Exhibit 10.2
AMENDED AND RESTATED SECURITY
AGREEMENT
THIS AMENDED AND RESTATED SECURITY
AGREEMENT (this “ Security Agreement ”) is
entered into as of December 14, 2005 among RED ROBIN
INTERNATIONAL, INC., a Nevada corporation (the “
Borrower ”), RED ROBIN GOURMET BURGERS, INC., a
Delaware corporation (the “ Parent ”), those
Domestic Subsidiaries of the Borrower as may from time to time
become parties hereto (together with the Parent, individually a
“ Guarantor ” and collectively the “
Guarantors ”; the Guarantors and the Borrower,
individually an “ Obligor ” and collectively the
“ Obligors ”) and WACHOVIA BANK, NATIONAL
ASSOCIATION, in its capacity as administrative agent (in such
capacity, the “ Administrative Agent ”) for the
lenders from time to time party to the Credit Agreement described
below (the “ Lenders ”).
RECITALS
WHEREAS, pursuant to that certain
Amended and Restated Credit Agreement dated as of May 20, 2003
(as amended or modified, the “ Existing Credit
Agreement ”), among the Borrower, the Guarantors, the
lenders party thereto, and the Administrative Agent, the Lenders
agreed to make loans and issue or participate in letters of credit
upon the terms and subject to the conditions set forth
therein;
WHEREAS, pursuant to that certain
Amended and Restated Credit Agreement dated as of the date hereof
(as amended, modified, extended, renewed, restated or replaced from
time to time, the “ Credit Agreement ”), among
the Borrower, the Guarantors, the Lenders party thereto, and the
Administrative Agent, the Lenders have agreed to refinance the
Existing Credit Agreement and make Loans and issue or participate
in Letters of Credit upon the terms and subject to the conditions
set forth therein;
WHEREAS, in connection with the
Existing Credit Agreement, the Borrower and the Guarantors entered
into that certain Amended and Restated Security Agreement dated as
of May 20, 2003 (as amended or modified, the “
Existing Security Agreement ”); and
WHEREAS, it is a condition precedent
to the effectiveness of the Credit Agreement and the obligations of
the Lenders to make their respective Loans and to issue or
participate in Letters of Credit under the Credit Agreement that
the Obligors shall have executed and delivered this Security
Agreement (which amends and restates the Existing Security
Agreement) to the Administrative Agent for the ratable benefit of
the Lenders.
NOW, THEREFORE, in consideration of
these premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions .
(a) Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
such terms in the Credit Agreement, and the following terms
which
are defined in the Uniform
Commercial Code from time to time in effect in the State of North
Carolina (the “ UCC ”) are used herein as so
defined: Accessions, Accounts, As-Extracted Collateral, Chattel
Paper, Commercial Tort Claims, Consumer Goods, Control, Deposit
Accounts, Documents, Electronic Chattel Paper, Equipment, Farm
Products, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Investment Property, Letter-of-Credit Rights,
Manufactured Homes, Proceeds, Securities Intermediary, Security
Entitlement, Software, Supporting Obligations and Tangible Chattel
Paper. For purposes of this Security Agreement, the term
“Lender” shall include any Hedging Agreement
Provider.
(b) In addition, the following terms
shall have the following meaning:
“ Material ”:
shall mean, with respect to any item of Collateral (or amount
payable thereunder or in connection therewith with respect to
Accounts or similar obligations) qualified by the term
“Material” in this Security Agreement, that such item
of Collateral (or such amount), when aggregated with all other
items of Collateral excluded because such items are qualified by
the term “Material,” has a fair market value in excess
of $500,000 in the aggregate.
