EXHIBIT 10.36
FORM OF
SECURITY AGREEMENT
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(▇▇▇ ▇▇▇ ROO, INC.)
This SECURITY AGREEMENT (this "Agreement"), is entered into as of
__________, 1998 between FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), with a place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and ▇▇▇ ▇▇▇ ROO, INC., a
Delaware corporation ("Guarantor"), with its chief executive office located at
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Borrower, Foothill, and the other parties thereto have heretofore
entered into the Loan Agreement;
WHEREAS, Guarantor has executed that certain General Continuing Guaranty,
of even date herewith, in favor of Foothill (the "Guaranty"), respecting certain
obligations of Borrower owing to Foothill under the Loan Agreement;
WHEREAS, Guarantor desires to collateralize its obligations under the
Guaranty by granting to Foothill a security interest in certain of its assets;
and
WHEREAS, Guarantor will benefit by virtue of the loan from Foothill to
Borrower.
NOW THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and each intending to
be bound hereby, Foothill and Guarantor agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS . All capitalized terms used herein and not otherwise
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defined herein shall have the meanings ascribed to them in the Loan Agreement.
As used in this Agreement, the following terms shall have the following
definitions:
"Accounts" means all currently existing and hereafter arising
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accounts, contract rights, and all other forms of obligations owing to Guarantor
arising out of the sale, license, or lease of goods or the rendition of services
by Guarantor, irrespective of whether earned by performance, and any and all
credit insurance, guaranties, or security therefor.
"Agreement" means this Security Agreement and any extensions,
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riders, supplements, notes, amendments, or modifications to or in connection
with this Security Agreement.
"Borrower" means any one or more of Chi-Chi's, Inc., a Delaware
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corporation, and El Torito Restaurants, Inc., a Delaware corporation,
individually and collectively, jointly and severally.
"Collateral" means each of the following: the Accounts;
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Guarantor's Books; the Equipment; the General Intangibles; the Inventory; the
Negotiable Collateral; any money, or other assets of Guarantor which now or
hereafter come into the possession, custody, or control of Foothill; and the
proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance covering any or all of the Collateral, and any
and all Accounts, Guarantor's Books, Equipment, General Intangibles, Inventory,
Negotiable Collateral, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"Equipment" means all of Guarantor's present and hereafter
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acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods
(other than consumer goods, farm products, or Inventory), wherever located, and
any interest of Guarantor in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located.
"Event of Default" has the meaning ascribed to it in Section 6.
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"Excluded Contract Right" means, with respect to Guarantor, and
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with respect to any contract to which Guarantor is a party, a right or privilege
of Guarantor under such contract, or an obligation due to Guarantor under such
contract, that: (a) In the case of a More Important Contract, arises under a
contract described on Schedule E-1 of the Loan Agreement; or (b) In the case of
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a Less Important Contract, (i) does not consist of the right of Guarantor to
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receive a payment, or an obligation due to Guarantor with respect to a payment,
and (ii) is, by the express terms of such contract, subject to a restriction on
assignability that prohibits the pledge, hypothecation, mortgage, encumbrance,
or grant of a Lien on same, if such restriction is enforceable, and if the
breach of such restriction by Guarantor would constitute a material breach of
such contract sufficient to give rise to a right on the part of another party to
such contract to terminate such contract or to impose liability for not
insignificant damages upon Guarantor for breach of such contract; provided that
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the proceeds of any disposition of any Excluded Contract
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Right shall not constitute an Excluded Contract Right, and any such proceeds
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shall be subject to Foothill's security interest.
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"General Intangibles" means all of Guarantor's present and future
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general intangibles and other personal property (including contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer discs or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral; provided that
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General Intangibles shall not include any Excluded Contract Right.
"Guarantied Obligations" shall have the meaning ascribed to it in
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the Guaranty.
"Guarantor's Books" means all of Guarantor's books and records,
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including: ledgers; records indicating, summarizing, or evidencing Guarantor's
properties or assets (including the Collateral) or liabilities; all information
relating to Guarantor's business operations or financial condition; and all
computer programs, disc or tape files, printouts, runs, or other computer
prepared information in respect of such books and records.
"Guarantor" has the meaning ascribed thereto in the preamble to
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this Agreement.
"Guaranty" means the General Continuing Guaranty of Guarantor to
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Foothill of even date herewith.
"Inventory" means all present and future inventory in which
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Guarantor has any interest, including goods held for sale, license, or lease or
to be furnished under a contract of service and all of Guarantor's present and
future raw materials, work in process, finished goods, and packing and shipping
materials, wherever located, and any documents of title representing any of the
above.
"Investment Property" means "investment property" as that term
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is defined in Section 9115 of the Code.
"Less Important Contract" means, with respect to Guarantor, a
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contract to which Guarantor is a party that is not a More Important Contract.
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"Loan Agreement" means that certain Loan and Security Agreement,
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dated as of January 10, 1997 (as heretofore amended, supplemented, or otherwise
modified), among Borrower, Foothill, and the other parties thereto.
