EXHIBIT 10.3
SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, this "Agreement"), dated as of
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October 29, 1999 is made by the signatories hereto and each Person becoming a
party hereto identified as a "Debtor" (each, a "Debtor" and collectively,
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"Debtors"), in favor of Bank of America, N.A. in its capacity as administrative
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agent (in such capacity, "Administrative Agent") or Lenders, Issuing Lender,
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Indemnitees and itself (collectively, the "Secured Parties") under the Credit
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Agreement referred to below.
RECITALS
A. Pursuant to that certain Credit Agreement dated as of October 29, 1999
among California Pizza Kitchen, Inc., a California corporation ("Borrower"),
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Lenders from time to time party thereto, Bank of America, N.A., as
Administrative Agent, Swing Line Lender and Issuing Lender and Bankers Trust
Company, as Documentation Agent (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Credit Agreement;" the
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terms defined therein being used herein as therein defined), Lenders and the
Issuing Lender are making certain credit facilities available to Borrower.
B. Concurrently herewith, certain Debtors are executing and delivering to
Administrative Agent a Master Subsidiary Guaranty dated as of even date herewith
(as amended from time to time, the "Master Subsidiary Guaranty") guarantying the
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Obligations.
C. It is a requirement of the Credit Agreement that Debtors enter into
this Agreement, and that if any Person becomes a Domestic Subsidiary of Borrower
after the date hereof, such Person shall enter into a joinder and become a party
hereto.
D. Each Debtor expects to realize direct and indirect benefits as a
result of the availability of the aforementioned credit facilities.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Grant of Security Interest. Each Debtor hereby pledges, assigns and
grants to Administrative Agent, for the benefit of the Secured Parties, a
security interest in the property described in Paragraph 2 below (collectively
and severally, the "Collateral") to secure payment and performance of the
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Obligations.
2. Collateral. The Collateral shall consist of all right, title and
interest of each Debtor in and to the following, but only to the extent that,
except in the case of Trademark Collateral, a security interest therein can be
perfected by a filing of a financing statement with a secretary of state or
county:
(a) All now existing and hereafter arising receivables, accounts,
contracts, contract rights, chattel paper, documents, instruments, investment
property, and general intangibles of
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each Debtor, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and all rights of each Debtor now
and hereafter arising in and to all security agreements, guaranties, leases and
other writings securing or otherwise relating to any such receivables, accounts,
contracts, contract rights, chattel paper, documents, instruments and general
intangibles, except, in every case, such receivables, accounts, contracts,
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contract rights, chattel paper, documents, instruments, investment property, and
general intangibles with respect to which a breach or default would occur upon
the granting of a security interest hereunder and except, in every case, any
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nontransferable liquor licenses;
(b) All inventory of each Debtor, now owned and hereafter acquired,
wherever located, including, without limitation, all merchandise, goods and
other personal property which are held for sale or lease, all raw materials,
work in process, materials used or consumed in each Debtor's business and
finished goods, all goods in which each Debtor has an interest in mass or a
joint or other interest or gifts of any kind (including goods in which each
Debtor has an interest or right as consignee), and all goods which are returned
to or repossessed by each Debtor, together with all additions and accessions
thereto and replacements therefor and products thereof and documents therefor;
(c) All equipment of each Debtor, now owned and hereafter acquired,
wherever located, and all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor,
including, without limitation, all machinery, tools, dies, blueprints,
catalogues, computer hardware and software, furniture, furnishings and fixtures;
(d) All now existing and hereafter acquired Computer Hardware and Software
Collateral, Trademark Collateral and Trade Secrets Collateral (as those terms
are defined in Paragraph 20 below) (collectively, the "Intellectual Property
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Collateral");
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(e) All now existing and hereafter acquired books, records, writings, data
bases, information and other property relating to, used or useful in connection
with, embodying, incorporating or referring to, any of the foregoing Collateral;
(f) All other property of each Debtor now or hereafter in the possession,
custody or control of Administrative Agent, and all property of each Debtor in
which Administrative Agent now has or hereafter acquires a security interest for
the benefit of the Secured Parties;
(g) Rights under insurance policies, letter of credit rights, and
supporting obligations, including without limitation guaranties;
(h) All now existing and hereafter acquired cash and cash equivalents held
by each Debtor not otherwise included in the foregoing Collateral; and
(i) All products and proceeds of the foregoing Collateral. Collateral
shall not include leasehold interests or any other interests in real property.
For purposes of this Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds thereof is sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes, without limitation, all rights to payment, including
return premiums, with respect to any insurance relating thereto.
