Exhibit 10.60


 


SECURITY AGREEMENT


 


SECURITY
AGREEMENT dated as of December 19th, 2002 made by DALLAS S&W, L.P., a Texas
limited partnership (the “Grantor”) to MORGAN STANLEY DEAN WITTER
COMMERCIAL FINANCIAL SERVICES, INC., a Delaware corporation (the “Lender”).


 


PRELIMINARY
STATEMENTS.


 


(1)           The Grantor, the Lender and others
have entered into a Term Loan Agreement of even date herewith (said Term Loan
Agreement, as it may hereafter be amended, modified or restated from time to
time, being the “Credit Agreement”).


 


(2)           Pursuant to the Credit Agreement, the
Grantor is entering into this Agreement in order to grant to the Lender a
security interest in all of its personal property and fixtures now owned or
hereafter acquired.


 


(3)           It is a condition precedent to the
making of the Advance by the Lender under the Credit Agreement that the Grantor
shall have granted the assignment and security interest contemplated by this
Agreement.


 


(4)           Terms defined in the Credit Agreement
and not otherwise defined in this Agreement are used in this Agreement as
defined in the Credit Agreement. 
Further, unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in the Uniform Commercial Code in effect in the State of
New York (“N.Y. Uniform Commercial Code”) on the date hereof are used in
this Agreement as such terms are defined in the N.Y. Uniform Commercial Code.


 


NOW,
THEREFORE, in consideration of the premises and in order to induce the Lender
to make the Advance under the Credit Agreement, the Grantor hereby agrees as
follows:


 


Section
1.  Grant of Security.  The Grantor hereby assigns and pledges to
the Lender, and hereby grants to the Lender a security interest in, the
Grantor’s right, title and interest in and to the following, in each case, as
to each type of property described below, whether now existing or hereafter
acquired by the Grantor, wherever located, and whether now or hereafter
existing or arising (collectively, the “Collateral”):


 


(a)           all equipment in all of its forms,
all fixtures and all parts thereof and all accessions thereto (any and all such
equipment, fixtures, parts and accessions being the “Equipment”);


 


(b)           all inventory in all of its forms
(including, without limitation, all raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the manufacture,
production, preparation or shipping thereof, and all accessions thereto and
products thereof and documents therefor (any and all such inventory,
accessions, products and documents being the “Inventory”);


 


(c)           all accounts, chattel paper,
instruments, deposit accounts, general intangibles and other obligations of any
kind, whether or not arising out of or in connection with the sale or lease of
goods or the rendering of services, and all rights now or hereafter existing in
and to all security agreements, leases and other contracts securing or
otherwise relating to any such


 


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accounts, chattel paper,
instruments, deposit accounts, general intangibles or obligations (any and all
such accounts, chattel paper, instruments, deposit accounts, general
intangibles and obligations, to the extent not referred to in clause (d),
below, being the “Receivables”, and any and all such leases, security
agreements and other contracts being the “Related Contracts”); and


 


(d)           all proceeds and products of any and
all of the foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clauses (a)-(c) of this Section 1
and this clause (d) and, to the extent not otherwise included, all (i) payments
under insurance (whether or not the Lender is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral and (ii) cash.


 


Section
2.  Security for Obligations.  This Agreement secures the prompt payment
and performance of all obligations of the Grantor to the Lender and its
Affiliates now or hereafter existing, whether absolute or contingent, disputed
or undisputed, direct or indirect and out of whatever transactions arising,
including, without limitation, obligations arising under or in respect of the
Credit Agreement, the Guaranty and the other Loan Documents to which the Grantor
is a party, existing and future loans and advances, letters of credit,
acceptances, all other extensions of credit, security agreements, mortgages,
overdrafts, and all contracts for payment or performance, and all indebtedness,
obligations and liabilities under any guaranty or surety agreement, including
without limitation, all principal, interest, fees, indemnifications, costs,
expenses or otherwise (all such obligations being the “Secured Obligations”).