"More Important Contract" means, with respect to Guarantor, a
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contract to which Guarantor is a party: (a) Described on Schedule E-1 to the
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Loan Agreement; (b) the material breach of which by Guarantor could give rise to
a claim against Guarantor that is material in relation to Guarantor's financial
condition; or (c) the termination of which could interfere substantially with
the ongoing operations, businesses, or prospects of Guarantor.
"Negotiable Collateral" means all of Guarantor's present and
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future letters of credit, notes, drafts, instruments, Investment Property
(including the shares of stock of Subsidiaries of Guarantor), documents,
personal property leases (wherein Guarantor is the lessor), chattel paper, and
Guarantor's Books relating to any of the foregoing.
"Permitted Liens" means, with respect to the assets of Guarantor
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or its Subsidiaries: (a) Liens granted to Foothill or any assignee under the
Loan Documents, (b) Liens for unpaid taxes, assessments, and government charges
that either (i) are not yet due and payable or (ii) are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1 of the Loan Agreement, (d)(i) the
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interests of lessors or lessees under operating leases and subleases, or (ii)
the interests of licensees or franchisees under licenses or franchises of
Borrower Intellectual Property to the extent constituting an Ordinary Course
Disposition under clause (e) of the definition of Ordinary Course Disposition,
(e)(i) Liens securing purchase money Indebtedness or capital leases permitted
under Section 7.1(g) of the Loan Agreement, so long as the Lien only attaches to
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the asset purchased or acquired, or (ii) Acquisition Liens, (f) Liens arising by
operation of law, incurred in the ordinary course of business of Guarantor and
its Subsidiaries and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet due and payable, (ii) are the subject of
Permitted Protests, or (iii) in the aggregate are de minimis in amount, (g)
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Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, contracts or leases (to the extent permitted under
this Agreement), incurred in the ordinary course of business of Guarantor and
its Subsidiaries and not in connection with the borrowing of money, (i) Liens
arising by reason of security for surety or appeal bonds, (j) Liens of or
resulting from any judgment or award that does not constitute an Event of
Default hereunder, (k) Liens with respect to the Real Property Collateral, and
the Anaheim Property, that are exceptions to the commitments for title insurance
issued in connection with the Mortgages, and the Anaheim Mortgage as accepted by
Foothill at the time of such issuance, (l) with respect to any Real Property,
easements,
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rights of way, zoning and similar covenants and restrictions, and similar
encumbrances that do not materially interfere with or impair the use or
operation thereof by Guarantor or its Subsidiaries, (m) other Liens imposed by
operation of law that do not materially affect Guarantor's or its Subsidiaries
ability to perform their respective obligations under the Loan Documents, (n)
replacement or continued Liens granted to a Person who provides refinancing or
continuation of Indebtedness pursuant to Section 7.1(h) of the Loan Agreement;
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provided, that the replacement or continued Lien is limited to all or part of
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the properties or assets that secured the refinanced or continued Indebtedness.
"Secured Obligations" shall mean all liabilities, obligations,
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or undertakings owing by Guarantor to Foothill of any kind or description
arising out of or outstanding under, advanced or issued pursuant to, or
evidenced by the Guaranty, any other Loan Document heretofore, herewith, or
hereafter executed by Guarantor, or this Agreement, irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, voluntary or involuntary, whether now existing or hereafter
arising, and including all interest (including interest that accrues after the
filing of a case under the Bankruptcy Code) and any and all reasonable out-of-
pocket costs, fees (including reasonable attorneys fees), and expenses which
Guarantor is required to pay pursuant to any of the foregoing, by law, or
otherwise.
1.2 CODE. Any terms used in this Agreement which are defined in
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the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.3 CONSTRUCTION. Unless the context of this Agreement clearly
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requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. Any reference in this Agreement or in any of the
other Loan Documents to this Agreement or any of the other Loan Documents shall
include all alterations, amendments, restatements, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable. In the event of a direct conflict between the terms
and provisions of this Agreement and the Loan Agreement, it is the intention of
the parties hereto that both such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of the Loan Agreement shall control and
govern; provided, however, that the inclusion herein of additional obligations
on the part of Guarantor and supplemental rights and remedies in
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favor of Foothill, in each case in respect of the Collateral, shall not be
deemed a conflict with the Loan Agreement.
1.4 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
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attached to this Agreement shall be deemed incorporated herein by reference.
2. CREATION OF SECURITY INTEREST.
2.1 GRANT OF SECURITY INTEREST. Guarantor hereby grants to
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Foothill a continuing security interest in all of its currently existing and
hereafter acquired or arising Collateral in order to secure payment and
performance of the Secured Obligations. Foothill's security interests in the
Collateral shall attach to all Collateral without further act on the part of
Foothill or Guarantor. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, Guarantor has no authority, express or
implied, to dispose of any item or portion of the Collateral other than
Permitted Dispositions. Concurrent with the consummation of any Permitted
Disposition, Foothill agrees to release its Liens on the subject property or
asset (but not the proceeds from the Asset Disposition).
2.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
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including proceeds, is evidenced by or consists of Negotiable Collateral (other
than Collection items received by Guarantor in the ordinary course of
Guarantor's business and deposited), Guarantor shall, promptly upon the request
of Foothill, deliver physical possession of such Negotiable Collateral to
Foothill or its bailee to the extent required for Foothill to have a first
priority perfected Lien thereon.
