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EXHIBIT 4.9
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT") is dated as of
February 25, 1998, and is entered into by AMERICAN RESTAURANT GROUP, INC., a
Delaware corporation (the "COMPANY"), and each of the undersigned Subsidiaries
of the Company (the "SUBSIDIARY PLEDGORS"; the Company and the Subsidiary
Pledgors each individually referred to herein as a "PLEDGOR" and collectively as
"PLEDGORS"; provided that after the Closing Date, "Pledgors" shall be deemed to
include any new subsidiary of any Pledgor which executes an acknowledgment to
this Agreement pursuant to Section 7 hereof agreeing to be bound by the terms
hereof) in favor of U.S. TRUST COMPANY OF CALIFORNIA, N.A. ("U.S. Trust"), as
collateral agent for and representative of (in such capacity referred to herein
as "COLLATERAL AGENT") the Secured Parties (as hereinafter defined).
RECITALS
WHEREAS, pursuant to that certain Indenture dated as of
February 25, 1998 (as supplemented and otherwise amended from time to time, the
"Senior Note Indenture"), by and among the Company, the Subsidiary Pledgors, and
U.S. Trust as Trustee thereunder (in such capacity, the "Indenture Trustee"),
the Company will issue 11.50% Series A senior secured notes (and, in connection
with the Exchange Offer as defined in the Senior Note Indenture, the Series B
senior secured notes) due on or before 2003 in an aggregate principal amount of
up to $155,000,000 (collectively, the "Senior Notes") to the holders thereof
(the "Senior Note Holders");
WHEREAS, the Company, each of the Subsidiary Pledgors, the
lenders listed on the signature pages thereof and BankBoston, N.A., as agent
thereunder (the "Agent"), have entered into that certain Credit Agreement (as
defined in the Intercreditor Agreement referenced to below and together with any
loan documents referred to therein, the "New Credit Facility");
WHEREAS, pursuant to a guaranty included in the Senior Note
Indenture, the Subsidiary Pledgors have guaranteed the obligations of the
Company under the Senior Notes, the Senior Note Indenture and the other
documents to which the Company is a party;
WHEREAS, the Collateral Agent, the Senior Note Trustee and the
Agent have entered into that certain Intercreditor Agreement, dated as of the
date hereof (the "Intercreditor Agreement") providing for, among other things,
the appointment of the Collateral Agent to administer and enforce the Collateral
Documents and Collateral as provided therein;
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WHEREAS, it is a condition precedent to the Senior Note
Indenture and the New Credit Facility that Pledgors shall have entered into this
Agreement and granted the pledges provided herein;
WHEREAS, each Pledgor wishes to grant pledges and security
interests in favor of Collateral Agent for the benefit of the Indenture Trustee,
the Senior Note Holders, the Agent, the Lenders and the persons who may in the
future become secured parties in accordance with the terms of the Intercreditor
Agreement(all such beneficially interested parties being the "SECURED PARTIES");
and
WHEREAS, the rights and obligations of each of the Secured
Parties are further governed by and subject to the Intercreditor Agreement;
WHEREAS, each Pledgor is the legal and beneficial owner of (a)
the shares of capital stock listed opposite the name of such Pledgor in Part A
of Schedule I hereto (the "PLEDGED SHARES"), which shares constitute all of the
issued and outstanding shares of capital stock of the corporations named therein
and (b) the intercompany indebtedness listed opposite the name of such Pledgor
described in Part B of Schedule I issued by the obligors named therein
(collectively, the "INTERCOMPANY INDEBTEDNESS");
NOW, THEREFORE, in consideration of the premises set forth
herein and in order to induce the Senior Note Holders to purchase the Senior
Notes and to induce the Lenders to make loans and other extensions of credit
under the New Credit Facility, Pledgors hereby agree with the Collateral Agent
for the ratable benefit of the Secured Parties as follows:
SECTION 1. CERTAIN DEFINED TERMS. The following terms as used
herein shall have the following meanings:
"PLEDGED COLLATERAL" means collectively the Pledged Debt and
Pledged Equity.
"PLEDGED DEBT" means all of each Pledgor's rights to repayment
and other rights with respect to Indebtedness owed from time to time to
such Pledgor by the Company or any direct or indirect Subsidiary of the
Company including, without limitation, the Intercompany Indebtedness
issued to any Pledgor following the date hereof and any other
instruments evidencing such Indebtedness, all rights with respect to
collateral pledged to secure such Indebtedness and, all instruments,
interest, cash and other property and proceeds from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Indebtedness and all Proceeds thereof.