“ Secured Obligations
”: the collective reference to the following:
(a) all Credit Party Obligations
(including obligations under Secured Hedging Agreements), howsoever
evidenced, created, incurred or acquired, whether primary,
secondary, direct, contingent, or joint and several; and
(b) all reasonable expenses and
charges, legal and otherwise, incurred by the Administrative Agent
and/or the Lenders and/or the Hedging Agreement Providers in
collecting or enforcing any Credit Party Obligation or in realizing
on or protecting any security therefor, including without
limitation, the security granted hereunder.
“ Vehicles ”:
shall mean all cars, trucks, vans, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of
title law of any state, including, without limitation, all tires
and other appurtenances to any of the foregoing.
2. Grant of Security Interest in
the Collateral . To secure the prompt payment and performance
in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Obligor
hereby grants to the Administrative Agent, for the ratable benefit
of the Lenders, a continuing security interest in, and a right to
set off against, any and all right, title and interest of such
Obligor in and to the following, whether now owned or existing or
owned, acquired, or arising hereafter (collectively, the “
Collateral ”):
(a) all Accounts;
(b) all cash and Cash
Equivalents;
(c) all Chattel Paper (including
Electronic Chattel Paper);
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(d) those certain Commercial Tort
Claims of such Obligor set forth on Schedule 2(d) attached
hereto (as such Schedule may be updated from time to time by the
Obligors);
(e) all Copyright
Licenses;
(f) all Copyrights;
(g) all Deposit Accounts;
(h) all Documents;
(i) all Equipment;
(j) all Fixtures;
(k) all General
Intangibles;
(l) all Goods;
(m) all Instruments;
(n) all Inventory;
(o) all Investment
Property;
(p) all Letter-of-Credit
Rights;
(q) all Material Contracts and all
such other agreements, contracts, leases, licenses, tax sharing
agreements or hedging arrangements now or hereafter entered into by
an Obligor, as such agreements may be amended or otherwise modified
from time to time (collectively, the “Assigned
Agreements”), including without limitation, (i) all
rights of an Obligor to receive moneys due and to become due under
or pursuant to the Assigned Agreements, (ii) all rights of an
Obligor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements,
(iii) claims of an Obligor for damages arising out of or for
breach of or default under the Assigned Agreements and
(iv) the right of an Obligor to terminate the Assigned
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder;
(r) all Payment
Intangibles;
(s) all Patent Licenses;
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(t) all Patents;
(u) all Software;
(v) all Supporting
Obligations;
(w) all Trademark
Licenses;
(x) all Trademarks;
(y) all books, records, ledger
cards, files, correspondence, computer programs, tapes, disks, and
related data processing software (owned by such Obligor or in which
it has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise necessary
or helpful in the collection thereof or realization
thereupon;
(z) to the extent not otherwise
included, all, Accessions, Proceeds and products of any and all of
the foregoing; and
(aa) all other assets of such
Obligor.
Notwithstanding the foregoing,
“Collateral” shall not include (i) Deposit
Accounts that consist of, contain or include money deposited by
franchisees to the extent the Credit Parties do not have money
deposited in such accounts exceeding $500,000 in the aggregate,
(ii) shares of Capital Stock of any Foreign Subsidiary in
excess of 65% of the total shares of outstanding Capital Stock of
such Foreign Subsidiary to the extent that a pledge of, or lien on,
such shares would result in adverse tax consequences for any
Obligor, or (iii) any “Excluded Property” (as
defined below) until such time, if any, as the prohibitions causing
such property to be Excluded Property have terminated (howsoever
occurring). Upon such termination, the Administrative Agent will be
deemed to have and at all times from and after the date hereof to
have had, a security interest in such Excluded Property and the
relevant Obligor shall take all actions necessary in the reasonable
judgment of the Administrative Agent to perfect such security
interest. The term “Excluded Property” means
(a) any permit, lease, license, agreement, contract or other
General Intangible of any Obligor that validly prohibits the
creation by such Obligor of a security interest therein which was
entered into prior to the date hereof (to the extent such
prohibition is not invalidated under the UCC) and (b) any
permit, lease, license, agreement, contract or other General
Intangible of such Obligor to the extent that any Requirement of
Law applicable thereto prohibits the creation by such Obligor of a
security interest therein, in each case other than (i) the
right to receive any payment of money due in respect of such
permit, lease, license, agreement, contract or other General
Intangible and (ii) any Accessions, Proceeds or products of
any such permit, lease, license, agreement, contract or other
General Intangible (unless such Accessions, Proceeds or products
would itself constitute Excluded Property).