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3. Obligations. The Obligations secured by this Agreement shall consist
of all Obligations of each Debtor under the Loan Documents to which it is a
party 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.
4. Representations and Warranties. In addition to all representations
and warranties of each Debtor set forth in the Guaranty and any other Loan
Document to which such Debtor may be a party, which are incorporated herein by
this reference, each Debtor hereby represents and warrants for itself that:
(a) Except for the Lien in favor of Administrative Agent for the benefit
of the Secured Parties granted hereunder, Liens on new property permitted by
Section 7.02(c) of the Credit Agreement and Ordinary Course Liens, no Person has
(or, in the case of after-acquired Collateral, at the time Debtor acquires
rights therein, will have) any right, title, claim or interest (by way of
security interest or other Lien or charge) in, against or to the Collateral.
(b) All information heretofore, herein or hereafter supplied to
Administrative Agent or any Secured Party by or on behalf of Debtor with respect
to the Collateral is accurate and complete in all material respects.
(c) Debtor is lawfully possessed of ownership of the Collateral which
exists on the date hereof and has full right, title and interest in all rights
purported to be granted by it hereunder, and has full power and lawful authority
to grant the liens in and on the Collateral hereunder.
(d) This Agreement creates in favor of the Secured Parties a valid and
enforceable lien on the Collateral, securing the payment and performance of all
Obligations. Upon the filing of financing statement(s) covering the Collateral
with the appropriate filing offices, all filings and recordings necessary to
perfect such lien will have been duly made or taken.
(e) Debtor is a corporation duly organized, validly existing and in good
standing under the Laws of the state of its incorporation, has the power and
authority and the legal right to own and operate its properties, to lease the
properties it operates and to conduct its business, is duly qualified and in
good standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification, and is in compliance with all Laws except to the extent that
noncompliance does not have a Material Adverse Effect.
(f) Debtor has the power and authority and the legal right to make,
deliver and perform this Agreement and to authorize the execution, delivery and
performance of this Agreement. Except as contemplated herein, no consent or
authorization of, filing with, or other act by or in respect of any Governmental
Authority, is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement. This Agreement has been duly
executed and delivered by Debtor, and constitutes a legal, valid and binding
obligation of Guarantor, enforceable against Debtor in accordance with its
terms, except as enforceability may be limited by applicable Debtor Relief Laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
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(g) The execution, delivery, and performance by Debtor of this Agreement
and compliance with the provisions hereof have been duly authorized by all
requisite action on the part of Debtor and do not and will not (i) violate or
conflict with, or result in a breach of, or require any consent, except where
such violation, conflict, breach or failure to obtain consent would not have a
Material Adverse Effect, under (A) any Organization Documents of Debtor or any
of its Subsidiaries, (B) any applicable Laws, rules, or regulations or any
order, writ, injunction, or decree of any Governmental Authority or arbitrator,
or (C) any Contractual Obligation of Debtor or any of its Subsidiaries or by
which any of them or any of their property is bound or subject, (ii) constitute
a default under any such agreement or instrument, except where such default
would not have a Material Adverse Effect, or (iii) result in, or require, the
creation or imposition of any Lien on any material portion of the properties of
Debtor or any of its Subsidiaries other than pursuant hereto.
(h) No litigation, investigation or proceeding of or before an arbitrator
or Governmental Authority is pending or, to the best knowledge of Debtor,
threatened by or against Debtor or any of its Subsidiaries or against any of
their properties or revenues which, if determined adversely, could have a
Material Adverse Effect.
(i) The execution, delivery and performance by Debtor of this Agreement
does not constitute, to the best knowledge of Debtor, a "fraudulent conveyance,"
"fraudulent obligation" or "fraudulent transfer" within the meanings of the
Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as
enacted in California.
(j) The offices where Debtors keep their records concerning the Collateral
("Records") are located at the addresses set forth on Schedule 1 hereto.
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5. Covenants and Agreements of Each Debtor. In addition to all covenants
and agreements of each Debtor set forth in any other Loan Document to which it
may be a party, which are incorporated herein by this reference, each Debtor
hereby agrees, at no cost or expense to Administrative Agent or any of the
Secured Parties:
(a) Subject to Debtor's right to make Dispositions of the type permitted
under Section 7.04 of the Credit Agreement, to do all acts that may be necessary
to maintain, preserve and protect the Collateral and the priority and perfected
nature of the security interest of Administrative Agent for the benefit of the
Secured Parties therein.