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"PLEDGED EQUITY" means:
(a) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of any Pledgor in Security Entitlements
(within the meaning of Article 8 of the Uniform Commercial Code), the
entries on the books of any securities intermediary pertaining to the
Pledged Shares, and all dividends, cash, 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
the Pledged Shares;
(b) all additional shares of, and all securities convertible
into and warrants, options and other rights to purchase, stock of any
issuer of the Pledged Shares from time to time acquired by any Pledgor
in any manner (which shares shall be deemed to be part of the Pledged
Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and
any interest of any Pledgor in the entries on the books of any
financial intermediary pertaining to such additional shares, and all
dividends, cash, 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
additional shares, securities, warrants, options or other rights;
(c) all shares of, and all securities convertible into and
warrants, options and other rights to purchase, stock of any Person
that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct Subsidiary of any Pledgor (which shares shall be
deemed to be part of the Pledged Shares) and the certificates or other
instruments representing such shares, securities, warrants, options or
other rights and any interest of any Pledgor in the entries on the
books of any financial intermediary pertaining to such shares, and,
subject to Section 8, all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such shares, securities, warrants, options or other
rights; and
(d) to the extent not covered above, all Proceeds thereof.
"PROCEEDS" shall have the meaning assigned that term under the
Uniform Commercial Code (the "CODE") as in effect in any relevant
jurisdiction or under relevant law and, in any event, shall include,
but not be limited to, any and all (i) proceeds of any indemnity or
guaranty payable to any Pledgor or any Secured Party from time to time
with respect to any of the Pledged Collateral and (ii) any other
amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral or otherwise receivable or received when
the Pledged Collateral is or proceeds are sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or
involuntary.
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SECTION 2. PLEDGE OF SECURITY. Each Pledgor hereby pledges to
Collateral Agent and grants to Collateral Agent, for its benefit and for the
ratable benefit of the Secured Parties, a first priority security interest in
the Pledged Equity and Pledged Debt.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment and
performance in full when due, whether at stated maturity, by acceleration or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. Section 362(a), or any successor provision thereto), of all Secured
Obligations to the extent and as provided in Section 2 hereof, whether now
existing or hereafter arising, voluntary or involuntary, whether or not jointly
owed with others, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or extinguished and
later increased, created or incurred and all or any portion of such obligations
that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from the Collateral Agent or Secured Parties as
a preference, fraudulent transfer or otherwise (all such obligations being the
"UNDERLYING DEBT"), and all obligations or liabilities of every nature of
Pledgors now or hereafter existing under this Agreement (all such obligations of
Pledgors, together with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or, as applicable, shall be accompanied
by the applicable Pledgor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Collateral Agent. If an Event of Default shall have occurred and
be continuing, Collateral Agent shall have the right, at any time in its
discretion and without notice to any Pledgor, to transfer to or to register in
the name of Collateral Agent or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 8(a)
hereof. In addition, Collateral Agent 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.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Pledgor
represents and warrants as follows:
(a) Pledged Equity and Pledged Debt. All of the Pledged Shares
pledged by such Pledgor have been duly authorized and validly issued and are
fully paid and nonassessable. All of the Pledged Debt pledged by such Pledgor
has been duly authorized, authenticated or issued and delivered, and is the
legal, valid and binding obligation of the issuers thereof (except as may be
limited by bankruptcy, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally or by general principles of equity
relating to enforceability), and is not in default. The Pledged Shares
constitute all of the issued and outstanding shares of each issuer thereof and
there are no outstanding options, warrants, rights to subscribe, stock purchase
rights or other agreements outstanding with
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respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Shares. The Pledged Debt
constitutes all of the issued and outstanding Intercompany Indebtedness owing to
such Pledgor by the Company or any direct or indirect Subsidiary of the Company.
(b) Ownership of Pledged Collateral. Such Pledgor is the
legal, record and beneficial owner of the Pledged Collateral pledged by such
Pledgor free and clear of any Lien except for the security interest created by
this Agreement.
(c) Consents. No consent of any other party (including,
without limitation, stockholders or creditors of such Pledgor or any Person
under any contractual obligation of such Pledgor) and no consent, authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge by such
Pledgor of the Pledged Collateral pledged by such Pledgor pursuant to this
Agreement and the grant by such Pledgor of the security interest granted hereby
or for the execution, delivery or performance of this Agreement by such Pledgor
or (ii) for the exercise by Collateral Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except (x) those which have been obtained
or made (y) as may be required in connection with a disposition of Pledged
Collateral by laws affecting the offering and sale of securities generally).
