This SECURITY AGREEMENT (together with
all amendments, supplements and modifications, if any, from time to
time hereto, this “ Agreement ”), dated as of
July 7, 2009, is by the undersigned (each, a “
Grantor ” and, collectively, the “
Grantors ”) in favor of Wells Fargo Bank, National
Association, in its capacity as the collateral agent (in such
capacity, together with its successors and assignees, the “
Collateral Agent ”) for the Secured Parties (as
defined below).
WHEREAS , Real Mex Restaurants, Inc., a Delaware
corporation (the “ Issuer ”), the guarantors
party to the Indenture (as defined below) and Wells Fargo Bank,
National Association, as trustee (in such capacity, the “
Trustee ” ) thereunder, are parties to that certain
indenture, dated as of even date herewith (as amended, restated,
modified, supplemented, renewed, refunded, replaced or refinanced
from time to time, the “ Indenture
”);
WHEREAS , the Collateral Agent, the Trustee and General
Electric Capital Corporation, as Agent, have entered into the
Intercreditor Agreement, dated as of even date herewith (as
amended, supplemented or otherwise modified from time to time, the
“ Intercreditor Agreement ”);
WHEREAS , each Grantor is either the Issuer, the parent
of the Issuer, or a direct or indirect subsidiary of the Issuer and
as such will derive direct and indirect economic benefits from the
issuance of the Notes under the Indenture; and
WHEREAS , the holders of the Note Obligations (the
“ Holders ”) have required, as a condition to
the purchase of the Notes under the Indenture, that each Grantor
grant to the Collateral Agent for the ratable benefit of the
Collateral Agent, the Trustee and the Holders (collectively, the
“ Secured Parties ”) a security interest in and
to the Collateral (as defined herein).
NOW, THEREFORE , in consideration of the promises contained
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Except as otherwise defined in this Agreement,
all capitalized terms used herein without definitions shall have
the respective meanings provided therefor in the Indenture. All
terms defined in the Uniform Commercial Code of the State of New
York and used herein shall have the same definitions herein as
specified therein. However, if a term is defined in Article 9
of the New York Uniform Commercial Code differently than in another
Article of the New York Uniform Commercial Code, the term has the
meaning specified in Article 9. The term “electronic
document” applies in the event that the 2003 revisions to
Article 7, with amendments to Article 9, of the Uniform
Commercial Code, in substantially the form approved by the American
Law Institute and the National Conference of Commissioners on
Uniform State Laws, are now or hereafter adopted and become
effective in the State of New York or in any other relevant
jurisdiction. For purposes of this Agreement, “
Obligations ” means all of the Note Obligations
(including, without limitation, the Issuer’s Obligations
under or in respect of the Notes (including any exchange notes
issued from time to time pursuant to any agreement to provide
registration rights in respect of the Notes)) and, in addition,
with respect to any Grantor that is a Guarantor of the Note
Obligations, all obligations and liabilities of such Grantor which
may arise under or in connection with such Guarantee or any other
Note Document to which such Grantor is a party, in each case
whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of
counsel to any Secured Party that are required to be paid by such
Grantor pursuant to the terms of this Agreement or any other Note
Document). For purposes of this Agreement, (i) “ Stock
Pledge Agreement ” means the Stock Pledge Agreement,
dated as of even date herewith, by the Grantors party thereto in
favor of the Collateral Agent, (ii) “ Membership Interest
Pledge Agreement ” means the Membership Interest Pledge
Agreement, dated as of even date herewith, by CKR Acquisition
Corp., a Delaware corporation, in favor of the Collateral Agent,
and (iii) “ Trademark Security Agreement ” means
the Trademark Collateral Security and Pledge Agreement, dated as of
even date herewith, by the Grantors party thereto in favor of the
Collateral Agent, in each case as amended, modified, supplemented
or waived in accordance with the provisions of the
Indenture.
Unless otherwise provided herein, the rules of
construction set forth in Section 1.04 of the Indenture shall
be applicable to this Agreement.
2. GRANT
OF SECURITY INTEREST .
