Exhibit IV
MODIFICATION AGREEMENT
----------------------
(First Amendment to Security Agreement (Canadian))
THIS MODIFICATION AGREEMENT is dated for reference December 12, 2001.
AMONG:
ELEPHANT & CASTLE GROUP INC.
(the "Debtor")
AND:
THE ELEPHANT AND CASTLE CANADA INC.
(the "Subsidiary")
AND:
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP
(the "Secured Party")
WHEREAS:
A. The Debtor, the Subsidiary and the Secured Party have agreed to amend
and restate that certain Note, Stock Purchase and Warrant Agreement
dated as of November 30, 1995 pursuant to the agreement entitled the
"Amended and Restated Note, Stock Purchase and Warrant Agreement" dated
for reference December 12, 2001 among the same parties (as the same may
be further amended, extended, renewed, replaced, restated and in effect
form time to time the "Amended and Restated Note, Stock Purchase and
Warrant Agreement");
B. In connection with the Amended and Restated Note, Stock Purchase and
Warrant Agreement the Debtor and the Subsidiary desire to amend that
certain security agreement (the "Security Agreement") dated as of
October 6, 1999 among the Debtor, the Subsidiary and the Secured Party;
AND
C. Capitalized terms unless otherwise defined herein shall have the
meaning attributed thereto in the Security Agreement.
D. It is a condition to the Secured Party entering into the Amended and
Restated Note, Stock Purchase and Warrant Agreement, that the Debtor
and the Subsidiary execute this Modification Agreement.
NOW THEREFORE WITNESSETH that in consideration of the premises and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto), the parties hereby agree as
follows:
1. Amendment to the Security Agreement
-----------------------------------
The Debtor and Subsidiary agree that the Security Agreement is amended
by:
(a) deleting the first recital and substituting the following
therefor:
"WHEREAS, the Debtor and the Secured Party have entered into
that certain Note, Stock Purchase and Warrant Agreement dated
November 30, 1995 (as amended and restated by that certain
Amended and Restated Note, Stock Purchase and Warrant
Agreement dated for reference December 12, 2001 and as may
from time to time be further amended, extended, renewed,
replaced, restated and in effect from time to time the "Note,
Stock Purchase and Warrant Agreement") and, pursuant to the
Note, Stock Purchase and Warrant Agreement, the Debtor has
executed and delivered to the Secured Party the amended and
restated notes (the "Notes") in the aggregate principal amount
of U.S.$10,000,000. Terms used herein not otherwise defined
shall have the meaning ascribed thereto in the Note, Stock
Purchase and Warrant Agreement"; and
(b) deleting the second recital and substituting the following
therefor:
"WHEREAS the Secured Party and the Debtor desire to continue
the security interest in the Collateral in full force and
effect as security for the repayment of the Notes and the
Debtor and the Subsidiary have agreed to execute this
Agreement and, pursuant hereto, to pledge the Collateral (as
hereinafter defined) as security for the prompt satisfaction
of the Secured Obligations (as hereinafter defined)."
(c) section 1.1(a) is hereby amended by deleting clauses (iv) and
(vi) thereof in their entirety and substituting the following
in lieu thereof:
"(iv) all equipment now owned or hereafter
acquired either by the Debtor or by the
Subsidiary, in all of its forms, located in
Canada on all properties now owned or leased
by the Debtor or the Subsidiary, a list of
properties currently owned or leased by the
Debtor or the Subsidiary is attached hereto
as Exhibit B, including, without limitation,
all machinery and other goods, furniture,
fixtures, furnishings, office supplies,
appliances and all other similar types of
tangible personal property of whatever
nature (whether or not the same constitute
fixtures) and all parts thereof
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and all accessions thereto, together with
all parts, fittings, special tools,
alterations, substitutions, replacements and
accessions thereto;
(vi) all claims, awards and payments made as a
result of the exercise of the right of
eminent domain, condemnation or
expropriation against property or any part
thereof (the "Property") subject to any of
the leases now held by the Debtor or the
Subsidiary in Canada (the "Leases"), a list
of the Leases now held by the Debtor and the
Subsidiary is set forth on Exhibit B hereto,
or payments received in lieu of the exercise
of any such right, all rents, income or
profits arising as from or in connection
with any of the Leases, all compensation
received as damages for injury to the
Property, all proceeds from insurance on
improvements to the Property, and all
proceeds of any sale, assignment or
subletting of any of the Leases
(collectively, the "Lease Proceeds");";
(d) section 1.1(c) is hereby deleted in its entirety and the
following substituted therefor;
"(c) charges as and by way of a floating charge to
and in favour of the Secured Party all of the
Debtor's and the subsidiary's right, title and
interest in and to all of their respective presently
owned or held, real, immoveable and leasehold
property, including, without limitation the leasehold
property described in Exhibit B, and all interests
therein, and all easements, rights-of-way,
privileges, benefits, licences, improvements and
rights whether connected therewith or appurtenant
thereto, including all structures, plant and other