 


Section
3.  Grantor Remains Liable.  Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein and
perform all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Lender of any of the
rights hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) the Lender shall not have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement, nor
shall the Lender be obligated to perform any of the obligations or duties of
the Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.


 


Section
4.  Representations and Warranties.  The Grantor represents and warrants as
follows: (a) All of the Equipment and Inventory of the Grantor are located at
the places specified therefor in Schedule I hereto.  The chief executive office of the Grantor and the office where
the Grantor keeps its records concerning the Receivables are located at the
address specified therefor in Schedule I hereto.  The Grantor’s state of organization and Federal tax
identification number are set forth in Schedule I hereto.  None of the Receivables is evidenced by a
promissory note or other instrument; (b) The Grantor is the legal and
beneficial owner of the Collateral free and clear of any Lien, except for the
security interest created by this Agreement and the Dallas Deed of Trust or
otherwise permitted under the Credit Agreement.  No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Lender relating to
this Agreement and the Dallas Deed of Trust or as otherwise permitted under the
Credit Agreement.


 


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The Grantor has no trade names
other than the trade names listed on Schedule I; (c) The Grantor has exclusive
possession and control of the Equipment and Inventory; (d) All filings and
other actions necessary or desirable to perfect and protect the security
interest in the Collateral of the Grantor created under this Agreement have
been duly made or taken and are in full force and effect, and this Agreement
creates in favor of the Lender a valid and, together with such filings and
other actions, perfected first priority security interest in the Collateral of
the Grantor, securing the payment of the Secured Obligations; and (e) No
consent of any other Person and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
or other third party is required either (i) for the grant by the Grantor of the
pledge, assignment and security interest granted hereby or for the execution,
delivery or performance of this Agreement by the Grantor, (ii) for the
perfection or maintenance of the pledge, assignment and security interest
created hereby (including the first priority nature of such pledge, assignment
or security interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code, or (iii) for the exercise by the
Lender of the remedies in respect of the Collateral pursuant to this Agreement.


 


Section
5.  Further Assurances.  The Grantor agrees that from time to time,
at the expense of the Grantor, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Lender may request, in order to perfect and protect
any pledge, assignment or security interest granted or purported to be granted
by the Grantor hereunder or to enable the Lender to exercise and enforce its
rights and remedies hereunder with respect to any Collateral of the
Grantor.  The Grantor hereby authorizes
the Lender to file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral of the Grantor without
the signature of the Grantor where permitted by law.  A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.  The Grantor will furnish to the Lender from
time to time statements and schedules further identifying and describing the
Collateral of the Grantor and such other reports in connection with such
Collateral as the Lender may reasonably request, all in reasonable detail.


 


Section
6.  As to Equipment and Inventory.  The Grantor shall keep the Equipment and
Inventory of the Grantor (other than Inventory sold in the ordinary course of
business) at the places therefor specified in Section 4(a) or, upon 30 days’
prior written notice to the Lender, at such other places in a jurisdiction
where all action required by Section 5 shall have been taken with respect to
such Equipment and Inventory.  The
Grantor shall cause the Equipment of the Grantor to be maintained and preserved
in the same condition, repair and working order as when new, ordinary wear and
tear excepted, and shall, in the case of any loss or damage to any of such
Equipment, as quickly as practicable after the occurrence thereof, make or
cause to be made, all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end.  The Grantor shall pay promptly when due all
property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment and Inventory of the Grantor.