(b) Not to use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement, any other agreement with
Administrative Agent and/or the Secured Parties related hereto, or any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
each Debtor or affecting any of the Collateral or any contractual obligation
affecting any of the Collateral, except, in each case, where such unlawful use
or violations would not cause a Material Adverse Effect.
(c) Except as permitted in the definition of Ordinary Course Liens in the
Credit Agreement with respect to contested Liens, to pay promptly when due all
taxes, assessments, charges, encumbrances and obligations secured by Liens now
or hereafter imposed upon or affecting any Collateral.
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(d) To appear in and defend any action or proceeding which may affect its
title to or Administrative Agent's interest on behalf of the Secured Parties in
the Collateral.
(e) Not to surrender or lose possession of (other than to Administrative
Agent), sell, encumber, lease, rent, or otherwise dispose of or transfer any
Collateral or right or interest therein except as permitted herein or in the
other Loan Documents, and to keep the Collateral free of all levies and
security interests or other Liens or charges except as permitted by the Credit
Agreement; provided, however, that, unless an Event of Default shall have
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occurred and be continuing, each Debtor may, in the ordinary course of business,
sell or lease any Collateral consisting of Inventory and any other Collateral as
permitted under Section 7.04 of the Credit Agreement.
(f) After the occurrence and during the continuance of an Event of
Default, to account fully for and promptly deliver to Administrative Agent, in
the form received, all proceeds of the Collateral received, all endorsed to
Administrative Agent or in blank, as requested by Administrative Agent, and
until so delivered all such documents, instruments, agreements and proceeds
shall be held by each Debtor in trust for Administrative Agent for the benefit
of the Secured Parties, separate from all other property of each Debtor.
(g) To keep records of the Collateral which are accurate and complete in
all material respects and to provide Administrative Agent and each of the
Secured Parties with such records and such other reports and information
relating to the Collateral as Administrative Agent or any Secured Party may
reasonably request from time to time.
(h) To give Administrative Agent 30 days prior written notice of any
change in any Debtor's chief place of business, any Debtor's state of
incorporation or legal name or trade name(s) or style(s) referred to in
Paragraph 10 below.
(i) To keep the records concerning the Collateral at the location(s)
referred to in Paragraph 10 below and not to remove such records from such
location(s) without the prior written consent of Administrative Agent.
(j) To keep the Collateral in good condition and repair and not to cause
or permit any waste or unusual or unreasonable depreciation of the Collateral.
(k) To notify Administrative Agent promptly, in reasonable detail, (i) of
any material claim made or asserted against any material portion of the
Collateral by any person; and (ii) of any event not related to the Subsidiaries'
business which is reasonably expected to have a material adverse effect on the
security interest hereunder, the value of the Collateral or the ability of the
Secured Parties to dispose of the Collateral or the rights and remedies of the
Secured Parties.
(l) At the expense of each Debtor, to promptly execute and deliver all
further instruments and documents, and take all further action that may be
necessary or, in the reasonable opinion of Administrative Agent, desirable, in
order to perfect the liens granted or purported to be granted hereby or to
enable Administrative Agent to exercise and enforce its rights and remedies
hereunder and execute and file such financing or continuation statements, or
amendments thereto, and such other instruments, endorsements or notices, as may
be necessary
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or, in the reasonable opinion of Administrative Agent, desirable, in order to
perfect and preserve the Liens granted or purported to be granted hereby.
(m) To authorize Administrative Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of each Debtor where permitted by law.
(n) To pay all filing, registration and recording fees or refiling, re-
registration and re-recording fees, and all expenses incident to the execution
and acknowledgement of this Agreement, any agreement supplemental hereto and any
instruments of further assurance, and all federal, state, county and municipal
stamp taxes and other taxes, duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of this Agreement, any
agreement supplemental hereto and any instruments of further assurance.
(p) To notify Administrative Agent upon the creation, possession or
ownership of any Collateral with respect to which the Lien of the Administrative
Agent is not automatically perfected.
(q) To keep the Collateral at the location(s) referred to in Paragraph 10
below and at new restaurants from time to time opened (provided that Borrower
shall immediately notify Administrative Agent of any new restaurant located in a
state not referred to in Paragraph 10) and, subject to Debtor's right to make
Dispositions of the type permitted under Paragraph 5(e) of this Agreement, not
to remove the Collateral from such location(s) without the prior written consent
of Administrative Agent.