fixtures (all of which is collectively called the
"Real Property");";
(e) Section 1.3 of the Security Agreement is hereby deleted in its
entirety;
(f) The following paragraph is added immediately after Section 2.1
of the Security Agreement:
"In consideration of the continuation of the Security
Interest hereunder and continuation of the security
interest granted pursuant to the U.S. Documents (as
herein defined), the Secured Party hereby waives and
forgives the accrued and unpaid interest on the Notes
in the aggregate amount of U.S.$620,000;
(g) Section 2.2 of the Security Agreement is hereby deleted in its
entirety and the following substituted therefor:
"2.2 This Agreement is being executed and delivered
to secure, and Security Interests herein granted
shall secure: (a) full payment and performance of all
of the indebtedness and obligations owing to the
Secured Party by the Debtor under the Note, Stock
Purchase and Warrant
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Agreement and the Notes, whether for principal,
interest, costs, fees, expenses or otherwise, (b) all
covenants of the Debtor and of the Subsidiary under
this Agreement and all covenants of the Debtor under
the Note, Stock Purchase and Warrant Agreement, in
each case including all renewals, extensions and
modifications thereof, and (c) all reasonable costs
and expenses incurred by the Secured Party in
collecting the indebtedness evidenced by the Notes or
otherwise enforcing its rights under this Agreement,
the Note, Stock Purchase and Warrant Agreement or the
Notes, including without limitation, reasonable
attorneys' fees. All of such debts, indebtedness,
liabilities, covenants and duties referred to in (a),
(b) and (c) of this Section 2.2 are hereafter
collectively referred to as the "Secured
Obligations".
(h) Section 14.2 is hereby amended by deleting the address of the
Debtor and the Subsidiary set forth therein and by inserting
the following address in lieu thereof:
"1190 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx, X0X 0X0".
2. Conditions Precedent.
--------------------
The Secured Party's obligation to enter into this Modification
Agreement is subject to the satisfaction, on or prior to the date hereof, of the
following conditions:
(a) The Secured Party, the Debtor and the Subsidiary shall have
entered into the Amended and Restated Note, Stock Purchase and
Warrant Agreement; and
(b) The U.S. Security Agreement (as defined in the Security
Agreement) among, inter alia, the Company and the Secured
Party dated as of October 6, 1999 and documents related
thereto shall have been amended as provided for in the Amended
and Restated Note, Stock Purchase and Warrant Agreement.
3. General Provisions
------------------
(a) All covenants, clauses, agreements, provisos, stipulations,
conditions, powers, matters and things whatsoever contained in
the Security Agreement as amended hereby, are hereby confirmed
by each of the Secured Party, the Debtor and the Subsidiary
and shall continue in full force and effect, save as expressly
amended hereby.
(b) This Modification Agreement shall from the date hereof and
without prejudice to the rights and priorities of the Secured
Party as against the Debtor and the Subsidiary or any
subsequent encumbrancer, be read and construed along with the
Security Agreement and be treated as a part thereof and for
such purposes and so far as may be necessary to effectuate
these presents, the Security Agreement shall be regarded as
being hereby amended and the Security Agreement as so amended
together with all of the covenants, clauses, agreements,
provisos, stipulations, conditions, powers, matters and things
whatsoever contained in the Security Agreement shall continue
in full force and effect.
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(c) The Debtor and Subsidiary covenant and agree to keep, observe
and perform each and every one of the terms, covenants and
conditions on the part of the Debtor and Subsidiary to be
kept, observed and performed in the Security Agreement as
modified by this Modification Agreement in accordance with the
terms thereof and hereof.
(d) This Modification Agreement and everything herein contained
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
4. Governing Law
-------------
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY, AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF
BRITISH COLUMBIA AND THE LAWS OF CANADA APPLICABLE THEREIN WITHOUT
REGARD FOR CONFLICT OF LAWS PRINCIPLES.
5. Counterpart and Facsimile Execution
-----------------------------------
This Modification Agreement may be signed in as many counterparts as
may be necessary and delivered by facsimile each of which so signed
shall be deemed to be an original, and such counterparts together shall
constitute one and the same Modification Agreement.
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IN WITNESS WHEREOF this Modification Agreement has been
executed this 12 day of December, 2001.
DEBTOR:
ELEPHANT & CASTLE GROUP INC.
By: _____________________________
Name: Xxxx Xxxxxx
Title: President and CEO
SUBSIDIARY:
THE ELEPHANT AND CASTLE CANADA INC.
By: _____________________________
Name: Xxxx Xxxxxx
Title: President and CEO
SECURED PARTY:
GE INVESTMENT PRIVATE PARTNERS II, A LIMITED
PARTNERSHIP
By: GE Asset Management Incorporated,
its General Partner
By: _____________________________
Name:
Title:
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