 


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Section
7.  Insurance.  The Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory of the Grantor
in such amounts, against such risks, in such form and with such insurers, as
shall be satisfactory to the Lender from time to time.  Each policy of the Grantor for liability
insurance shall provide for all losses to be paid on behalf of the Lender and
the Grantor as their interests may appear, and each policy for property damage
insurance shall provide for all losses to be paid directly to the Lender.  Each such policy shall, in addition (a) name
the Grantor and the Lender as insured parties thereunder (without any
representation or warranty by or obligation upon the Lender) as their interests
may appear, (b) contain the agreement by the insurer, pursuant to a lender’s
loss payable endorsement, that any loss thereunder shall be payable to the
Lender notwithstanding any action, inaction or breach of representation or
warranty by the Grantor and (c) provide that at least 30 days’ prior written
notice of cancellation or of lapse shall be given to the Lender by the
insurer.  The Grantor shall, if so
requested by the Lender, deliver to the Lender original or duplicate policies
of such insurance.  Reimbursement under
any liability insurance maintained by the Grantor pursuant to this Section 7
may be paid directly to the Person who shall have incurred liability covered by
such insurance.  In case of any loss
involving damage to Equipment or Inventory, the Grantor shall make or cause to
be made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance properly received by or released to
the Grantor shall be used by the Grantor, except as otherwise required
hereunder or by the Dallas Deed of Trust, to pay or as reimbursement for the
costs of such repairs or replacements. 
Notwithstanding the foregoing, provided that (i) the Grantor is not in
default hereunder, under the Guaranty or under the Credit Agreement, (ii) all
or substantially all of the Equipment and the Inventory is not damaged by fire
or other casualty, (iii) the proceeds of insurance are received at least six
(6) months prior to the maturity date under the Note and (iv) the Grantor
notifies the Lender in writing within ten (10) days of the date of such damage
that the Grantor elects to replace the damaged Equipment or Inventory with new
equipment or inventory of the same or better quality, then the Lender shall
deliver to the Grantor the proceeds of insurance on account of such damage.


 


Section
8.  Place of Perfection; Records;
Collection of Receivables. (a) The Grantor shall not change the
jurisdiction under whose laws it is organized. 
The Grantor shall keep its chief executive office and the office where
it keeps its records concerning the Collateral, and all originals of all
chattel paper that evidence the Receivables, at the location therefor specified
in Section 4(a) or, upon 30 days’ prior written notice to the Lender, at such
other locations in a jurisdiction where all actions required by Section 5 shall
have been taken with respect to such Collateral.  The Grantor will hold and preserve such records and chattel paper
and will permit representatives of the Lender at any time during normal
business hours to inspect and make abstracts from such records and chattel
paper.


 


(b)           Except as otherwise provided in this
Section 8(b), the Grantor shall continue to collect, at its own expense, all
amounts due or to become due the Grantor under the Receivables.  In connection with such collections, the
Grantor may take (and, at the Lender’s direction, shall take) such action as
the Grantor or the Lender may deem necessary or advisable to enforce collection
of such Receivables; provided, however, that the Lender shall
have the right at any time, upon the occurrence and during the continuance of a
Default and upon written notice


 


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to the Grantor of its intention
to do so, to notify the obligors under any such Receivables of the assignment
of such Receivables to the Lender and to direct such obligors to make payment
of all amounts due or to become due to the Grantor thereunder directly to the
Lender and, upon such notification and at the expense of the Grantor, to
enforce collection of any such Receivables, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as the
Grantor might have done.  After receipt
by the Grantor of the notice from the Lender referred to in the proviso
to the preceding sentence, (i) all amounts and proceeds (including instruments)
received by the Grantor in respect of the Receivables shall be received in
trust for the benefit of the Lender hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Lender in the same
form as so received (with any necessary indorsement), and (ii) the Grantor
shall not adjust, settle or compromise the amount or payment of any Receivable,
release wholly or partly any obligor thereof, or allow any credit or discount
thereon.


 


Section
9.  Transfers and Other Liens.  The Grantor shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Collateral of the Grantor, except sales of
Inventory in the ordinary course of business, or (ii) create or suffer to exist
any Lien upon or with respect to any of the Collateral of the Grantor except
for the pledge, assignment and security interest created by this Agreement and
Liens permitted under the Credit Agreement.