6. Authorized Actions by Administrative Agent. Each Debtor hereby agrees
that:
(a) From time to time, without presentment, notice or demand, and without
affecting or impairing in any way the rights of Administrative Agent with
respect to the Collateral, the obligations of Debtors hereunder or the
Obligations, Administrative Agent may, but shall not be obligated to and shall
incur no liability to any Debtor, any Secured Party or any third party for
failure to take any action which a Debtor is obligated by this Agreement to do
and to exercise such rights and powers as a Debtor might exercise with respect
to the Collateral.
(b) To the extent permitted by applicable Law, Administrative Agent may
execute in its own name or in the name of each Debtor and file one or more
financing statements describing the Collateral in such jurisdictions as deemed
appropriate by Administrative Agent from time to time.
(c) Administrative Agent may file photostatic or other copies of financing
statements signed or authenticated by each Debtor or of this Agreement in such
jurisdictions as deemed appropriate by Administrative Agent from time to time.
(d) each Debtor hereby irrevocably appoints Administrative Agent as its
attorney-in-fact to exercise after the occurrence and during the continuance of
an Event of Default such rights and powers, including without limitation, to
collect by legal proceedings or otherwise and endorse, receive and receipt for
all dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral.
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(e) Enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender, accept,
hold or apply other property in exchange for the Collateral.
(f) Insure, process and preserve the Collateral.
(g) Transfer the Collateral to its own or its nominee's name.
(h) Make any compromise or settlement, and take any action it deems
advisable, with respect to the Collateral.
(i) Subject to the provisions of Paragraph 8 below, notify any obligor on
any Collateral to make payment directly to Administrative Agent.
provided, however, that Administrative Agent may take the actions listed in
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paragraphs (e) through (i), inclusive, above only after the occurrence and
during the continuance of an Event of Default.
Each Debtor hereby grants to Administrative Agent for the benefit of the
Secured Parties an exclusive, irrevocable power of attorney, with full power and
authority in the place and stead of each Debtor to take all such action
permitted under this Paragraph 6. Each Debtor agrees to reimburse
Administrative Agent upon demand for any reasonable costs and expenses,
including, without limitation, attorneys' fees, Administrative Agent may incur
while acting as each Debtor's attorney-in-fact hereunder, all of which
reasonable costs and expenses are included in the Obligations secured hereby.
It is further agreed and understood between the parties hereto that such care as
Administrative Agent gives to the safekeeping of its own property of like kind
shall constitute reasonable care of the Collateral when in Administrative
Agent's possession; provided, however, that Administrative Agent shall not be
required to make any presentment, demand or protest, or give any notice and need
not take any action to preserve any rights against any prior party or any other
person in connection with the Obligations or with respect to the Collateral.
7. Remedies. Upon the occurrence and during the continuance of an Event
of Default, Administrative Agent may, after notice to Borrower (except in the
case of paragraph (g) below) and in addition to all rights and remedies
available to Administrative Agent and the Secured Parties with respect to the
Obligations, at law, in equity or otherwise, do any one or more of the
following:
(a) Foreclose or otherwise enforce Administrative Agent's security
interest in any manner permitted by law or provided for in this Agreement.
(b) Sell, lease or otherwise dispose of any Collateral at one or more
public or private sales at Administrative Agent's place of business or any other
place or places, including, without limitation, any broker's board or securities
exchange, whether or not such Collateral is present at the place of sale, for
cash or credit or future delivery, on such terms and in such manner as
Administrative Agent may reasonably determine.
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(c) Recover from each Debtor all reasonable costs and expenses, including,
without limitation, reasonable attorneys' fees (including the allocated cost of
internal counsel), incurred or paid by Administrative Agent or any Secured Party
in exercising any right, power or remedy provided by this Agreement.
(d) Require each Debtor to assemble the Collateral and make it available
to Administrative Agent at a place to be designated by Administrative Agent.
(e) Enter onto property where any Collateral is located and take
possession thereof with or without judicial process.
(f) Prior to the disposition of the Collateral, store, process, repair or
recondition it or otherwise prepare it for disposition in any manner and to the
extent Administrative Agent deems appropriate and in connection with such
preparation and disposition, without charge, use any trademark, tradename,
copyright, patent or technical process used by each Debtor.
