PLEDGE AND SECURITY AGREEMENT
ACLC 1999-2 SBL PROGRAM
made by
FFP Properties, L. P.,
as Borrower
in favor of
AMRESCO COMMERCIAL FINANCE, INC.,
as Secured Party
PLEDGE AND SECURITY AGREEMENT (this "Security Agreement"), dated as of the
date set forth on the signature page hereof, by FFP Properties, L. P. (the
"Borrower"), in favor of AMRESCO COMMERCIAL FINANCE, INC., a Nevada corporation
(together with its successors and assigns, the "Secured Party").
Preliminary Statements
A. On the date hereof; the Secured Party will make certain loans (each a
"Loan" and, collectively, the "Loans") to the Borrower segregated into two
series ("Series A and B" or for any such series a "Tranche") of which the Loans
in this series A are reflected in six (6) separate promissory notes in the ACLC
1999-2 SBL Program to the Secured Party, one promissory note in the amount of
$83,695.65, a second promissory note in the amount of $988,043.47, a third
promissory note in the amount of $2,318,478.25, a fourth promissory note in the
amount of $529,347.82, a fifth promissory note in the amount of $157,608.70, and
a sixth promissory note in the amount of $2,507,608.69, each dated the date
hereof (collectively, the "Promissory Note"), which Promissory Note will
evidence the Borrower's obligation, inter alia, (i) to repay the Loans
reflected in such Promissory Note, (ii) to guarantee the payment of
delinquencies or defaults in respect of Program Loans (as defined therein) in an
amount up to the Aggregate Credit Enhancement Amount (as defined therein), (iii)
to pay rebatable Scheduled Monthly Credit Enhancement Obligation Payments (as
defined therein) on each Loan and (iv) to pay interest and other amounts as set
forth therein.
B. It is a condition to the making of the Loans, that the Borrower shall have
executed and delivered this Security Agreement whereby the Borrower, in order to
provide security for the full payment when due of all amounts payable under the
Promissory Note, shall pledge and grant to the Secured Party a security interest
in the collateral described herein.
NOW THEREFORE, in consideration of the foregoing and in order to induce the
Secured Party to make the Loans available to the Borrower and for other good and
valuable consideration, the receipt and sufficiency of which the Borrower hereby
acknowledges, the Borrower and the Secured Party agree as follows:
ARTICLE I
DEFINITIONS AND OTHER TERMS
1.Definitions and Other Terms.
1.1.Defined Terms. The following terms shall have the meanings herein
specified unless the context otherwise requires. All terms not otherwise defined
herein shall have the meaning accorded to such terms in the Promissory Note. All
terms defined in the singular will have the same meaning when used in the plural
and vice versa.
"Accounts" means "accounts" as such term is defined in the UCC.
"Affiliate" means, with respect to any designated Person, any Person that,
directly or indirectly, controls or is controlled by or is under common control
with such designated Person and, without limiting the generality of the
foregoing, shall include, (a) any Person who is a director or officer of,
partner in, trustee of, or blood or legal relative, guardian or representative
of the designated Person, or any Person who acts or serves in a similar capacity
with respect to the designated Person, (b) any Person of which or whom the
designated Person is a director or officer, partner, trustee, or blood or legal
relative, guardian or representative, or with respect to which or whom, the
designated Person acts or serves in a similar capacity; and (c) any Person, who,
directly or indirectly, is the legal or beneficial owner of or controls ten
percent (10%) or more of any class of equity securities of the designated
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Affiliate Guarantor" has the meaning ascribed to such term in Section 1.2.
"Aggregate Credit Enhancement Amount" has the meaning ascribed to such term
in the Promissory Note.
"Applicable Collateral" means, for each Loan, the portion of the Collateral
specifically relating to the Store which corresponds to such Loan (as set forth
on Schedule 4 attached hereto).
"Business" means all Stores operated by the Borrower.
"Business Day" means any day other than a Saturday, Sunday or a day on which
banking institutions in New York City are authorized or obligated by law or
executive order to be closed.
"Cash Flow" means, for any period, with respect to any Person, an amount
equal to (a) the sum of (i) pre-tax income, (ii) interest expense, (iii)
depreciation and amortization, (iv) Discretionary Expenses, (v) Rental Expense
and (vi) Non-Recurring Expenses less Non-Recurring Income, all as reflected on
such Person's financial statement for such period.
"Chattel Paper" has the meaning ascribed to such term under the UCC.
"Code" means the Internal Revenue Code of 1986 as amended.
"Collateral" has the meaning ascribed to such term in Section 2.
"Consolidated FCCR" means, for any period, the ratio of (a) the Borrower's
Cash Flow for such period to (b) the sum of Fixed Charges and Rental Expense of
the Borrower for such period.