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The Obligors and the Administrative
Agent, on behalf of the Lenders, hereby acknowledge and agree that
the security interest created hereby in the Collateral
(i) constitutes continuing collateral security for all of the
Secured Obligations, whether now existing or hereafter arising and
(ii) is not to be construed as an assignment of any
Intellectual Property.
The term “Collateral”
shall include any Secured Hedging Agreement and any rights of the
Obligors thereunder only for purposes of this
Section 2.
3. Provisions Relating to
Accounts, Material Contracts and Assigned Agreements
.
(a) Anything herein to the contrary
notwithstanding, each of the Obligors shall remain liable under
each of its Accounts, Material Contracts and Assigned Agreements to
observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the
terms of any agreement giving rise to each such Account or the
terms of such Material Contracts and Assigned Agreements. Neither
the Administrative Agent nor any Lender shall have any obligation
or liability under any Account (or any agreement giving rise
thereto), Material Contract or Assigned Agreement by reason of or
arising out of this Security Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating to such
Account, Material Contract or Assigned Agreement pursuant hereto,
nor shall the Administrative Agent or any Lender be obligated in
any manner to perform any of the obligations of an Obligor under or
pursuant to any Account (or any agreement giving rise thereto),
Material Contract or Assigned Agreement, to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any
party under any Account (or any agreement giving rise thereto),
Material Contract or Assigned Agreement, to present or file any
claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) At any time and from time to
time, the Administrative Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in any
manner and through any medium that it reasonably considers
advisable, and the Obligors shall furnish all such assistance and
information as the Administrative Agent may reasonably require in
connection with such test verifications. At any time upon the
occurrence and during the continuation of a Default or Event of
Default upon the Administrative Agent’s request and at the
expense of the Obligors, the Obligors shall cause independent
public accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Accounts. The Administrative Agent in its own
name or in the name of others may communicate with account debtors
on the Accounts to verify with them to the Administrative
Agent’s satisfaction the existence, amount and terms of any
Accounts.
4. Representations and
Warranties . Each Obligor hereby represents and warrants to the
Administrative Agent, for the benefit of the Lenders, that so long
as any of the Secured Obligations remain outstanding (other than
contingent indemnity obligations which by the terms
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thereof are stated to survive termination of the
Credit Documents) or any Credit Document or Secured Hedging
Agreement is in effect, and until all of the Commitments shall have
been terminated:
(a) Chief Executive Office;
Books & Records; Legal Name; State of Formation . As
of the Closing Date, each Obligor’s chief executive office
and chief place of business are (and for the prior four months
prior to the date hereof has been) located at the locations set
forth on Schedule 3.19(c) to the Credit Agreement (as
updated from time to time), and as of the Closing Date each Obligor
keeps its books and records at such locations. As of the Closing
Date, each Obligor’s exact legal name is as shown in this
Security Agreement and its state of formation is (and for the prior
four months prior to the date hereof has been) the location set
forth on Schedule 3.12 to the Credit Agreement. No Obligor
has in the past four months prior to the date hereof changed its
name, been party to a merger, consolidation or other change in
structure or used any tradename not disclosed on Schedule
4(a) attached hereto (as updated from time to time in
accordance with Section 5(d)).
(b) Location of Collateral .
As of the Closing Date, the tangible Collateral owned by each
Obligor is located solely at the locations set forth on Schedule
3.19(b) to the Credit Agreement (other than immaterial portions
of Inventory and/or Equipment in transit or held in warehouses,
provided that such Inventory and/or Equipment has a fair market
value not in excess of $500,000 in the aggregate).