(g) Apply cash proceeds resulting from the collection, liquidation, sale,
lease or other disposition of the Collateral for the following purposes and in
the following order:
(i) First, to the payment of (A) all costs and expenses relating to
the sale of the Collateral and collection of amounts owing hereunder,
including reasonable attorneys' fees of the Secured Parties (including the
allocated cost of the Secured Parties' inhouse counsel), and disbursements
of the Secured Parties for services rendered in good faith in connection
therewith or in connection with any proceeding to sell if a sale if not
completed and (B) all charges, expenses and advances reasonably incurred or
made by the Secured Parties in order to protect the lien of this Agreement
or the security afforded hereby;
(ii) Second, to the payment in full of all Obligations; and
(iii) Third, the balance, if any, shall be paid to Debtors or to such
other person as shall be lawfully entitled to receive such surplus (as
determined by a court of competent jurisdiction, if such procedure is
available under applicable law).
Each Debtor shall be given ten (10) Business Days' prior notice of the time
and place of any public sale or of the time after which any private sale or
other intended disposition of Collateral is to be made, which notice each Debtor
hereby agrees shall be deemed reasonable notice thereof. Upon any sale or other
disposition pursuant to this Agreement, Administrative Agent shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral or
portion thereof so sold or disposed of. Each purchaser at any such sale or
other disposition (including Administrative Agent) shall hold the Collateral
free from any claim or right of whatever kind, including any equity or right of
redemption of each Debtor and each Debtor specifically waives (to the extent
permitted by law) all rights of redemption, stay or appraisal which it has or
may have under any rule of law or statute now existing or hereafter adopted.
8. Collection of Collateral Payments.
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(a) Each Debtor shall, at its sole cost and expense, endeavor to obtain
payment, when due and payable, of all sums due or to become due with respect to
any Collateral ("Collateral Payments" or a "Collateral Payment"), including,
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without limitation, the taking of such action with respect thereto as
Administrative Agent or any Secured Party may reasonably request, or, in the
absence of such request, as each Debtor may reasonably deem advisable; provided,
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however, that each Debtor shall not, without the prior written consent of
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Administrative Agent and the Secured Parties, grant or agree to any rebate,
refund, compromise or extension with respect to any Collateral Payment or accept
any prepayment on account thereof, except, in all cases referred to in this
sentence, in the ordinary course of business. After the occurrence and during
the continuance of an Event of Default, upon the request of Administrative Agent
at the direction of all the Secured Parties, each Debtor will notify and direct
any party who is or might become obligated to make any Collateral Payment, to
make payment thereof to such accounts as Administrative Agent may direct in
writing and to execute all instruments and take all action required by
Administrative Agent to ensure the rights of Administrative Agent for the
benefit of the Secured Parties in any Collateral subject to the Federal
Assignment of Claims Act of 1940, as amended.
(b) Upon the request of Administrative Agent, which request will be made
only following the occurrence and during the continuance of a Default or Event
of Default, each Debtor will, forthwith upon receipt, transmit and deliver to
Administrative Agent, in the form received, all cash, checks, drafts and other
instruments for the payment of money (properly endorsed where required so that
such items may be collected by Administrative Agent) which may be received by
each Debtor at any time as payment on account of any Collateral Payment and if
such request shall be made, until delivery to Administrative Agent, such items
will be held in trust for Administrative Agent and the Secured Parties and will
not be commingled by each Debtor with any of its other funds or property.
Thereafter, Administrative Agent is hereby authorized and empowered to endorse
the name of any Debtor on any check, draft or other instrument for the payment
of money received by Administrative Agent on account of any Collateral Payment
if Administrative Agent believes such endorsement is necessary or desirable for
purposes of collection.
(c) Each Debtor will indemnify and save harmless Administrative Agent from
and against all reasonable liabilities and expenses on account of any adverse
claim asserted against Administrative Agent relating to any moneys received by
Administrative Agent on account of any Collateral Payment except to the extent
such liabilities or expenses were caused by Administrative Agent's gross
negligence or willful misconduct, and such obligation of each Debtor shall
continue in effect after and notwithstanding the discharge of each Debtor
Obligations and the release of the security interest granted in Paragraph 2
above.
9. Additional Covenants Regarding Intellectual Property Collateral.
(a) Unless it shall either reasonably and in good faith determine that
such Collateral is of negligible economic value to each Debtor or that there is
a valid purpose to do otherwise, each Debtor will not:
(1) (i) Fail to continue to use any material portion of the
Trademark Collateral in order to maintain all of the Trademark Collateral
in full force free from any
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claim of abandonment for non-use, (ii) fail to maintain as in the past the
overall quality of products and services offered under all of the Trademark
Collateral, or (iii) do or permit any act or knowingly omit to do any act
whereby any material portion of the Trademark Collateral may lapse or
become invalid or unenforceable; or
(2) Do or permit any act or knowingly omit to do any act whereby any
material portion of the Trade Secrets Collateral may lapse or become
invalid or unenforceable or placed in the public domain except upon
expiration of the end of an unrenewable term of a registration thereof.