(d) Perfection. The pledge and delivery to Collateral Agent of
the Pledged Collateral pursuant to this Agreement creates a valid and perfected
security interest of Collateral Agent, on behalf of the Secured Parties, in the
Pledged Collateral of such Pledgor, securing the payment of the Secured
Obligations, with the priority set forth herein, and all actions necessary or
desirable to perfect and protect such security interest have been duly taken.
(e) Regulations G, T, U and X. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System.
SECTION 6. CERTAIN COVENANTS. Each Pledgor hereby covenants
that, until the Secured Obligations have been indefeasibly paid in full, such
Pledgor will:
(a) not, (i) except as permitted by each of the agreements
governing the Underlying Debt from time to time in effect (including without
limitation the Senior Note Indenture and the New Credit Facility), sell, assign
(by operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral pledged hereunder by such
Pledgor, (ii) create or permit to exist any Lien upon or with respect to any of
Pledged Collateral, except for the security interest under this Agreement or
(iii) permit, except as permitted by each of the agreements governing the
Underlying Debt from time to time in effect (including without limitation the
Senior Note Indenture and the New Credit Facility), any issuer of Pledged Shares
to merge or consolidate with any Person;
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provided, however, that in the event any Pledged Collateral is sold, transferred
or otherwise disposed of in any transaction permitted by each of the Senior Note
Indenture and the New Credit Facility (as long as all such agreements are in
effect, otherwise by whichever agreements remain in effect), such Pledged
Collateral shall, concurrently therewith, be automatically released from the
lien and security interest under this Agreement and the Collateral Agent shall,
at such Pledgor's expense, execute and deliver to such Pledgor such documents as
the Pledgor shall reasonably request to evidence such release; provided that
arrangements satisfactory to the Collateral Agent have been made for delivery to
it of the amounts, if any, required to be paid to the Secured Parties out of the
net proceeds of such disposition;
(b) (i) cause each issuer of Pledged Shares not to issue any
stock or other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to such Pledgor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock or other securities of each issuer of Pledged Shares,
and (iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock of any Person which, after the
date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of such Pledgor;
(c) (i) pledge hereunder, immediately upon their issuance, any
and all instruments or other evidences of additional indebtedness from time to
time owed (directly or indirectly) to such Pledgor by any direct or indirect
Subsidiary of the Company, and (ii) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of indebtedness from time
to time owed (directly or indirectly) to such Pledgor by any Person that after
the date of this Agreement becomes, as a result of any occurrence, a direct or
indirect Subsidiary of such Pledgor; and
(d) promptly deliver to Collateral Agent all written notices
received by it with respect to the Pledged Collateral.
SECTION 7. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Each Pledgor agrees that at any time and from time to
time, at the expense of Pledgors, Pledgors shall promptly execute and deliver
all further instruments and documents, and take all further actions, that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
(b) Each Pledgor further agrees that it will, upon obtaining
any additional shares of stock or other securities required to be pledged
hereunder as provided in Section 6(b) or (c) hereof, promptly (and in any event
within five Business Days) deliver to Collateral Agent a Pledge Amendment, duly
executed by such Pledgor, in substantially the form of Schedule II hereto (a
"PLEDGE AMENDMENT"), in respect of the additional Pledged Shares or Pledged Debt
to be pledged pursuant to this Agreement. Each Pledgor hereby
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authorizes Secured Party to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares or Pledged Debt listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral.
(c) Each Pledgor further agrees that it will cause any direct
or indirect Subsidiary acquired or created after the Closing Date promptly after
such acquisition or creation of such new Subsidiary (in any event within five
(5) Business Days after the date such acquisition or creation, as the case may
be) to deliver to Collateral Agent an acknowledgment duly executed by such new
Subsidiary in substantially the form of Schedule III hereto (a "PLEDGE
ACKNOWLEDGMENT").