2.3 [Intentionally omitted.]
2.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Guarantor shall
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execute, and deliver to Foothill, prior to or concurrently with Guarantor's
execution and delivery of this Agreement and at any time thereafter at the
request of Foothill, all financing statements, continuation financing
statements, fixture filings, security agreements, chattel mortgages, pledges,
mortgages, deeds of trust, assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices, schedules of accounts,
letters of authority, and all other documents that Foothill may reasonably
request, in form satisfactory to Foothill, to perfect and continue perfected
Foothill's security interests in the Collateral and in order to fully consummate
all of the transactions contemplated under the Loan Documents.
2.5 POWER OF ATTORNEY. Guarantor hereby irrevocably makes,
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constitutes, and appoints Foothill (and any of Foothill's officers, employees,
or agents
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designated by Foothill) as Guarantor's true and lawful attorney, with power to:
(a) if Guarantor refuses to, or fails timely to execute and deliver any of the
documents described in Section 2.4, sign the name of Guarantor on any of the
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documents described in Section 2.4; (b) endorse Guarantor's name on any
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Collection item that may come into Foothill's possession; (c) at any time that
an Event of Default has occurred and is continuing, make, settle, and adjust all
claims under Guarantor's policies of insurance and make all determinations and
decisions with respect to such policies of insurance. The appointment of
Foothill as Guarantor's attorney, and each and every one of Foothill's rights
and powers, being coupled with an interest, is irrevocable until all of the
Secured Obligations have been fully and finally repaid and performed and
Foothill's obligation to extend credit under the Loan Agreement is terminated.
2.6 RIGHT TO INSPECT. Prior to the time that an Event of Default
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has occurred and is continuing or Foothill deems itself insecure, Foothill
(through any of its officers, employees, or agents) shall have the right, from
time to time hereafter upon reasonable prior notification to Guarantor and
during normal business hours, to inspect Guarantor's and each of its
Subsidiary's Books and to check, test, and, subject to Section 2.11(d) of the
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Loan Agreement, appraise the Collateral in order to verify Guarantor's financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral. After the time that an Event of Default has
occurred and is continuing or Foothill deems itself insecure, Foothill (through
any of its officers, employees, or agents) shall have the right, from time to
time thereafter, to inspect Guarantor's and each of its Subsidiaries' Books and
to check, test, and, subject to Section 2.11(d) of the Loan Agreement, appraise
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the Collateral in order to verify Guarantor's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
3. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants as follows:
3.1 NO PRIOR ENCUMBRANCES. Guarantor owns the Collateral, free
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and clear of Liens, except for Permitted Liens.
3.2 PLACE OF BUSINESS/CHIEF EXECUTIVE OFFICE; FEIN. As of the KKR
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Closing Date, the chief executive office of Guarantor is at the address
indicated in the first paragraph of this Agreement. Guarantor's FEIN is _______.
3.3 [Intentionally Omitted].
3.4 [Intentionally Omitted].
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3.5 [Intentionally Omitted].
3.6 DUE ORGANIZATION AND QUALIFICATION. Guarantor is a Delaware
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corporation, and it is and shall at all times hereafter be duly organized and
existing and in good standing under the laws of Delaware and qualified and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified could reasonably be expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
finances, or prospects of Guarantor or on the value of the Collateral.
3.7 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
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performance of this Agreement, the Guaranty, and any other Loan Document to
which Guarantor is a party are within Guarantor's corporate powers, have been
duly authorized, and are not in conflict with nor, constitute a breach of any
provision contained in Guarantor's Articles or Certificate of Incorporation, or
By-laws, nor will they constitute an event of default under any material
agreement to which Guarantor is now or may hereafter become a party.
3.8 LITIGATION. There are no actions or proceedings pending by
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or against Guarantor before any court or administrative agency and Guarantor
does not have knowledge or belief of any pending, threatened, or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving Guarantor, except for: (a) matters disclosed on Schedule
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5.9 of the Loan Agreement; and (b) matters arising after the date hereof that,
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if decided adversely to Guarantor, would not materially impair the prospect of
repayment of the Secured Obligations or materially impair the value or priority
of Foothill's security interests in the Collateral.
3.9 NO INTENT TO HINDER CREDITORS. No transfer of property is
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being made by Guarantor and no obligation is being incurred by Guarantor in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Guarantor.
3.10 RELIANCE BY FOOTHILL; CUMULATIVE. The warranties,
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representations, and agreements set forth herein shall be conclusively presumed
to have been relied upon by Foothill and shall be cumulative and in addition to
any and all other warranties, representations, and agreements which Guarantor
shall now or hereinafter give, or cause to be given, to Foothill.
4. AFFIRMATIVE COVENANTS.
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Guarantor covenants and agrees that, until payment in full of the Secured
Obligations, and unless Foothill shall otherwise consent in writing, Guarantor
shall do all of the following:
4.1 [Intentionally Omitted.]
4.2 [Intentionally Omitted.]
4.3 [Intentionally Omitted.]
4.4 [Intentionally Omitted.]