(b) Each Debtor shall notify Administrative Agent immediately if it knows,
or has reason to know, that any application or registration relating to any
material item of the Intellectual Property Collateral may become abandoned or
dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court) regarding each
Debtor's ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
(c) In no event shall any Debtor or any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the United States Patent and Trademark
Office, unless it promptly informs Administrative Agent, and upon request of
Administrative Agent, executes and delivers any and all agreements, instruments,
documents and papers as Administrative Agent may reasonably request to evidence
Administrative Agent's security interest in such Intellectual Property
Collateral and the goodwill and general intangibles of each Debtor relating
thereto or represented thereby.
(d) Each Debtor shall, contemporaneously herewith, execute and deliver to
Administrative Agent agreements in the form of Exhibit A hereto, and shall
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execute and deliver to Administrative Agent any other document required to
acknowledge or register or perfect Administrative Agent's security interest in
any part of the Intellectual Property Collateral.
(e) Each Debtor hereby grants to the Secured Parties a present,
irrevocable, paid-up royalty-free world wide and non-exclusive license under all
Intellectual Property Collateral owned by each Debtor or licensed to each Debtor
with the right, after the occurrence and during the continuance of an Event of
Default, to sublicense to make, have made, reproduce, have reproduced, prepare
derivative works of, perform, or display (publicly or otherwise) or otherwise
use, sell, lease or distribute any products or processes, except Intellectual
Property Collateral as to which the Secured Parties have a perfected security
interest that permits exercise of the remedies set forth herein upon an Event of
Default. After the occurrence and during the continuance of an Event of
Default, the Secured Parties shall have the right to sublicense (with the right
of any sublicensee to grant further sublicenses) or unconditionally assign such
license without each Debtor's consent, limited only in the case of licenses to
each Debtor of intellectual property owned by unaffiliated third parties to the
extent permitted in the applicable license. Such license may be subject to the
payment of royalties by each Debtor to third parties.
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10. Place of Business; Collateral Location; Records Location. Borrower
represents that its chief place of business is at its address set forth on
Schedule 10.02 to the Credit Agreement. Each other Debtor represents that its
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chief place of business is as set forth on Schedule 1 attached hereto. All
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Debtors represent that the only trade name(s) currently used by them are set
forth on Schedule 1; and that, except as otherwise disclosed to Administrative
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Agent in writing on or prior to the date hereof, the Collateral and each
Debtor's records concerning the Collateral are located at the locations listed
on Schedule 1.
11. Waiver of Hearing. Each Debtor expressly waives any constitutional or
other right to a judicial hearing prior to the time Administrative Agent takes
possession or disposes of the Collateral upon the occurrence of an Event of
Default.
12. Cumulative Rights. The rights, powers and remedies of Administrative
Agent and any of the Secured Parties under this Agreement shall be in addition
to all rights, powers and remedies given to Administrative Agent and any of the
Secured Parties by virtue of any statute or rule of law, the Credit Agreement,
the Loan Documents or any other agreement, all of which rights, powers and
remedies shall be cumulative and may be exercised successively or concurrently
without impairing Administrative Agent's and any of the Secured Parties'
security interest in the Collateral.
13. Waiver. Any forbearance or failure or delay by Administrative Agent
in exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of Administrative Agent or any of the
Secured Parties shall continue in full force and effect until such right, power
or remedy is specifically waived in a writing executed by Administrative Agent
or such other Secured Party, as applicable. Each Debtor waives any right to
require any Secured Party to proceed against any person or to exhaust any
Collateral or to pursue any remedy in such Secured Party's power.
14. Setoff. Each Debtor agrees that each Secured Party may exercise its
rights of setoff with respect to the Obligations in the same manner as if the
Obligations were unsecured.
15. Continuing Assignment and Security Interest; Transfer of Obligations.
(a) This Agreement shall create a continuing assignment of and security
interest in the Collateral and shall remain in full force and effect until
payment in full of all Obligations, be binding upon each Debtor, their
successors and assigns, and inure, together with the rights and remedies of
Secured Parties hereunder, to the benefit of Secured Parties and their
successors, transferees and assigns.