(c) Ownership . Each Obligor
is the legal and beneficial owner of its Collateral and has the
right to pledge, sell, assign or transfer the same except to the
extent that any pledge, sale, assignment or transfer of such
Collateral is prohibited or limited by applicable law, regulations
or administrative guidelines or by any contract entered into prior
to the date hereof.
(d) Security
Interest/Priority . This Security Agreement creates a valid
security interest in favor of the Administrative Agent, for the
benefit of the Lenders, in the Collateral of such Obligor and, when
properly perfected by filing, the granting of Control to the
Administrative Agent or otherwise, shall constitute a valid first
priority, perfected security interest in the Collateral with
respect to which the security interest is to be perfected, to the
extent such security interest can be perfected by filing or
otherwise under the UCC or by filing an appropriate notice with the
United States Patent and Trademark Office or the United States
Copyright Office, free and clear of all Liens except for Permitted
Liens.
(e) Consents . Except for
(i) the filing or recording of UCC financing statements,
(ii) the filing of appropriate notices with the United States
Patent and Trademark Office and the United States Copyright Office
or (iii) obtaining Control to perfect the Liens created by
this Security Agreement, no consent or authorization of, filing
with, or other act by or in respect of, any arbitrator or
Governmental Authority and no consent of any other Person
(including, without limitation, any stockholder, member or creditor
of such Obligor), is required under the UCC (i) for the grant
by such Obligor of the
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security interest in the Collateral
granted hereby or for the execution, delivery or performance of
this Security Agreement by such Obligor or (ii) for the
perfection of such security interest or the exercise by the
Administrative Agent of the rights and remedies provided for in
this Security Agreement.
(f) Types of Collateral .
None of the Collateral consists of, or is the Proceeds of,
As-Extracted Collateral, Consumer Goods, Farm Products,
Manufactured Homes or standing timber (as such term is used in the
UCC).
(g) Accounts . With respect
to the Accounts of the Obligors: (i) each Account and the
papers and documents of the applicable Obligor relating thereto are
genuine and in all material respects what they purport to be;
(ii) each Account arises out of a bona fide transaction for
goods sold and delivered (or in the process of being delivered) by
an Obligor or for services actually rendered by an Obligor, which
transaction was conducted in the ordinary course of the
Obligor’s business and was or will be performed substantially
in accordance with the terms of any documents pertaining thereto;
(iii) no Account of an Obligor is evidenced by any Instrument
or Chattel Paper unless such Instrument or Chattel Paper has been
theretofore delivered to, or submitted to the Control of, the
Administrative Agent; provided that this subsection
(iii) is not intended to (A) require the endorsement or
delivery of ordinary course records and payment instructions or
(B) require the endorsement or delivery of any individual
Instrument or Chattel Paper in an amount of less than $500,000;
(iv) the amount of each Account as shown on the applicable
Obligor’s books and records, and on all invoices and
statements which may be delivered to the Administrative Agent with
respect thereto, is payable to the applicable Obligor and no
material portion of the Accounts are contingent; (v) no
Account is evidenced by a judgment, there are no set-offs,
counterclaims or disputes existing or asserted with respect to any
Account that in the aggregate could reasonably be expected to have
a Material Adverse Effect, and no Obligor has made any agreement
with any account debtor for any deduction from any Account except a
discount or allowance for prompt payment allowed by the applicable
Obligor and other discounts or allowances made in the ordinary
course of its business; (vi) there are no facts, events or
occurrences which in any material respect impair the validity or
enforcement of any Material Account or could reasonably be expected
to materially reduce the amount payable thereunder as shown on the
applicable Obligor’s books and records and all invoices and
statements delivered to the Administrative Agent with respect
thereto; (vii) the right to receive payment under each Account
is assignable except where the account debtor with respect to such
Account is the United States government or any State government or
any agency, department or instrumentality thereof, to the extent
the assignment of any such right to payment is prohibited or
limited by applicable law, regulations, administrative guidelines
or contract; and (viii) the goods sold and/or services
furnished giving rise to each Account are not subject to any
security interest or Lien except the security interest granted the
Administrative Agent herein and except for Permitted
Liens.