4.5 TAXES. Other than taxes of which Guarantor is unaware or that
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in the aggregate are de minimis, all assessments and taxes (including
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withholding taxes), whether real, personal, or otherwise, due or payable by, or
imposed, levied, or assessed against Guarantor or any of its property have been
paid, and shall be paid in full, before delinquency or before the expiration of
any extension period, except to the extent that the validity of such assessment
or tax (other than taxes that are the subject of a United States federal tax
lien) is the subject of a Permitted Protest. Guarantor, upon request, shall
furnish Foothill with proof reasonably satisfactory to Foothill indicating that
Guarantor has made all due and timely payments or deposits of all such federal,
state, and local taxes, assessments, or contributions required of it by law.
4.6 INSURANCE.
(a) At its expense, keep the Collateral insured against loss
or damage by fire, theft, explosion, sprinklers, and other hazards and risks,
and in such amounts, as are ordinarily insured against by other owners in
similar businesses. Guarantor also shall maintain business interruption, public
liability, product liability, and property damage insurance relating to their
ownership and use of the Collateral, as well as insurance against larceny,
embezzlement, and criminal misappropriation, in each case consistent with past
practice; provided, however, that Guarantor and its Subsidiaries only shall be
required to use their reasonable best efforts to maintain earthquake insurance,
in amounts and subject to deductibles consistent with those ordinarily insured
against by other similar companies in the same industry, so long as it is
available at reasonable commercial rates. Foothill agrees that Guarantor and its
Subsidiaries may self-insure for workers compensation insurance, generally
liability insurance, auto liability insurance, and health insurance, in each
case, consistent with past practice and with a limit of up to $500,000 per
occurrence.
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(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be reasonably satisfactory to
Foothill. Insurance policies covering property and assets against loss by fire,
lightening, windstorm, hail, explosion, aircraft, smoke damage, earthquake,
elevator collisions and other risks included under an "extended coverage"
endorsement shall, with respect to hazard insurance and such other insurance as
Foothill shall specify, contain a California Form 438BFU (NS) mortgagee
endorsement, or an equivalent endorsement satisfactory to Foothill, showing
Foothill as a loss payee thereof as its interests may appear, and shall contain
a waiver of warranties. All such insurance (with the exception of workers'
compensation and health insurance policies) shall name Foothill as an additional
insured as its interest may appear. Every policy of insurance referred to in
this Section 4.6 (with the exception of workers' compensation and health
insurance policies) shall contain an agreement by the insurer that it will not
cancel such policy except after 10 days prior written notice to Foothill.
Certified copies or originals of such policies or certificates thereof
satisfactory to Foothill evidencing such insurance shall be delivered to
Foothill prior to the expiration or the cancellation of the existing or
preceding policies. Guarantor shall deliver to Foothill, upon the request of
Foothill, evidence of the payment of all premiums for such policies of
insurance.
4.7 FOOTHILL EXPENSES. Guarantor shall immediately and without
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demand reimburse Foothill for all sums expended by Foothill which constitute
Foothill Expenses and Guarantor hereby authorizes and approves all advances and
payments by Foothill for items constituting Foothill Expenses.
5. NEGATIVE COVENANTS.
Guarantor covenants and agrees that until payment in full of
the Secured Obligations, it will not do any of the following without Foothill's
prior written consent:
5.1 LIENS. Create, incur, assume, or permit to exist, directly or
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indirectly, any lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens.
5.2 [Intentionally omitted.]
5.3 [Intentionally omitted.]
5.4 CHANGE NAME. Except on 30 days prior written notice to
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Foothill, change its name or FEIN.
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5.5 [Intentionally omitted.]
5.6 [Intentionally omitted.]
5.7 [Intentionally omitted.]
5.8 [Intentionally omitted.]
5.9 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
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EQUIPMENT WITH BAILEES. Without thirty (30) days prior written notification to
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Foothill, relocate its chief executive office to a new location, unless, at the
time of such written notification, it provides any financing statements or
fixture filings necessary to perfect and continue perfected Foothill's security
interests and also provides to Foothill a landlord's waiver in form and
substance satisfactory to Foothill. The Inventory and Equipment shall not at any
time now or hereafter be stored with a bailee, warehouseman, or similar party
without Foothill's prior written consent.
6. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
6.1 The occurrence of an Event of Default (as defined in the Loan
Agreement);
6.2 If (a) Guarantor fails or neglects to perform, keep, or
observe, in any material respect, any term, provision, condition, covenant, or
agreement contained in this Agreement or in the Guaranty, or in any other
present or future Loan Document between Guarantor and Foothill and such failure
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continues for a period of 15 days from the date on which Guarantor first had
knowledge or reasonably should have had knowledge of such failure or neglect, or
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(b) Guarantor fails or neglects to perform, keep, or observe, in any material
respect, any other term, provision, condition, covenant, or agreement contained
in this Agreement or in the Guaranty, or in any other present or future Loan
Document between Guarantor and Foothill, and Foothill, in its reasonable
discretion, determines such failure or neglect is not capable of cure by
Guarantor within 15 days from the date on which Guarantor first had knowledge or
reasonably should have had knowledge of such failure or neglect;
6.3 If there is a Material Adverse Collateral Change;
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6.4 (a) If a notice of lien, levy, or assessment is filed of
record with respect to any of Guarantor's properties or assets by the United
States Government, or any department, agency, or instrumentality thereof, or if
any taxes or debts owing at any time hereafter to the United States becomes a
lien, whether ▇▇▇▇▇▇ or otherwise, upon any of Guarantor's properties or assets;
or (b) if a notice of lien, levy, or assessment is filed of record for an amount
in excess of $250,000 with respect to any of Guarantor's properties or assets by
any state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a lien
for an amount in excess of $250,000, whether ▇▇▇▇▇▇ or otherwise, upon any of
Guarantor's properties or assets and, in any such case, such taxes or debts are
not the subject of a Permitted Protest, and the lien, levy, or assessment is not
released, discharged, or bonded against before the earlier of 30 days of the
date it first arises or 5 days of the date when such property or asset is
subject to being forfeited;
6.5 If a judgment or other claim becomes a Lien upon any material
portion of Guarantor's properties or assets and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30
days of the date it first arises or 5 days of the date when such property or
asset is subject to being forfeited;
6.6 If there is a material default in any material agreement
relating to Indebtedness to which Guarantor is a party with one or more third
Persons resulting in a right by such third Persons, irrespective of whether
exercised, to accelerate the maturity of Guarantor's obligations thereunder;
6.7 [Intentionally Omitted;]
6.8 If any misstatement or misrepresentation exists now or
hereafter in any written warranty, representation, statement, or report made
pursuant to any of the Loan Documents to Foothill by Guarantor or any officer,
employee, agent, or director of Guarantor (in the case of employees or agents
who are not officers or directors, to the extent authorized by an officer or
director to communicate or transact business with Foothill or who regularly
communicate or transact business with Foothill), or if any such warranty or
representation is withdrawn.
7. FOOTHILL'S RIGHTS AND REMEDIES.
7.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
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continuation of an Event of Default, the security hereby constituted shall
become enforceable and, in addition to all other rights and remedies available
to Foothill as provided hereafter, Foothill may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by Guarantor:
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(a) Proceed directly and at once, without notice, against the
Guarantor to collect and recover the full amount or any portion of the
Guarantied Obligations, without first proceeding against Borrower, or against
any security or collateral for the Guarantied Obligations;
(b) Without notice to the Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Guarantied Obligations (i) any indebtedness due
or to become due from Foothill to the Guarantor and (ii) any moneys, credits or
other property belonging to the Guarantor at any time held by or coming into the
possession of Foothill;
(c) May exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein and the Guaranty or otherwise
available to it, all the rights and remedies available to it at law (including
those of a secured party under the Code) or in equity;
(d) [Intentionally omitted;]
(e) [Intentionally omitted;]
(f) Without notice or demand, make such payments and do such
acts as Foothill considers reasonably necessary to protect its security interest
in the Collateral. Guarantor agrees to assemble the Collateral if Foothill so
requires, and to make the Collateral available to Foothill as Foothill may
designate. Guarantor authorizes Foothill to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Foothill's reasonable determination appears to be prior
or superior to its security interest and to pay all reasonable expenses incurred
in connection therewith. With respect to any of Guarantor's owned premises,
Guarantor hereby grants Foothill a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Foothill's rights or remedies provided
herein, at law, in equity, or otherwise;
(g) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Foothill is hereby granted a license or other right to
use, without charge, Guarantor's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of advertising for sale and selling any Collateral, and
Guarantor's rights under all licenses and all franchise agreements shall inure
to Foothill's benefit;
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(h) Sell all or any part of the Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Guarantor's
premises) as Foothill determines is commercially reasonable. It is not necessary
that the Collateral be present at any such sale. Foothill shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Guarantor,
which right or equity is hereby waived or released to the extent permitted by
law. Anything in the foregoing to the contrary notwithstanding, Foothill
acknowledges and agrees that (i) the Flagstar Bonds contain certain legends,
contain certain restrictions on transfer, and are subject to certain claims of
Flagstar and potential reductions of the principal amount thereof, (ii) any
transfer of the Flagstar Bonds (including, without limitation, upon foreclosure)
shall be subject to any enforceable restrictions contained in the Flagstar
Bonds, and (iii) so long as no Triggering Event has occurred and is continuing
and so long as the proposed sale would not violate any covenant contained in any
Loan Document to which Guarantor is a party or by which Guarantor is bound, in
the event of a proposed sale by Guarantor of any Flagstar Bonds in the
possession of a bailee under a bailee agreement with Foothill, promptly after
Guarantor notifies Foothill of such sale, Foothill shall instruct the bailee to
deliver such Flagstar Bonds to Guarantor, (or otherwise in accordance with
Guarantor's written instructions) within 5 Business Days of Guarantor's notice
to Foothill, it shall deliver duly executed non-recourse endorsements or
assignments (if necessary), provided that Guarantor shall immediately return
--------
such Flagstar Bonds to the bailee, and such endorsements or assignments to
Foothill, in the event that such sale is not consummated within 5 Business Days
of the delivery of such Flagstar Bonds to Guarantor.