SECTION 8. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default (as defined below) shall
have occurred and be continuing:
(i) Pledgors shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of any of
the agreements governing the Underlying Debt secured hereby from time
to time in effect (including without limitation the Senior Note
Indenture and the New Credit Facility). It is understood, however, that
neither (A) the voting by Pledgors of any Pledged Shares for or
Pledgors' consent to the election of directors at a regularly scheduled
annual or other meeting of stockholders or with respect to incidental
matters at any such meeting nor (B) Pledgors' consent to or approval of
any action otherwise permitted under each of the agreements governing
the Underlying Debt secured hereby from time to time in effect
(including without limitation the Senior Note Indenture and the New
Credit Facility) shall be deemed inconsistent with the terms of any of
the agreements governing the Underlying Debt secured hereby from time
to time in effect (including without limitation and the Senior Note
Indenture and the New Credit Facility) within the meaning of this
Section 8(a)(i), and no notice of any such voting or consent need be
given to Collateral Agent.
(ii) Pledgors shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all
dividends and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
(other than cash) received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Pledged Collateral in connection
with a partial or total liquidation or dissolution (except any
distribution upon liquidation to another
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Pledgor to the extent permitted under each of the agreements
governing the Underlying Debt secured hereby from time to time
in effect (including without limitation the Senior Note
Indenture and the New Credit Facility)), or in connection with
a reduction of capital, capital surplus or paid-in-surplus,
and
(C) cash paid, payable or otherwise distributed in
respect of principal or in redemption of or in exchange for
any Pledged Collateral,
shall be, and shall forthwith be delivered to Collateral Agent to hold
as, Pledged Collateral and shall, if received by any Pledgor, be
received in trust for the benefit of Collateral Agent, be segregated
from the other property or funds of such Pledgor and be forthwith
delivered to Collateral Agent as Pledged Collateral in the same form as
so received (with all necessary endorsements).
(iii) Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to appropriate Pledgor all such
proxies, dividend payment orders and other instruments as such Pledgor
may from time to time reasonably request for the purpose of enabling
such Pledgor to exercise the voting and other consensual rights which
it is entitled to exercise pursuant to paragraph (i) above and to
receive the dividends, principal or interest payments which it is
authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) Upon written notice from Collateral Agent to the Company,
all rights of Pledgors to exercise the voting and other consensual
rights which they would otherwise be entitled to exercise pursuant to
Section 8(a)(i) shall cease, and all such rights shall thereupon become
vested in Collateral Agent who shall thereupon have the right to
exercise such voting and other consensual rights.
(ii) All rights of Pledgors to receive the dividends and
interest payments which they would otherwise be authorized to receive
and retain pursuant to Section 8(a)(ii) shall cease, and all such
rights shall thereupon become vested in Collateral Agent who shall
thereupon have the right to receive and hold as Pledged Collateral such
dividends and interest payments which shall, upon written notice from
Collateral Agent, be paid to Collateral Agent.
(iii) All dividends, principal and interest payments which are
received by any Pledgor contrary to the provisions of paragraph (ii) of
this Section 8(b) shall be received in trust for the benefit of
Collateral Agent, shall be segregated from other funds of such Pledgor
and shall forthwith be paid over to Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsements).
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(c) In order to permit Collateral Agent to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant to
Section 8(b)(i) hereof and to receive all dividends and other distributions
which it may be entitled to receive under Section 8(a)(ii) hereof or Section
8(b)(ii) hereof, Pledgors shall promptly execute and deliver (or cause to be
executed and delivered) to Collateral Agent all such proxies, dividend payment
orders and other instruments as Collateral Agent may from time to time
reasonably request.
SECTION 9. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each
Pledgor hereby irrevocably appoints Collateral Agent 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 or otherwise, from time to time in Collateral
Agent's reasonable discretion to take any action and to execute any instrument,
including but not limited to financing and continuation statements, which
Collateral Agent may deem necessary or advisable, subject to the terms and
conditions of this Agreement, to accomplish the purposes of this Agreement,
including, without limitation, (a) to receive, endorse and collect all
instruments made payable to such Pledgor representing any dividend, principal or
interest payment or other distribution in respect of the Pledged Collateral or
any part thereof and to give full discharge for the same, and (b) if an Event of
Default shall have occurred and be continuing, to ask, demand, collect, ▇▇▇ for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Pledged Collateral, and to file
any claims or take any action or institute any proceedings which Collateral
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or to enforce the rights of Collateral Agent with respect to any of
the Pledged Collateral.