2.1. Collateral Granted . Each Grantor
hereby unconditionally grants to the Collateral Agent, for the
benefit of the Secured Parties, to secure the payment and
performance in full of all of the Obligations, a security interest
in and so pledges and assigns to the Collateral Agent, for the
benefit of the Secured Parties, the following properties, assets
and rights of such Grantor, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products
thereof (all of the same being hereinafter called the “
Collateral ”): all personal and fixture property of
every kind and nature including all goods (including inventory,
equipment and any accessions thereto), instruments (including
promissory notes), documents (including, if applicable, electronic
documents), accounts (including health-care-insurance receivables),
chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing), commercial tort claims, securities and all
other investment property, supporting obligations, any other
contract rights or rights to the payment of money, insurance claims
and proceeds, all general intangibles (including all payment
intangibles) and all proceeds and products of any or all of the
foregoing.
2.2. Commercial Tort Claims . The
Collateral Agent acknowledges that the attachment of its security
interest in any commercial tort claim as original collateral is
subject to the Grantor’s compliance with
§2.5.
2.3.
Delivery of Instruments, etc .
(a) Pursuant to the terms hereof, each
Grantor has endorsed, assigned and delivered to the Priority Lien
Collateral Agent as bailee for the Collateral Agent pursuant to the
Intercreditor Agreement all negotiable or non-negotiable
instruments, certificated securities and chattel paper pledged by
it hereunder, together with instruments of transfer or assignment
duly executed in blank as the Priority Lien Collateral Agent as
bailee for the Collateral Agent or the Collateral Agent may have
specified. In the event that any Grantor shall, after the date of
this Agreement, acquire any other negotiable or non-negotiable
instruments, certificated securities or chattel paper to be pledged
by it hereunder, such Grantor shall forthwith endorse, assign and
deliver the same to the Priority Lien Collateral Agent as bailee
for the Collateral Agent pursuant to the Intercreditor Agreement,
accompanied by such instruments of transfer or assignment duly
executed in blank as the Priority Lien Collateral Agent as bailee
for the Collateral Agent pursuant to the Intercreditor Agreement,
or the Collateral Agent may from time to time specify.
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(b) To the extent that any securities now
or hereafter acquired by any Grantor are uncertificated and are
issued to such Grantor or its nominee directly by the issuer
thereof, such Grantor shall cause the issuer to note on its books
the security interest of the Collateral Agent in such securities
and, subject to the Intercreditor Agreement, shall cause the
issuer, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, to agree to comply with
instructions from the Collateral Agent as to such securities at any
time after the Collateral Agent’s receipt of a Priority Lien
Obligations Discharge Notice (as defined in the Intercreditor
Agreement), without further consent of such Grantor or such
nominee. To the extent that any securities, whether certificated or
uncertificated, or other investment property now or hereafter
acquired by any Grantor are held by such Grantor or its nominee
through a securities intermediary, subject to the Intercreditor
Agreement, such Grantor shall at the request of the Collateral
Agent cause such securities intermediary, pursuant to an agreement
in form and substance satisfactory to the Collateral Agent, to
agree to comply at any time after the Collateral Agent’s
receipt of a Priority Lien Obligations Discharge Notice (as defined
in the Intercreditor Agreement) with entitlement orders or other
instructions from the Collateral Agent to such securities
intermediary as to such securities, or other investment property,
or (as the case may be) at any time after the Collateral
Agent’s receipt of a Priority Lien Obligations Discharge
Notice (as defined in the Intercreditor Agreement) to apply any
value distributed on account of any commodity contract as directed
by the Collateral Agent to such commodity intermediary without
further consent of such Grantor or such nominee.
(c) To the extent that any Grantor is a
beneficiary under any written letter of credit now or hereafter
issued in favor of such Grantor, such Grantor shall deliver such
letter of credit to the Priority Lien Collateral Agent as bailee
for the Collateral Agent pursuant to the Intercreditor Agreement.