(i) Foothill shall give notice of the disposition of the
Personal Property Collateral as follows:
(1) Foothill shall give Guarantor and each holder of a
security interest in the Personal Property Collateral who has filed with
Foothill a written request for notice, a notice in writing of the time and place
of public sale, or, if the sale is a private sale or some other disposition
other than a public sale is to be made of the Personal Property Collateral, then
the time on or after which the private sale or other disposition is to be made;
(2) The notice shall be personally delivered or mailed,
postage prepaid, to Guarantor as provided in Section 10, at least 10 days before
--------
the date fixed for the sale, or at least 10 days before the date on or after
which the private sale or other disposition is to be made; no notice needs to be
given prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market. Notice to Persons
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other than Guarantor claiming an interest in the Personal Property Collateral
shall be sent to such addresses as they have furnished to Foothill;
(3) If the sale is to be a public sale, Foothill also shall
give notice of the time and place by publishing a notice one time at least 10
days before the date of the sale in a newspaper of general circulation in the
county in which the sale is to be held;
(j) [Intentionally omitted;]
(k) [Intentionally omitted;]
(l) [Intentionally omitted;]
(m) [Intentionally omitted;]
(n) Any deficiency which exists after disposition of the
Collateral as provided above will be paid immediately by Guarantor up to the
maximum amount, if any, of Guarantor's liability under the Guaranty. Any excess
will be promptly returned to Guarantor, without interest and subject to the
rights of third parties, by Foothill.
Except as required by law, Foothill may take any or all of the foregoing action
without demand, presentment, protest, advertisement or notice of any kind to or
upon Guarantor or any other person. Anything in this Agreement to the contrary
notwithstanding, unless a Triggering Event has occurred and is continuing,
Foothill (a) shall not exercise any of its default remedies with respect to the
Flagstar Bonds, and (b) shall not exercise any of its default remedies with
respect to the Investment Property.
7.2 REMEDIES CUMULATIVE. Foothill's rights and remedies under
-------------------
this Agreement and the other Loan Documents shall be cumulative. Foothill shall
have all other rights and remedies not inconsistent herewith as provided under
the Code, by law, or in equity. No exercise by Foothill of one right or remedy
shall be deemed an election,and no waiver by Foothill of any Event of Default on
Borrower's part shall be deemed a continuing waiver. No delay by Foothill shall
constitute a waiver, election, or acquiescence by it.
8. TAXES AND EXPENSES REGARDING THE COLLATERAL.
If Guarantor fails to pay any monies (whether taxes, rents,
assessments, insurance premiums, or otherwise) due to third persons or entities,
or fails to
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make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Foothill
determines that such failure, by Guarantor reasonably could be expected to have
a material adverse effect on Foothill's interests in the Collateral, in its
discretion and without prior notice to Guarantor, Foothill may do any or all of
the following: (a) make payment of the same or any part thereof; (b) set up such
reserves in Borrower's loan account as Foothill reasonably deems necessary to
protect Foothill from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type described in Section 4.6 hereof insuring
-----------
Guarantor's ownership and use of the Collateral, and take any action with
respect to such policies as Foothill reasonably deems prudent. Any amounts paid
or deposited by Foothill shall constitute Foothill Expenses, shall immediately
become additional Secured Obligations, shall bear interest at the applicable
rate described in the Loan Document, and shall be secured by the Collateral. Any
payments made by Foothill shall not constitute an agreement by Foothill to make
similar payments in the future or a waiver by Foothill of any Event of Default
under this Agreement. Foothill need not inquire as to, or contest the validity
of, any such expense, tax, security interest, encumbrance, or lien and the
receipt of the usual official notice for the payment thereof shall for the
purposes of this Agreement be conclusive evidence that the same was validly due
and owing. Foothill shall use its best efforts to provide notice to Guarantor of
any action taken by it under this Section 8.
9. WAIVERS; INDEMNIFICATION.
9.1 DEMAND; PROTEST; ETC. To the fullest extent permitted by
--------------------
applicable law, Guarantor waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by Foothill on which Guarantor may in any way be liable.
9.2 FOOTHILL'S LIABILITY FOR COLLATERAL. So long as Foothill
-----------------------------------
complies with its obligations, if any, under Section 9207 of the Code, Foothill
shall not in any way or manner be liable or responsible for: (a) the safekeeping
of the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person; and (e) risk of loss, damage, or destruction of the Collateral.
9.3 INDEMNIFICATION. Guarantor agrees to defend, indemnify,
---------------
save, and hold Foothill and its officers, employees, and agents harmless
against: (a) all demands, claims, and liabilities claimed or asserted by any
other Person, and (b) all losses (including reasonable attorneys fees and
disbursements) in any way suffered, incurred, or paid by
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Foothill as a result of or in any way arising out of, or related to transactions
with Borrower or Guarantor, under this Agreement and any other Loan Documents.