SECTION 10. COLLATERAL AGENT MAY PERFORM. If any Pledgor fails
to perform any agreement contained herein, Collateral Agent may, upon thirty
days' notice to the Pledgors (unless otherwise expressly set forth in this
Agreement or an Event of Default shall have occurred and be continuing, in which
case, no notice shall be required) itself perform, or cause performance of, such
agreement, and the expenses of Collateral Agent incurred in connection therewith
shall be payable by Pledgors under Section 16(b) hereof.
SECTION 11. STANDARD OF CARE. The powers conferred on
Collateral Agent hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose on it any duty to exercise such powers.
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equivalent to that which
Collateral Agent accords its own property consisting of negotiable securities,
it being understood that Collateral Agent shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not any Secured Party has or is deemed to have knowledge of such matters, (b)
taking any necessary steps (other than steps taken in accordance with the
standard of care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any parties with respect to any Pledged
Collateral, (c) taking any necessary steps to collect or realize upon the
Secured Obligations or any
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guarantee therefor, or any part thereof, or any of the Pledged Collateral or (d)
initiating any action to protect the Pledged Collateral against the possibility
of a decline in market value.
SECTION 12. EVENTS OF DEFAULT. The occurrence of any "EVENT OF
DEFAULT" as defined in any of the agreements governing the Underlying Debt
secured hereby from time to time in effect (including without limitation the
Senior Note Indenture and the New Credit Facility) shall constitute an Event of
Default under this Agreement.
SECTION 13. REMEDIES UPON DEFAULT.
(a) Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(i) Collateral Agent 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 as in effect in the State of
New York (or any other state with jurisdiction over the Pledged
Collateral) at that time, and Collateral Agent may also in its sole
discretion, 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
Collateral Agent'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 Collateral Agent may deem commercially
reasonable, irrespective of the impact of any such sales on the market
price of the Pledged Collateral. Collateral Agent 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 any of the Secured
Obligations as a credit on account of the purchase price of any Pledged
Collateral payable by Collateral Agent 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
and/or appraisal which it now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.
Pledgors agree that, to the extent notice of sale shall be required by
law, at least ten days' notice to Pledgors of the time and place of any
public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Collateral Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice
of sale having been given. Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Pledgor hereby
waives any claims against Collateral Agent arising by reason of the
fact that the price at which any Pledged Collateral may have been sold
at such a private sale was less than the price which might have been
obtained at a public sale, even if Collateral Agent accepts the first
offer received and does not offer such Pledged Collateral to more
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than one offeree. If the proceeds of any sale or other disposition of
the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgors shall be liable for the deficiency and the fees
of any attorneys employed by Collateral Agent to collect such
deficiency.
(ii) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to
time amended (the "SECURITIES ACT"), and applicable state securities
laws, Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral conducted without prior
registration or qualification of such Pledged Collateral under the
Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged
Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Each Pledgor acknowledges that any
such private sales may be at prices and on terms less favorable to
Collateral Agent than those obtainable through a public sale without
such restrictions (including, without limitation, a public offering
made pursuant to a registration statement under the Securities Act)
and, notwithstanding such circumstances, each Pledgor agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner and that Collateral Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any
Pledged Collateral for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so
register it.
(iii) If Collateral Agent determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request,
Pledgors shall and shall cause each issuer of any Pledged Shares to be
sold hereunder from time to time to furnish to Collateral Agent all
such information as Collateral Agent may request in order to determine
the number of shares and other instruments included in the Pledged
Collateral which may be sold by Collateral Agent in exempt transactions
under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
(b) Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Agreement to the contrary, as provided in the
Intercreditor Agreement, the Collateral Agent shall exercise, or shall refrain
from exercising any remedy provided in Section 8(b)(i) and Section 13(a) hereof
in accordance with the instructions of the Requisite Party (as defined in the
Intercreditor Agreement) and the Secured Parties shall be bound by such
instructions; and sole rights of the Secured Parties under this Agreement shall
be to be secured by the Pledged Collateral as provided herein and to receive the
payments provided for in Section 14 hereof.
SECTION 14. APPLICATION OF PROCEEDS. All Proceeds received by
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or
11
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any part of the Pledged Collateral may, in the discretion of Collateral Agent,
be held by Collateral Agent as Pledged Collateral for, and/or then or at any
time thereafter applied in whole or in part by Collateral Agent against the
Secured Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, and all expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith and all amounts for
which the Collateral Agent is entitled to indemnification hereunder and all
advances made by the Collateral Agent hereunder for the account of Pledgors or
for the payment of all costs and expenses paid or incurred by the Collateral
Agent in connection with the exercise of any right or remedy hereunder, all in
accordance with Section 16 hereof;
SECOND: With respect to Proceeds received in respect of the
Pledged Collateral and Proceeds thereof, to the payment in full of all Secured
Obligations in accordance with Section 4 of the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Pledgors, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 15. COLLATERAL AGENT. Collateral Agent has been
appointed as Collateral Agent hereunder pursuant to the Intercreditor Agreement.