 


Section
10.  Lender Appointed
Attorney-in-Fact.  The Grantor
hereby irrevocably appoints the Lender the Grantor’s attorney-in-fact, coupled
with an interest, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time in the Lender’s
discretion, to take any action and to execute any instrument that the Lender
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation (a) to direct any party liable for any payment
under any of the Collateral to make payment of any and all monies due and to
become due thereunder directly to the Lender or as the Lender shall direct, (b)
to obtain and adjust insurance required to be paid to the Lender pursuant to
Section 7, (c) to enter into any premises where any of the Collateral is
located and to take possession and control of same, to take possession and
control of all books and records of the Grantor relating to the Collateral, and
to ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral, (d) to receive, indorse and collect any checks,
drafts or other instruments, documents and chattel paper, in connection with
clause (a) or (b) above, (e) to file any claims or take any action or institute
any proceedings that the Lender may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Lender with respect to any of the Collateral, (f) to do all acts and things
which the Lender deems necessary to protect, preserve or realize upon the
Collateral and the Lender’s security interest therein, in order to effect the
intent of this Agreement, all as fully and effectively as the Grantor might do
and (g) to promptly execute and deliver all further instruments and documents,
and take all further action as contemplated by Section 5 hereof.


 


Section
11.  Lender May Perform.  If the Grantor fails to perform any
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the


 


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expenses of the Lender incurred
in connection therewith shall be payable by the Grantor under Section
14(c).  The powers conferred on the
Lender hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers.


 


Section
12.  The Lender’s Duties.  The powers conferred on the Lender hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. 
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Lender shall have
no duty as to any Collateral, whether or not the Lender has or is deemed to
have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.  The Lender shall be deemed
to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Lender accords its own property.


 


Section
13.  Remedies.  If any Event of Default shall have occurred
and be continuing:


 


(a)           The Lender may exercise in respect of
the Collateral, in addition to the other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party upon default under the New York Uniform Commercial Code (whether or not
the New York Uniform Commercial Code applies to the affected Collateral) and
also may (i) require the Grantor to, and the Grantor hereby agrees that it will
at its expense and upon request of the Lender forthwith, assemble all or part
of the Collateral of the Grantor as directed by the Lender and make it
available to the Lender at a place to be designated by the Lender, (ii) without
notice except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Lender’s offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Lender may deem commercially reasonable, and (iii) exercise any
and all rights and remedies of the Grantor under or in connection with the
Receivables and Related Contracts of the Grantor or otherwise in respect of the
Collateral of the Grantor, including, without limitation, any and all rights of
the Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Receivables and the Related
Contracts.  The Grantor agrees that, to
the extent notice of sale shall be required by law, at least 10 days’ notice to
the Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute commercially reasonable
notification.  The Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given.  The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.


 


(b)           All cash proceeds received by the
Lender in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral may, in the discretion of the Lender, be held
by the Lender as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Lender pursuant to Section 14) in
whole or in part by the Lender against, all or any part of the Secured
Obligations in such order as the Lender shall elect.  Any surplus of such cash or cash proceeds held by the Lender and
remaining after payment in full of all the Secured Obligations shall be paid
over to the Grantor or to whomsoever may be lawfully entitled to receive such
surplus.


 


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(c)           The Lender may exercise any and all
rights and remedies of the Grantor under or in respect of the Collateral.


 


(d)           All payments received by the Grantor
under or in respect of the Collateral shall be received in trust for the
benefit of the Lender, shall be segregated from other funds of the Grantor and
shall be forthwith paid over to the Lender in the same form as so received
(with any necessary indorsement).


 


Section
14.  Indemnity and Expenses.  (a) The Grantor agrees to indemnify the
Lender from and against any and all claims, losses and liabilities growing out
of or resulting from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, losses or liabilities resulting from the
Lender’s gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction.


 


(b)           The Grantor hereby agrees not to
assert any claim against the Lender on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise
relating to this Agreement or the other Loan Documents.


 


(c)           The Grantor will, upon demand, pay to
the Lender the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Lender may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of the
Grantor, (iii) the exercise or enforcement of any of the rights of the Lender
hereunder, or (iv) the failure by the Grantor to perform or observe any of the
provisions hereof.