Guarantor shall have no obligation under this Section 9.3: (a) with respect to
-----------
indemnification of any liability that a court of competent jurisdiction finally
determines to have resulted from the gross negligence or willful misconduct of
the indemnified person; (b) with respect to any settlement in excess of $250,000
made without Guarantor's consent (which shall not be unreasonably withheld,
conditioned, or delayed and which consent need not be obtained if Guarantor, or
Borrower is in default of its obligations under this Section 9.3); or (c)
-----------
without Guarantor's consent (which shall not be reasonably withheld,
conditioned, or delayed), for the fees and disbursements of more than one
separate firm of attorneys for all indemnified persons relative to a
indemnification of any particular liability. This provision shall survive full
and final payment in cash of the Secured Obligations and the termination of all
commitments of Foothill to extend credit to Borrower or Guarantor for a period
of 2 years.
9.4 WAIVERS. (a) To the fullest extent permitted by applicable
-------
law, Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of
any loans or other financial accommodations made or extended under the Loan
Agreement, or the creation or existence of any Obligations; (iii) notice of the
amount of the Obligations, subject, however, to Guarantor's right to make
inquiry of Foothill to ascertain the amount of the Obligations at any reasonable
time; (iv) notice of any adverse change in the financial condition of Borrower
or of any other fact that might increase Guarantor's risk hereunder; (v) notice
of presentment for payment, demand, protest, and notice thereof as to any
instrument among the Loan Documents; (vi) notice of any unmatured Event of
Default or Event of Default under the Loan Agreement; and (vii) all other
notices (except if such notice is specifically required to be given to Guarantor
under this Agreement) and demands to which Guarantor might otherwise be
entitled.
(b) To the fullest extent permitted by applicable law, Guarantor hereby
waives the right by statute or otherwise to require Foothill to institute suit
against Borrower or to exhaust any rights and remedies which Foothill has or may
have against Borrower. Guarantor further waives any defense arising by reason
of any disability or other defense (other than the defense that the Obligations
shall have been fully and finally indefeasibly paid) of Borrower or by reason of
the cessation from any cause (other than that the Obligations shall have been
fully and finally indefeasibly paid) whatsoever of the liability of Borrower in
respect thereof.
(c) To the fullest extent permitted by applicable law, Guarantor hereby
waives: (i) any rights to assert against Foothill any defense (legal or
equitable), set-off, counterclaim, or claim which Guarantor may now or at any
time hereafter have against Borrower or any other party liable to Foothill on
account of or with respect to the
-17-
Obligations; (ii) any defense, set-off, counterclaim, or claim, of any kind or
nature, arising directly or indirectly from the present or future sufficiency,
validity, or enforceability of the Obligations; (iii) any defense arising by
reason of any claim or defense based upon an election of remedies by Foothill
including, to the extent applicable, the provisions of (S)(S) 580d and 726 of
the California Code of Civil Procedure, or any similar law of California or any
other jurisdiction; (iv) the benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof.
(d) To the fullest extent permitted by applicable law, Guarantor hereby
waives any right of subrogation Guarantor has or may have as against Borrower
with respect to the Obligations. In addition, Guarantor hereby waives any right
to proceed against Borrower, now or hereafter, for contribution, indemnity,
reimbursement, or any other suretyship rights and claims (irrespective of
whether direct or indirect, liquidated or contingent), with respect to the
Obligations. Guarantor also hereby waives any right to proceed or to seek
recourse against or with respect to any property or asset of Borrower.
Guarantor hereby agrees that, in light of the waivers contained in this Section,
Guarantor shall not be deemed to be a "creditor" (as that term is defined in the
Bankruptcy Code or otherwise) of Borrower, whether for purposes of the
application of Sections 547 or 550 of the United States Bankruptcy Code or
otherwise.
(e) If any of the Secured Obligations at any time are secured by a mortgage
or deed of trust upon real property, Foothill may elect, in its sole discretion,
upon a default with respect to the Secured Obligations, to foreclose such
mortgage or deed of trust judicially or nonjudicially in any manner permitted by
law, before or after enforcing this Agreement, without diminishing or affecting
the liability of Guarantor hereunder. Guarantor understands that (a) by virtue
of the operation of California's antideficiency law applicable to nonjudicial
foreclosures, an election by Foothill nonjudicially to foreclose such a mortgage
or deed of trust probably would have the effect of impairing or destroying
rights of subrogation, reimbursement, contribution, or indemnity of Guarantor
against Borrower or guarantors or sureties, and (b) absent the waiver given by
Guarantor herein, such an election might estop Foothill from enforcing this
Agreement against Guarantor. Understanding the foregoing, and understanding
that Guarantor is hereby relinquishing a defense to the enforceability of this
Agreement, Guarantor hereby waives any right to assert against Foothill any
defense to the enforcement of this Agreement, whether denominated "estoppel" or
otherwise, based on or arising from an election by Foothill nonjudicially to
foreclose any such mortgage or deed of trust. Guarantor understands that the
effect of the foregoing waiver may be that Guarantor may have liability
hereunder for amounts with respect to which Guarantor may be left without rights
of subrogation, reimbursement, contribution, or indemnity against Borrower or
guarantors or sureties. Guarantor also agrees that the "fair market value"
provisions of
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Section 580a of the California Code of Civil Procedure shall have no
applicability with respect to the determination of Guarantor's liability under
this Agreement.