Collateral Agent shall be obligated and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking any action (including, without limitation, the
release or substitution of Collateral) solely in accordance with the
Intercreditor Agreement. Collateral Agent may resign and a successor Collateral
Agent may be appointed in the manner provided for resignation and appointment of
a successor in the Intercreditor Agreement. Upon the acceptance of any
appointment as a Collateral Agent by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent under
this Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement and shall deliver any
Collateral in its possession to the successor Collateral Agent. After any
retiring Collateral Agent's resignation, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was Collateral Agent.
SECTION 16. INDEMNITY AND EXPENSES.
(a) Pledgors jointly and severally agree to indemnify
Collateral Agent, each Secured Party and each of the officers, directors,
agents, employees and affiliates of each of them (each an "INDEMNITEE"), from
and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this Agree-
12
13
ment), except claims, losses or liabilities resulting from the gross negligence
or willful misconduct of the Indemnitee seeking indemnification.
(b) Pledgors will upon demand pay to Collateral Agent the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Collateral Agent hereunder or (iv) the
failure by any Pledgor to perform or observe any of the provisions hereof.
SECTION 17. WAIVERS OF PLEDGORS.
(a) Each Pledgor hereby waives any right to require Collateral
Agent to: (i) proceed against the Company, any guarantor of any of the Secured
Obligations or any other person or entity; (ii) proceed against or exhaust any
other security held from any other person or entity; (iii) give notice to any
Pledgor of the terms, time and place of any public or private sale of the
Pledged Collateral or any other security, or otherwise comply with Section 9504
of the Code; (iv) pursue any other remedy in Collateral Agent's power; or (v)
except as otherwise expressly provided herein, make or give any presentments,
demands for performance, notices of nonperformance, protests, notices of protest
or notices of dishonor in connection with any obligations or evidences of
indebtedness which constitute in whole or in part the Secured Obligations or in
connection with the creation of new or additional Secured Obligations;
(b) Each Pledgor waives any defense arising by reason of: (i)
any disability or other defense of the Company, any other Pledgor or any other
entity, including, without limitation, any defense based on or arising out of
the unenforceability of any of the Secured Obligations, legal or equitable
discharge of the Secured Obligations or this Agreement or any statute of
limitations affecting such Pledgor's liability hereunder or the Company's
liability under the Senior Note Indenture or the enforcement hereof or thereof;
(ii) the cessation from any cause whatsoever, other than payment in full, of the
Secured Obligations or the release or substitution of any sureties or guarantors
of the Secured Obligations; (iii) any act or omission by Collateral Agent which
directly or indirectly results in or aids the discharge of any Pledgor or any of
the Secured Obligations by operation of law or otherwise; (iv) the release of
any other collateral securing the Secured Obligations or the failure by
Collateral Agent to perfect or maintain the perfection of any such other
collateral; (v) any modification of the Secured Obligations, in any form
whatsoever, including, but not limited to the renewal, extension, acceleration
or other change in the time for payment of the Secured Obligations, and any
change in the terms of the Secured Obligations, including, but not limited to,
any increase or decrease of the rate of interest on the Secured Obligations; and
(vi) any law limiting the liability of or exonerating guarantors or sureties;
and
(c) until all the Secured Obligations shall have been paid in
full, and all commitments to lend under the New Credit Facility shall have been
terminated and all letters
13
14
of credit issued, extended or renewed thereunder shall have been cancelled or
rescinded, each Pledgor waives any right to enforce any remedy which Collateral
Agent now has or may hereafter have against any person or entity guaranteeing or
securing the Secured Obligations, and waives any benefit of, or any right to
participate in any security whatsoever now or hereafter held by Collateral Agent
for the Secured Obligations.