 


Section
15.  Conflicts.  In the event any section or provision
hereunder is or shall come into conflict with any section or provision of the
Dallas Deed of Trust, the provision which most expands the scope of the
Collateral, the RP Collateral (as defined in the Dallas Deed of Trust) and/or
the UCC Collateral (as defined in the Dallas Deed of Trust), as the case may
be, or better enhances the security of the Lender from or through the
Collateral, RP Collateral and/or UCC Collateral, as the case may be, shall
control.


 


Section
16.  Amendments; Waivers.  No amendment or waiver of any provision of
this Agreement, and no consent to any departure by the Grantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.  No failure on the part of the Lender to
exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.


 


Section
17.  Addresses for Notices.  All notices and other communications
provided for hereunder shall be in writing (including telecopier communication
and any other method of communication authorized by the Lender) and mailed,
telecopied or otherwise sent or delivered to the Lender, addressed to it at its
address specified in the Credit Agreement, and to the Grantor, addressed to it
at its address set forth under the Grantor’s name on the signature page hereof),
or at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section.  All such notices and other


 


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communications shall, when
mailed, telecopied, or otherwise sent or delivered, be effective when deposited
in the mails, telecopied or otherwise sent or delivered, respectively,
addressed as aforesaid.


 


Section
18.  Continuing Security Interest;
Assignments under the Credit Agreement. 
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full in cash of the Secured Obligations, (b) be binding upon the Grantor, its
successors and assigns, and (c) inure, together with the rights and remedies of
the Lender hereunder, to the benefit of the Lender and its respective
successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (c), the Lender
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement to any other Person and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to the Lender herein or otherwise.


 


Section
19.  Termination.  Upon the indefeasible payment in full in
cash of the Secured Obligations, the pledge, assignment and security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Grantor.  Upon any such termination,
the Lender will, at the Grantor’s expense, execute and deliver to the Grantor
such documents as the Grantor shall reasonably request to evidence such
termination.


 


Section
20.  Security Interest Absolute.  The obligations of the Grantor under this
Agreement are independent of the Secured Obligations or any other obligations
of the Grantor under or in respect of the Loan Documents, and a separate action
or actions may be brought and prosecuted against the Grantor to enforce this
Agreement, irrespective of whether any action is brought against the Grantor or
whether the Grantor is joined in any such action or actions.  All rights of the Lender and the pledge,
assignment and security interest hereunder, and all obligations of the Grantor
hereunder, shall be irrevocable, absolute and unconditional irrespective of,
and the Grantor hereby irrevocably waives (to the maximum extent permitted by
applicable law) any defenses it may now have or may hereafter acquire in any
way relating to, any or all of the following: (a) any lack of validity or
enforceability of any Loan Document or any other agreement or instrument
relating thereto; (b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any other
obligations of the Grantor under or in respect of the Loan Documents or any
other amendment or waiver of or any consent to any departure from any Loan
Document, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to the Borrower
or otherwise; (c) any taking, exchange, release or non-perfection of any
Collateral or any other collateral, or any taking, release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations; (d) any manner of application of any Collateral or any
other collateral, or proceeds thereof, to all 
or any of the Secured Obligations, or any manner of sale or other
disposition of any Collateral or any other collateral for all or any of the
Secured Obligations or any other obligations of the Grantor under or in respect
of the Loan Documents or any other assets of the Grantor; (e) any change,
restructuring or termination of the organizational structure or existence of
the Grantor; (f) any failure of the Lender to disclose to the Grantor any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects


 


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of the Grantor (the Grantor
waiving any duty on the part of the Lender to disclose such information); (g)
the failure of any other Person to execute this Agreement or any other Loan
Document, guaranty or agreement or the release or reduction of liability of the
Grantor or other grantor or surety with respect to the Secured Obligations; or
(h) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by the
Lender that might otherwise constitute a defense available to, or a discharge
of, the Grantor or a third party grantor of a security interest.


