING CORP., a Delaware corporation
BERTOLINI'S RESTAURANTS, INC., a Delaware corporation
By: /s/ Thomas J. Baldwin
------------------------
Name: Thomas J. Baldwin
Title: Executive Vice President and Chief
FinancialOfficer of the above
corporations
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EXECUTION VERSION
WELLS FARGO FOOTHILL, INC.
By: /s/ Lisa Cooley
------------------
Name: Lisa C. Cooley
Title: Vice President