The Collateral Agent shall from time to time, at the request and
expense of such Grantor, use its commercially reasonable efforts to
make such arrangements with such Grantor as are in the Collateral
Agent’s reasonable judgment necessary and appropriate so that
such Grantor may make any drawing to which such Grantor is entitled
under such letter of credit, without impairment of the Collateral
Agent’s perfected security interest in such Grantor’s
rights to proceeds of such letter of credit or in the actual
proceeds of such drawing. At the Collateral Agent’s request,
subject to the Intercreditor Agreement, each Grantor shall, for any
letter of credit, whether or not written, now or hereafter issued
in favor of such Grantor as beneficiary, (i) execute and
deliver to the issuer and any confirmer of such letter of credit an
assignment of proceeds form, in favor of the Collateral Agent and
satisfactory to the Collateral Agent and such issuer or (as the
case may be) such confirmer, requiring the proceeds of any drawing
under such letter of credit to be paid directly to the Collateral
Agent for delivery to the Trustee for application as provided in
the Indenture, and (ii) use its commercially reasonable
efforts to cause the issuer and any such confirmer to execute and
deliver such assignment of proceeds form to the Collateral
Agent.
2.4. Excluded Assets . Notwithstanding
the foregoing provisions of this §2, (a) such grant of
security interest shall not extend to, and the term
“Collateral” shall not include, any Excluded Assets,
and (b) the obligations of the Grantors under §2.3 shall
apply only with respect to Collateral and shall not apply to any
Excluded Assets.
2.5. Commercial Tort Claims . If
any Grantor shall, now or at any time hereafter, hold or acquire a
commercial tort claim that is not an Excluded Asset, such Grantor
shall immediately notify the Collateral Agent in a writing signed
by such Grantor of the particulars thereof and grant to the
Collateral Agent, for the benefit of the Secured Parties, in such
writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in
form and substance reasonably satisfactory to the Collateral
Agent.
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3.
AUTHORIZATION TO FILE FINANCING STATEMENTS
.
Each Grantor hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to file in any
filing office in any Uniform Commercial Code jurisdiction any
initial financing statements and amendments thereto that
(a) indicate the collateral (i) as all assets of such
Grantor or words of similar effect (including, without limitation,
“all assets of the Debtor whether now owned or hereafter
acquired”), regardless of whether any particular asset
comprised in the Collateral falls within the scope of
Article 9 of the Uniform Commercial Code of the State of New
York or such other jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) provide any
other information required by part 5 of Article 9 of the
Uniform Commercial Code of the State of New York or such other
jurisdiction for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such
Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor and,
(ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to
which the Collateral relates. The filing of any financing statement
as an “all assets” filing shall in no way mean that any
Excluded Asset is deemed Collateral. Each Grantor agrees to furnish
any such information to the Collateral Agent promptly upon request.
Each Grantor also ratifies its authorization for the Collateral
Agent to have filed in any Uniform Commercial Code jurisdiction any
like initial financing statements or amendments thereto if filed
prior to the date hereof.
4.
RELATION TO OTHER SECURITY DOCUMENTS .
The provisions of this Agreement supplement the
provisions of any real estate mortgage or deed of trust granted by
the Grantors to the Collateral Agent, for the benefit of the
Secured Parties, as security for the payment or performance of any
of the Obligations. Nothing contained in any such real estate
mortgage or deed of trust shall derogate from any of the rights or
remedies of the Collateral Agent or any of the other Secured
Parties hereunder. In addition to the provisions of this Agreement
being so read and construed with any such mortgage or deed of
trust, the provisions of this Agreement shall be read and construed
with the other Security Documents referred to below in the manner
so indicated.
4.1. Stock Pledge Agreement and Membership
Interest Pledge Agreement . Concurrently herewith all or
certain of the Grantors are executing and delivering to the
Collateral Agent, for the benefit of the Secured Parties, the Stock
Pledge Agreement and the Membership Interest Pledge Agreement,
pursuant to which the applicable Grantors are pledging to the
Collateral Agent, for the benefit of the Secured Parties, the
equity interests subject thereto. Such pledges shall be governed by
the terms of the Stock Pledge Agreement and the Membership Pledge
Agreement, respectively, and not by the terms of this Agreement,
and shall be subject to the terms of the Intercreditor
Agreement.