SECTION 18. CONTINUING SECURITY INTEREST; TRANSFER OF
INDEBTEDNESS. This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (a) remain in full force and effect until
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments to extend credit under the New Credit Facility,
the cancellation or expiration of all outstanding letters of credit, (b) be
binding upon each Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and each Secured Party and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), subject to the provisions of the Senior Note Indenture and the New Credit
Facility, each Secured Party may assign or otherwise transfer any Indebtedness
held by it to any other person or entity, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof granted to a
Secured Party herein or otherwise. Upon the indefeasible payment in full of all
Secured Obligations, the cancellation or termination of the Commitments to
extend credit under the New Credit Facility, the cancellation or expiration of
all outstanding letters of credit, each Pledgor shall be entitled to the return,
upon its request and at its expense, against receipt and without recourse to
Collateral Agent, of such of the Pledged Collateral pledged by such Pledgor
hereunder as shall not have been sold or otherwise applied pursuant to the terms
hereof.
SECTION 19. NO WAIVER BY SECURED PARTY; AUTHORITY OF PLEDGORS.
No failure on the part of Collateral Agent to exercise, and no course of dealing
with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by Collateral Agent of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative to the fullest extent
permitted by law and are not exclusive of any remedies provided by law. It is
not necessary for Collateral Agent to inquire into the powers of any Pledgor or
the officers, directors or agents acting or purporting to act on behalf of any
of them.
SECTION 20. AMENDMENT, 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 the Pledgors and the Collateral Agent on behalf of the Requisite
Party (as defined in the Intercreditor Agreement), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 21. ADDRESSES FOR NOTICES. Unless otherwise
specifically provided herein, any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telecopied, telexed or sent by United States
14
15
mail or courier service and shall be deemed to have been given when delivered in
person, upon receipt (in the case of telecopy or telex) or four business days
after depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that any notice sent to
Collateral Agent shall not be effective until received. For purposes hereof, the
addresses of the parties hereto (until notice of a change thereof is delivered
as provided in this Section 21) shall be as set forth under each party's name on
the signature pages hereof.
SECTION 22. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES), EXCEPT TO
THE EXTENT THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein, terms defined in Article 9 of the Code are used herein as
therein defined.
SECTION 23. SEVERABILITY. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdictions, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
All judicial proceedings brought against any Pledgor with respect to this
Agreement may be brought in any state or federal court of competent jurisdiction
sitting in New York, New York, and by execution and delivery of this Agreement,
each Pledgor accepts for itself and in connection with its properties, generally
and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Each Pledgor designates and appoints The ▇▇▇▇▇▇▇▇-▇▇▇▇
Corporation System, Inc., ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and such
other Persons as may hereafter be selected by such Pledgor irrevocably agreeing
in writing to so serve, as its agent to receive on its behalf service of all
process in any such proceedings in any court in New York, New York, such service
being hereby acknowledged by such Pledgor to be effective and binding service in
every respect. A copy of any such process so served shall be mailed by
registered mail to such Pledgor at its address referred to in Section 21 hereof,
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by any Pledgor refuses to accept service, such Pledgor hereby agrees
that service upon it by mail shall constitute sufficient notice. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of the Collateral Agent to bring proceedings against any
Pledgor in the courts of any other jurisdiction.
15
16
SECTION 25. WAIVER OF JURY TRIAL. Each Pledgor and Collateral
Agent hereby agree to waive their respective rights to jury trial of any claim
or cause of action based upon or arising out of this Agreement. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. Each Pledgor and the
Collateral Agent each acknowledge that this waiver is a material inducement for
such Pledgor and the Collateral Agent to enter into a business relationship,
that each Pledgor and the Collateral Agent have already relied on the waiver in
entering into this Agreement and that each will continue to rely on the waiver
in their related future dealings. Each Pledgor and the Collateral Agent further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
TRIAL BY THE COURT.
SECTION 26. MARSHALING; PAYMENTS SET ASIDE. Collateral Agent
shall not be under any obligation to marshal any assets in favor of any Pledgor
or any other party or against or in payment of any or all of the Secured
Obligations. To the extent that any Pledgor makes a payment or payments to
Collateral Agent or Collateral Agent enforces its security interests or
exercises its rights of setoff, and such payment or payments or proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
SECTION 27. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.
SECTION 28. COUNTERPARTS. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original and all
of which together shall constitute one and the same Agreement.
16
17
IN WITNESS WHEREOF, Pledgors have caused this Agreement to be
duly executed and delivered by their officers thereunto duly authorized as of
the date first above written.