(b) To the extent permitted in the Credit Agreement, Administrative Agent
may assign or otherwise transfer its rights and obligations under the Loan
Documents 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
Administrative Agent herein or otherwise, all as provided in, to the extent
provided in, and to the extent set forth in, the Credit Agreement. No Debtor
may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Administrative Agent.
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16. Attorney Costs and Expenses. Each Debtor jointly and severally agrees
(a) to pay or reimburse Administrative Agent and each other Secured Party for
all reasonable costs and expenses incurred in connection with the enforcement or
attempted enforcement, or preservation of any rights under any this Agreement,
and any other documents prepared in connection herewith or therewith, or in
connection with any refinancing, or restructuring of any such documents in the
nature of a "workout" or of any insolvency or bankruptcy proceeding, including
reasonable Attorney Costs. The foregoing costs and expenses shall include all
reasonable search, filing, recording, and appraisal charges and fees and taxes
related thereto, and other out-of-pocket expenses incurred by Secured Parties
and the cost of independent public accountants and other outside experts
retained by Secured Parties. Any amount payable by Borrower under this Section
shall bear interest from the 30th day following the date of demand for payment
at the Default Rate, unless waived by Administrative Agent. The agreements in
this Section shall survive repayment of all Obligations.
17. Appointment of Administrative Agent. Pursuant to Section 9 of the
Credit Agreement, each Secured Party has appointed Administrative Agent as its
agent under the Loan Documents (as defined in the Credit Agreement to include,
without limitation, this Agreement), and Administrative Agent has accepted such
appointment. Administrative Agent shall act as secured party, agent, bailee and
custodian for the exclusive benefit of the Secured Parties with respect to the
Collateral (as defined below). Administrative Agent agrees that Administrative
Agent will act with respect to the Collateral for the exclusive benefit of the
Secured Parties and is not, and shall not at any time in the future be, in any
manner or to any extent, subject to the direction or control of each Debtor
except as expressly permitted hereunder, under the other Loan Documents or as
required by law.
18. Additional Debtors. From time to time, additional Subsidiaries of
Borrower may become parties hereto as additional Debtors (each, an "Additional
----------
Debtor"), by executing and delivering to the Administrative Agent a Joinder
------
Agreement substantially in the form of Exhibit I to the Credit Agreement,
---------
accompanied by a supplement to Schedule 1 hereto and such other documentation as
----------
Administrative Agent may reasonably require in connection therewith, wherein
such Additional Debtors agree to become a party hereto and to be bound hereby.
Upon delivery of such Joinder Agreement to and acceptance thereof by
Administrative Agent, notice of which is hereby waived by Debtors, each such
Additional Debtor shall be as fully a party hereto as if such Additional Debtor
were an original signatory hereto. Each Additional Debtor shall be deemed to
have made the representations and warranties set forth in Paragraph 2 of this
Agreement as of the date of its joinder. Each Debtor expressly agrees that its
Secured Obligations and the Liens upon its property granted herein shall not be
affected or diminished by the addition or release of Additional Debtors
hereunder, nor by any election of Secured Parties not to cause any other
Subsidiary of Borrower to become an Additional Debtor hereunder. This Agreement
shall be fully effective as to any Debtor who is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Debtor hereunder.
19. Extent of Obligations. Each Debtor hereby agrees that its obligations
hereunder are independent of the obligations of each other Debtor, and a
separate action or actions may be brought and prosecuted against each Debtor
whether or not action is brought against another Debtor and whether or not any
Debtor is joined in any such action or actions. Each Debtor hereby further
agrees that from time to time, without notice or demand and without affecting or
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impairing in any way the rights of the Secured Parties with respect to the
Collateral or the obligations of each Debtor hereunder, the Secured Parties may
(a) renew, compromise, extend, accelerate or change the time for payment or the
terms of the Obligations, or any part thereof, (b) exchange, enforce, waive,
release, apply and direct the order or manner of sale of any and all collateral
for the obligations, including, without limitation, the Collateral, all as
provided herein, and/or (c) release or substitute any Debtor, endorsers and
guarantors. Each Debtor waives any right to require the Secured Parties to (i)
proceed against any other Debtor, or (ii) proceed against or exhaust any
security of any other Debtor held for its obligations, or (iii) pursue any other
remedy whatsoever. Each Debtor waives any defense (other than payment in full
of the Obligations) based upon or arising out of any defense of any other
Debtor, including, without limitation, any defense based on or arising out of
the disability or the cessation of liability of any Debtor or any other person,
or the unenforceability of any other Debtor's obligations under any Loan
Document or any part thereof from any cause. Each Debtor agrees that the
Secured Parties may proceed against all or any portion of the Collateral for all
or any portion of the Obligations, as the Secured Parties may elect, without
regard to marshalling. Each Debtor acknowledges and agrees that the Secured
Parties may foreclose on any security held by it by one or more judicial or
nonjudicial sales, or exercise any right or remedy it may have against any other
Debtor or security held by it for the Obligations, without affecting or
impairing in any way the rights of the Secured Parties with respect to the
Collateral or the obligations of each Debtor hereunder. Each Debtor waives any
defense arising out of any such election by the Secured Parties, even though
such election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of each Debtor against any other Debtor or
any such security. Until all Obligations shall have been paid in full, each
Debtor shall not have any right of subrogation, and each Debtor waives any right
to enforce any remedy which the Secured Parties now have or may hereafter have
against each other Debtor and Subsidiary, and waives any benefit of, and any
right to participate in any security now or hereafter held by the Secured
Parties. Each Debtor further assumes all responsibility for being and keeping
itself informed of each other Debtor's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risk which each Debtor assumes and
incurs hereunder, and agrees that the Secured Parties shall have no duty to
advise each Debtor of information known to them regarding such circumstances or
risks.