(f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION
SET FORTH IN THIS AGREEMENT, GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH
WAIVER IS PERMITTED BY LAW, ANY AND ALL DEFENSES ARISING DIRECTLY OR INDIRECTLY
UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE (S)(S) 2808, 2809, 2810, 2815,
2819, 2820, 2821, 2838, 2839, 2845, 2848, 2849, AND 2850, TO THE EXTENT
APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE (S)(S) 580A, 580B, 580C, 580D,
AND 726, AND, TO THE EXTENT APPLICABLE, CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA
CIVIL CODE.
(g) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION
SET FORTH IN THIS AGREEMENT, GUARANTOR HEREBY WAIVES ALL RIGHTS AND DEFENSES
ARISING OUT OF AN ELECTION OF REMEDIES BY FOOTHILL, EVEN THOUGH THAT ELECTION OF
REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR A
SECURED OBLIGATION, HAS DESTROYED GUARANTOR'S RIGHTS OF SUBROGATION AND
REIMBURSEMENT AGAINST THE BORROWER BY THE OPERATION OF SECTION 580D OF THE CODE
OF CIVIL PROCEDURE OR OTHERWISE.
10. NOTICES.
All notices and other communications hereunder to Foothill shall be in
writing and shall be mailed, sent or delivered in accordance with the Loan
Agreement and all notices and other communications hereunder to Guarantor shall
be in writing and shall be mailed, sent or delivered in care of Borrower in
accordance with the Loan Agreement.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS
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LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT FOOTHILL'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE
FOOTHILL ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY
MAY BE FOUND. EACH OF GUARANTOR AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 11.
----------
GUARANTOR AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. GUARANTOR AND FOOTHILL REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12. DESTRUCTION OF GUARANTOR'S DOCUMENTS.
All documents, schedules, agings, or other papers delivered to
Foothill may be destroyed or otherwise disposed of by Foothill four (4) months
after they are delivered to or received by Foothill, unless Guarantor requests,
in writing, the return of said documents, schedules or other papers and makes
arrangements, at Guarantor's expense, for their return.
13. GENERAL PROVISIONS.
13.1 EFFECTIVENESS. This Agreement shall be binding and deemed
-------------
effective when executed by Guarantor and accepted and executed by Foothill.
13.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
----------------------
the benefit of the respective successors and assigns of each of the parties;
provided, however, that Guarantor may not assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely
-20-
void. No consent to an assignment by Foothill shall release Guarantor from its
Secured Obligations. Foothill may assign this Agreement and its rights and
duties hereunder in accordance with the Loan Agreement, and no consent or
approval by Guarantor is required in connection with any such assignment. In
accordance with the Loan Agreement, Foothill reserves the right to sell, assign,
transfer, negotiate, or grant participations in all or any part of, or any
interest in Foothill's rights and benefits hereunder. In accordance with the
Loan Agreement, Foothill may disclose all documents and information which
Foothill now or hereafter may have relating to Guarantor or Guarantor's
business. To the extent that Foothill assigns its rights and obligations to a
third Person in accordance with the Loan Agreement, Foothill thereafter shall be
released from such assigned obligations to Guarantor and such assignment shall
effect a novation between Guarantor and such third Person.
13.3 SECTION HEADINGS. Headings and numbers have been set forth
----------------
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
13.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against Foothill or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
13.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
--------------------------
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
13.6 AMENDMENTS IN WRITING. This Agreement can only be amended by
---------------------
a writing signed by both Foothill and Guarantor.
13.7 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.
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13.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence
----------------------------------------
or payment of the Secured Obligations by Guarantor or the transfer by Guarantor
to Foothill of any property of Guarantor should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, and other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
Foothill is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that Foothill is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of Foothill related thereto, the liability of Guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
13.9 TERMINATION. Upon the full and final payment in cash of the
-----------
Secured Obligations and the termination of all commitments of Foothill to extend
credit to Borrower or Guarantor, Foothill shall promptly terminate and release
its security interests in the Collateral, execute and deliver any necessary
financing statement terminations or releases, and return to Guarantor any
Collateral that was in the possession of Foothill, provided that, with respect
--------
to any loss or damage Foothill may incur as a result of dishonored checks or
other items of payment received by Foothill and applied to the Secured
Obligations, Foothill shall, at its option, (i) have received a written
agreement, executed by Borrower or Guarantor (as required by Foothill in its
sole discretion) and by any Person whose loans or other advances to Borrower or
Guarantor are used in whole or in part to satisfy the Secured Obligations,
indemnifying Foothill from any such loss or damage; or (ii) have retained such
monetary reserves or Liens on the Collateral for such period of time as
Foothill, in its reasonable discretion, may deem necessary to protect Foothill
from any such loss or damage. All reasonable expenses incurred by Foothill in
connection with the termination of the security interests granted to Foothill in
connection with this agreement shall be the sole expense of Guarantor.
- Remainder of page intentionally left blank -
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed at Los Angeles, California.
▇▇▇ ▇▇▇ ROO, INC.,
a Delaware corporation
By
---------------------------------
Its
---------------------------------
FOOTHILL CAPITAL CORPORATION, a
California corporation
By
---------------------------------
Its
---------------------------------
-S-1