"PLEDGORS"
AMERICAN RESTAURANT GROUP,
INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
ARG ENTERPRISES, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
ARG PROPERTY MANAGEMENT
CORPORATION, a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
▇▇▇▇▇▇'▇, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
18
SPECTRUM FOODS, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
LOCAL FAVORITE, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
SPOONS RESTAURANTS, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Title: Vice President and
Chief Financial Officer
2
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NOTICE ADDRESS FOR PLEDGORS:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman and Chief
Executive Officer
WITH COPIES TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
American Restaurant Group, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
3
20
"COLLATERAL AGENT"
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., AS COLLATERAL AGENT
By: /s/
------------------------------------
Title: Authorized Officer
---------------------------------
NOTICE ADDRESS:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
4
21
SCHEDULE I
to the Pledge Agreement
Attached to and forming a part of the Pledge Agreement dated
as of February 25, 1998 between Pledgors and U.S. Trust Company of California,
N.A., as Collateral Agent.
Part A
Pledgor: American Restaurant Group, Inc.
Issued and
Stock Outstanding Number of
Class of Certificate Par Number of Shares
Stock Issuer Stock Nos. Value Shares Pledged
------------ -------- ----------- ----- ----------- ---------
ARG Enterprises, Inc. Common 3 10.00 10,000 10,000
ARG Property Common 3 10.00 100 100
Management
Corporation
▇▇▇▇▇▇'▇, Inc. Common 2 1.00 1,000 1,000
Spectrum Foods, Inc. Common 85 10.00 1,000 1,000
Spoons Restaurants, Inc. Common 5 1.00 1,000 1,000
Local Favorite, Inc. Common 1 0 100 100
Pledgor: ARG Enterprises, Inc.
Issued and
Stock Outstanding Number of
Class of Certificate Par Number of Shares
Stock Issuer Stock Nos. Value Shares Pledged
------------ -------- ----------- ----- ----------- ---------
Black Angus Common 5 -0- 1 1
Enterprises of
Idaho, Inc.
I-1
22
Part B
Debt Issuer Payee Amount of Indebtedness
----------- ----- ----------------------
[None]
I-2
23
SCHEDULE II
to the Pledge Agreement
[FORM OF PLEDGE AMENDMENT]
This Pledge Amendment, dated _______, 19__, is delivered
pursuant to Section 7 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement
dated February 25, 1998, between the American Restaurant Group, Inc. and its
Subsidiaries who are signatories thereto and U.S. Trust Company of California,
N.A., as Collateral Agent (the "Pledge Agreement"; capitalized terms defined
therein being used herein as therein defined) and that the [Pledged
Shares]/[Pledged Debt] listed on this Pledge Amendment shall be deemed to be
part of the [Pledged Shares]/[Pledged Debt] and shall become part of the Pledged
Collateral and shall secure the Secured Obligations as provided in the Pledge
Agreement.
[PLEDGOR]
By:______________________
Title:___________________
Issued and
Stock Outstanding Number of
Class of Certificate Par Number of Shares
Stock Issuer Stock Nos. Value Shares Pledged
------------ -------- ----------- ----- ----------- ---------
Debt Issuer Amount of Indebtedness
II-1
24
SCHEDULE III
to the Pledge Agreement
[FORM OF ACKNOWLEDGMENT OF NEW SUBSIDIARY]
Reference is hereby made to the Pledge Agreement dated as of
February 25, 1998 (the "Pledge Agreement") among American Restaurant Group, Inc.
and its Subsidiaries who are signatories thereto and U.S. Trust Company of
California, N.A., as Collateral Agent in which this Acknowledgment and its
attachments are incorporated.
The undersigned is a new Subsidiary and, as such, is required
to pledge its Pledged Shares and its Pledged Debt to secure the Secured
Obligations (all as defined in the Pledge Agreement) as provided in the Pledge
Agreement. The undersigned hereby represents and warrants (a) that it is the
legal and beneficial owner of the shares of capital stock described in Part A of
Schedule 1 hereto which shares constitute all of the issued and outstanding
shares of all classes of capital stock of the Subsidiary or Subsidiary so listed
and (b) that it is legal and beneficial owner of the indebtedness described in
Part B of said Schedule 1.
The undersigned acknowledges the terms of the Pledge Agreement
and agrees to be bound thereby.
[NEW SUBSIDIARY]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Notice Address:
------------------------------
------------------------------
------------------------------
III-1
25
SCHEDULE 1
to the Acknowledgment to New Subsidiary
PART A: Capital Stock of Subsidiaries
PART B: Indebtedness owned by new Subsidiary
I-1