 


This Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Secured Obligations is rescinded or must
otherwise be returned by the Lender or by any other Person upon the insolvency,
bankruptcy or reorganization the Grantor or otherwise, all as though such
payment had not been made.


 


Section
21.  Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of an original executed counterpart of this Agreement.


 


Section
22.  Governing Law; Jurisdiction;
Waiver of Jury Trial, Etc.


 


(a)           This Agreement shall be governed by,
and construed in accordance with the laws of the State of New York, except to
the extent that the perfection, the effect of perfection or nonperfection, and
the priority of the security interest or remedies hereunder in respect of any
particular Collateral are governed by the laws of a jurisdiction other than the
State of New York.


 


(b)           The Grantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
other Loan Document, or for recognition or enforcement of any judgment, and the
Grantor hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the extent permitted by law, in such federal
court.  The Grantor consents to the
service of process of any and all process which may be served in any suit,
action or proceeding by the mailing of copies of such process to the Grantor at
its address specified in Section 17 hereof. 
The Grantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan
Document shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document in
the courts of any other jurisdiction.


 


(c)           The Grantor irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document to which it is or is to be a party in any New York
State or federal court.


 


9

















 


The Grantor hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such suit, action or proceeding in any such court.


 


(d)           THE GRANTOR (BY ITS ACCEPTANCE
HEREOF) HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT OR ANY OTHER
LOAN DOCUMENT, THE ADVANCE OR THE ACTIONS OF THE LENDER OR ANY OF ITS
AFFILIATES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
HEREOF OR THEREOF.


 


Section
23.  Severability of Provisions.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.


 


Section
24.  Headings.  Article, section and paragraph headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part hereof for any other purpose.


 


Section
25.  Cash Collateral.  In any situation hereunder where the Lender
is or may be entitled under this Agreement to apply the proceeds of any
insurance policy or any other monies against any portion of the Secured
Obligations, the Lender shall have the right at its option to hold the monies
in question as cash collateral.  Until
expended or applied against such remaining Secured Obligations, any cash
collateral retained by the Lender shall constitute additional security for the
Secured Obligations and shall not bear interest. The election of whether to
make such application or to hold such monies as cash collateral shall be in the
sole and absolute discretion of the Lender.


 


[Remainder of page left intentionally blank]


 


10

















 


IN WITNESS WHEREOF,
the Grantor has caused this Agreement to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above written.


 


	
   

  	
   

  	
   

  	
  DALLAS
  S&W, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
  By:  S&W of Dallas LLC, general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Alan M.
  Mandel

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Alan
  M. Mandel

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  	
  c/o The
  Smith & Wollensky

  	
   

  
	
   

  	
   

  	
   

  	
  Restaurant
  Group, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
  114 First
  Avenue

  	
   

  
	
   

  	
   

  	
   

  	
  New York,
  New York 10021

  	
   

  
	
   

  	
   

  	
   

  	
  Fax No.: 212
  758 6028

  	
   

  
							



 


11

















 


	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  ss.:

  
	
  COUNTY OF
  NEW YORK

  	
  )

  



 


 


On the 19th
day of December in the year 2002 before me, the undersigned, a Notary Public in
and for said State, personally appeared Alan M. Mandel, personally known to me
or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that
he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.


 


 


	
   

  	
   

  	
   

  	
  /s/ Linda Marshall

  	
   

  
	
   

  	
   

  	
   

  	
  Notary Public

  



 


12

















 


Schedule I


 


Locations of Equipment:  18438 Dallas Parkway, Dallas, Texas


 


 


Locations of Inventory:  18438 Dallas Parkway, Dallas, Texas


 


 


Trade Names:  Smith & Wollensky


 


 


State of Organization:  Texas


 


 


Chief Executive
Office: 1114 First Avenue, New York, New York


 


 


Federal Tax Identification Number: 
75-3086522


 


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