4.2. Trademark Security Agreement .
Concurrently herewith the Grantors are executing and delivering to
the Collateral Agent, for the benefit of the Secured Parties, the
Trademark Security Agreement pursuant to which the Grantors are
assigning to the Collateral Agent, for the benefit of the Secured
Parties, certain Collateral consisting of trademarks, service marks
and trademark and service mark rights, together with the goodwill
appurtenant thereto. The provisions of the Trademark Security
Agreement are supplemental to the provisions of this Agreement, and
nothing contained in the Trademark Security Agreement shall
derogate from any of the rights or remedies of the Collateral Agent
or any of the other Secured Parties hereunder. Nor shall anything
contained in the Trademark Security Agreement be deemed to prevent
or extend the time of attachment or perfection of any security
interest in such Collateral created hereby. The Trademark Security
Agreement shall be subject to the terms of the Intercreditor
Agreement.
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5.
REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL,
ETC .
Each Grantor represents and warrants to the
Secured Parties as follows: (a) the Grantors are the owners of
the Collateral free from any right or claim of any person or any
Lien, except for the security interest created by this Agreement
and other Permitted Liens, (b) none of the Collateral
constitutes, or is the proceeds of, “farm products” as
defined in §9-102(a)(34) of the New York Uniform Commercial
Code, (c) none of the account debtors or other Persons
obligated on any of the Collateral is a governmental authority
subject to the Federal Assignment of Claims Act or like federal,
state or local statute or rule in respect of such Collateral,
(d) the Grantors hold no commercial tort claim except as
indicated on Schedule A hereto, and (e) the
Grantors have at all times operated their businesses in compliance
in all material respects with all applicable provisions of the
Federal Fair Labor Standards Act, as amended and with all
applicable provisions of federal, state and local statutes and
ordinances dealing with the control shipment, storage or disposal
of hazardous materials or substances.
6.
CONTINUOUS PERFECTION .
Each Grantor’s place of business or, if
more than one, chief executive office is indicated on
Schedule B hereto. No Grantor will change the same, or
the name, identity, jurisdiction of organization or organizational
structure of such Grantor in any manner, without providing at least
30 days prior written notice to the Collateral Agent. The
tangible Collateral, to the extent not delivered pursuant to
§2.3 to the Priority Lien Collateral Agent as bailee for the
Collateral Agent pursuant to the Intercreditor Agreement, will be
kept at those locations listed on Schedule B hereto and at
additional locations from time to time established by the Grantors
which shall give at least 60 days prior written notice thereof
to the Collateral Agent and no Grantor will remove the tangible
Collateral from such locations, without providing at least
30 days prior written notice to the Collateral
Agent.
Except for the security interest herein granted
and other Permitted Liens, the Grantors shall be the owners of the
Collateral free from any Lien, and each Grantor shall defend the
same against all claims and demands of all persons at any time
claiming the same or any interests therein adverse to the
Collateral Agent or any of the other Secured Parties;
provided that, as to priority, the security interests
granted herein shall be subject only to Permitted Prior Liens. No
Grantor shall pledge, mortgage or create, or suffer to exist any
right of any Person in or claim by any Person to the Collateral or
any Lien in the Collateral, in favor of any Person, or become bound
(as provided in Section 9-203(d) of the New York Uniform
Commercial Code or any other relevant jurisdiction or otherwise) by
a security agreement in favor of any Person, as secured party,
other than the Collateral Agent, for the benefit of the Secured
Parties, except for Permitted Liens; provided that, as to
priority, the security interests granted herein shall be subject
only to Permitted Prior Liens.
No Grantor will sell or offer to sell or
otherwise transfer or dispose of the Collateral or any interest
therein, except as provided in the Indenture.
9.1. Maintenance of Insurance . Each
Grantor will maintain such insurance as shall be required to be
maintained under the Indenture and the other Note Documents. Such
insurance shall be in such minimum amounts that each Grantor will
not be deemed a co-insurer under applicable insurance laws,
regulations and policies and otherwise shall be in such amounts,
contain such terms, be in such forms and be for such periods as are
customary with companies in the same or similar business operating
in the same or similar locations. In addition, subject to the
Intercreditor Agreement, all such insurance proceeds shall be
payable to the Collateral Agent as loss payee under a
“standard” loss payee clause for the benefit of the
Secured Parties. Without limiting the foregoing, each Grantor will
keep all of its physical property insured with casualty or physical
hazard insurance on an “all risks” basis, with broad
form flood and earthquake coverages and electronic data processing
coverage, with a full replacement cost endorseme
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