(h) Inventory . No Inventory
of an Obligor is held by a third party (other than an Obligor)
pursuant to consignment, sale or return, sale on approval or
similar arrangement.
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(i) Intellectual Property
.
(i) Schedule 3.16 to the
Credit Agreement includes all Intellectual Property owned by the
Obligors in their own names, or that the Obligors have the right to
use, as of the Closing Date.
(ii) Each Material Copyright,
Material Patent and Material Trademark owned by such Obligor is
valid, subsisting, unexpired, and to such Obligor’s
knowledge, enforceable and has not been abandoned, and such Obligor
is legally entitled to use each of its tradenames.
(iii) Except as set forth in
Schedule 3.16 to the Credit Agreement, none of the Material
Copyrights, Material Patents and Material Trademarks is the subject
of any licensing or franchise agreement other than for the benefit
of any franchisee.
(iv) No holding, decision or
judgment has been rendered by any Governmental Authority which
would limit, cancel or question the validity of any Material
Intellectual Property of the Obligors.
(v) No action or proceeding is
pending seeking to limit, cancel or question the validity of any
Material Intellectual Property, or which, if adversely determined,
would have a material adverse effect on the value of any Material
Intellectual Property.
(vi) All applications pertaining to
the Material Copyrights, Material Patents and Material Trademarks
of each Obligor have been duly and properly filed, and all
registrations or letters pertaining to such Copyrights, Patents and
Trademarks have been duly and properly filed and issued, and all of
such Copyrights, Patents and Trademarks are valid and
enforceable.
(vii) No Obligor has made any
assignment or agreement in conflict with the security interest of
the Administrative Agent in the Material Intellectual Property of
each Obligor hereunder.
(j) Documents, Instruments and
Chattel Paper . All Documents, Instruments and Chattel Paper
describing, evidencing or constituting Collateral are, to the
Obligors’ knowledge, complete in all material respects, valid
and genuine.
(k) Equipment . With respect
to each Obligor’s Equipment that is material to its business:
(i) such Obligor has good and marketable title thereto or a
valid leasehold interest therein; and (ii) all such Equipment
is in normal operating condition and repair, ordinary wear and tear
and obsolescence alone excepted (subject to casualty events), and
is suitable for the uses to which it is customarily put in the
conduct of such Obligor’s business.
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(l) Restrictions on Security
Interest . None of the Obligors is party to any material
license (other than certain liquor licenses) or any material
personal property lease that contains legally enforceable
restrictions on the granting of a security interest
therein.
(m) Collateral Requiring Control
to Perfect . Set forth on Schedule 4(m) is a description of all
Deposit Accounts, Electronic Chattel Paper, Letter of Credit
Rights, Securities Accounts and uncertificated Investment Property
of the Obligors, including the name and address of (i) in the
case of a Deposit Account, the depository institution, (ii) in
the case of Electronic Chattel Paper, the account debtor,
(iii) in the case of Letter of Credit Rights, the issuer or
nominated person, as applicable, and (iv) in the case of a
Securities Account or other uncertificated Investment Property, the
Securities Intermediary or issuer, as applicable.
5. Covenants . Each Obligor
covenants that, so long as any of the Secured Obligations remain
outstanding (other than contingent indemnity obligations which by
the terms thereof are stated to survive termination of the Credit
Documents) or any Credit Document or Secured Hedging Agreement is
in effect, and until all of the Commitments shall have been
terminated, such Obligor shall:
(a) Other Liens . Defend its
interests in the Collateral against the claims and demands of all
other parties claiming an interest therein and keep the Collateral
free from all Liens, except, in each case, for Permitted Liens, and
not sell, exchange, transfer, assign, lease or otherwise dispose of
the Collateral or any interest therein and, except as permitted
under the Credit Agreement and the other Credit
Documents.