20. Intellectual Property Collateral. For purposes of this Agreement, the
following capitalized terms shall have the following meanings:
"Computer Hardware and Software Collateral" means all of each Debtor's
-----------------------------------------
right, title and interest in all now existing and hereafter created or acquired:
(a) Computer and other electronic data processing hardware, integrated
computer systems, central processing units, memory units, display terminals,
printers, features, computer elements, card readers, tape drives, hard and soft
disk drives, cables, electrical supply hardware, generators, power equalizers,
accessories and all peripheral devices and other related computer hardware;
(b) Except to the extent that the grant of a security interest hereunder
would cause a breach or default thereunder, software programs (including both
source code, object code and all
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related applications and data files), whether owned, licensed or leased,
designed for use on the computers and electronic data processing hardware
described in subparagraph (a) above;
(c) Firmware associated therewith;
(d) Documentation (including flow charts, logic diagrams, manuals, guides
and specifications) with respect to such hardware, software and firmware
described in subparagraph (a) through (c) above; and
(e) Rights with respect to all of the foregoing, including, without
limitation, any and all of each Debtor's copyrights, licenses, options,
warranties, service contracts, program services, test rights, renewal rights and
indemnifications and any substitutions, replacements, additions or model
conversions of any of the foregoing.
"Trademark Collateral" means all of each Debtor's right, title and interest
--------------------
in now existing and hereafter created or acquired:
(a) Trademarks, trade names, corporate names, business names, fictitious
business names, trade styles, service marks, certification makers, collective
marks, logos, other source of business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles of
a like nature (all of the foregoing items in this clause (a) being collectively
called a "Trademark"), now existing in the United States or hereafter adopted or
---------
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications in
the United States Patent and Trademark Office;
(b) Trademark licenses;
(c) Reissues, extensions or renewals of any of the items described in
clauses (a) and (b);
----------- ---
(d) The goodwill of the business of each Debtor connected with the use of,
and symbolized by the items described in, clauses (a) and (b), and
----------- ---
(e) Proceeds of, and rights of each Debtor associated with, the foregoing,
including any claim by each Debtor against third parties for past, present or
future infringement or dilution of any Trademark, Trademark registration or
Trademark license, or for any injury to the goodwill associated with the use of
any such Trademark or for breach or enforcement of any Trademark license.
"Trade Secrets Collateral" means common law and statutory trade secrets and
------------------------
all other confidential or proprietary or useful information and all know-how
obtained by or used in or contemplated at any time for use in the business of
each Debtor (all of the foregoing being collectively called a "Trade Secret"),
------------
whether or not such Trade Secret has been reduced to a writing or other tangible
form including all documents and things embodying, incorporating or referring in
any way to such Trade Secret, all Trade Secret licenses, including the right to
▇▇▇ for and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or enforcement of any
such Trade Secret license.
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EXECUTED as of the day and year first above written.
"Debtors"
CALIFORNIA PIZZA KITCHEN, INC.
By ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Executive Vice President,
Chief Financial Officer and Secretary
CPK MANAGEMENT COMPANY
By ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇. ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Chief Financial Officer
and Secretary
CALIFORNIA PIZZA KITCHEN
OF ILLINOIS, INC.
By ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Secretary and Treasurer
BANK OF AMERICA, N.A.,
as Administrative Agent
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
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