(b) Preservation of
Collateral . Keep all Material Collateral useful and necessary
in its business in good order, condition and repair, ordinary wear
and tear and obsolescence excepted; not use the Collateral in
violation of the provisions of this Security Agreement or any other
agreement relating to the Collateral or any policy insuring the
Collateral or any applicable Requirement of Law except for
violations that could not reasonably be expected to have a Material
Adverse Effect; and not, without the prior written consent of the
Administrative Agent, alter or remove any identifying symbol or
number on any Material item of Equipment.
(c) Possession or Control of
Certain Collateral . If (i) any amount payable under or in
connection with any of the Collateral in excess of $500,000 shall
be or become evidenced by any Instrument, Tangible Chattel Paper or
Supporting Obligation or (ii) if any Collateral shall be
stored or shipped subject to a Document or (iii) if any
Collateral in excess of $500,000 shall consist of Investment
Property in the form of certificated securities (other than Cash
Equivalents held in accordance with the Credit Agreement), promptly
notify the Administrative Agent of the existence of such Collateral
and, at the reasonable request of the Administrative Agent, deliver
such Instrument, Chattel Paper, Supporting Obligation, Document or
Investment Property to the Administrative Agent to be held as
Collateral pursuant to this Security Agreement. If any Collateral
shall consist of Material Deposit Accounts, Material Electronic
Chattel Paper, Material Letter-of-Credit Rights or
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Material uncertificated Investment
Property, promptly execute and deliver (and, with respect to any
Collateral consisting of uncertificated Investment Property, cause
the issuer or Securities Intermediary with respect to such
Investment Property to execute and deliver) to the Administrative
Agent all control agreements, assignments, instruments or other
documents as reasonably requested by the Administrative Agent for
the purposes of obtaining and maintaining Control of such
Collateral.
(d) Changes in Corporate
Structure or Location . Not, without providing 30 days prior
written notice to the Administrative Agent and without filing (or
confirming that the Administrative Agent has filed) such amendments
to any previously filed financing statements as the Administrative
Agent may require, (i) alter its corporate existence or, in
one transaction or a series of transactions, merge into or
consolidate with any other entity, or sell all or substantially all
of its assets, except as permitted by the Credit Agreement,
(ii) change its state of incorporation or formation or
(iii) change its registered corporate name.
(e) Inspection . Allow the
Administrative Agent or its representatives to visit and inspect
the Collateral as set forth in Section 5.6 of the Credit
Agreement.
(f) Perfection of Security
Interest . Each Obligor hereby authorizes the Administrative
Agent to prepare and file such financing statements (including
continuation statements) or amendments thereof or supplements
thereto or other instruments as the Administrative Agent may from
time to time deem necessary or appropriate in order to perfect and
maintain the security interests granted on the Collateral hereunder
except with respect to perfection only, for Collateral that is
subject to a Permitted Lien under subsections (xi) and
(xii) of the definition of Permitted Lien in accordance with
the UCC. Each Obligor shall also execute and deliver to the
Administrative Agent such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments and
restatements of existing documents, as the Administrative Agent may
reasonably request) and do all such other things as the
Administrative Agent may reasonably deem necessary or appropriate
(i) to assure to the Administrative Agent its security
interests hereunder are perfected in accordance with the UCC,
including, without limitation, (A) any financing statement
that describes the Collateral as “all personal
property” or “all assets” or in some other manner
as the Administrative Agent deems necessary or advisable,
(B) such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other
instruments as the Administrative Agent may from time to time
reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC and any
other personal property security legislation in the appropriate
state(s) or province(s), (C)&