"Contracts" shall mean all contracts and agreements to which the Borrower now
is, or hereafter will be, bound, or a party, beneficiary or assignee (other than
rights evidenced by Chattel Paper, Documents or Instruments), including, without
limitation, any franchise agreements or license agreements and all other
agreements and documents executed and delivered with respect to such contracts,
and all revenues, rentals and other sums of money due and to become due
thereunder from any of the foregoing.
"Copyrights" shall mean all United States or other registered and
unregistered copyrights, all licenses thereto, and all applications therefor,
and all reissues, divisions, continuations, renewals, extensions, modifications,
supplements thereto or to any part thereof, and the right to sue for past,
present and future infringements of the foregoing, and all rights corresponding
to the foregoing throughout the world.
"Credit Enhancement Amount" has the meaning ascribed to such term in the
Promissory Note.
"Default Rate" has the meaning ascribed to such term in the Promissory Note.
"Deposit Accounts" has the meaning ascribed to such term in the UCC.
"Discretionary Expenses" means, with respect to any Person, the difference
between (a) operating expenses for salaries, wages, benefits, and reimbursements
and the like incurred by such Person and (b) the reasonable and customary
expenses for salaries; wages, benefits, and reimbursements incurred by such
Person, as determined by the Secured Party or any appointed servicer.
Discretionary Expenses shall in no event be less than zero.
"Distributions" means distributions, all salaries, fees and other
compensation, and all reimbursement or indemnification, directly or indirectly,
paid or payable to (or forte benefit of any Affiliate of the Borrower, other
than a Person who is an officer of the Borrower and is not otherwise an
Affiliate of the Borrower. "Distributions" shall include, but not be limited to,
any payment or reimbursement of travel and entertainment expenses, automobile
expenses, and premiums or expenses associated with any insurance policy other
than those expressly required to be maintained pursuant to Section 3.18 hereof.
"Document" has the meaning ascribed to such term under the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974 as amended.
"Equipment" means any "equipment", as such term is defined in the 13CC, used
or bought for use primarily in the Pledged Stores and not included within
Inventory, now or hereafter owned or leased by the Borrower and, in any event,
shall include, but shall not be limited to, all machinery, tools, computer
software, office equipment, furniture, appliances, furnishings, fixtures,
vehicles, motor vehicles, petroleum storage tanks and pumps, and any manuals,
instructions and similar items which relate to the foregoing, and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all improvements thereon and all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto.
"Event of Default" has the meaning ascribed to such term in Section 7.
"Financing Statements" means the UCC financing statements, prepared by
Secured Party, and delivered to Borrower and which Borrower must execute and
deliver to Secured Party as a condition under the Loan Documents.
"Fixed Changes" means, with respect to any Person, for any period, without
duplication, the aggregate of all amounts paid or accrued by such Person during
such period with respect to Indebtedness, as determined in accordance with
generally accepted accounting principles.
"Franchise Agreement" means any franchise or license agreement or agreements
with Borrower as franchisor or licensor, or as franchisee or licensee.
"General lntangibles" shall mean "general intangibles" as such item is
defined in the UCC and shall include, but not be limited to, writings,
memoranda, confirmations, passbooks, signature cards, acknowledgements,
understandings, contract rights, licenses, including Liquor Licenses, leases,
permits, filings, consents, and approvals, and all puts, calls, options,
warrants, and securities, and all security interests, Patents, inventions,
processes, lists (including customer and suppliers lists), methods, and
information (including proprietary information, director and shareholder, sales,
business, financial, accounting, forecasts, projections, media, and other
information), know-how, software, programs, plans, data, blueprints, designs,
drawings, surveys, notices, Copyrights, Trademarks, tradenames, trade secrets,
service marks, service names, logos and goodwill, and all recordings and
registrations thereof, applications for recording or registration, renewals,
modifications, supplements, reissues, continuations, extensions, divisions
thereof and rights corresponding thereto, and all manuals, standards, practices,
mail, advertisements, files, reports, books, catalogs, records, journals,
invoices, and bills, and all rights (including voting rights, rights to receive
notice or to consent, rights to payment, interest, dividends, distributions or
earnings, rights to sue and enforce), powers (including powers of attorney),
privileges, benefits, and remedies relating thereto or arising in connection
therewith.
"Goods" has the meaning ascribed to such term in the UCC.
"Indebtedness" means, with respect to any Person, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services, (d) all
capitalized lease obligations of such Person, (e) all indebtedness of others
secured by a Lien on any asset of such Person, whether or not such indebtedness
has been assumed by such Person and (f) all indebtedness of others to the extent
guaranteed by such Person.
"Instrument" has the meaning ascribed to such term in the UCC (other than
Instruments constituting Chattel Paper).
"Insurance and Condemnation Proceeds" means (a) any and all proceeds of any
insurance (insuring the Collateral or otherwise required to be maintained
hereunder, including return of unearned premium), indemnity, warranty or
guaranty payable to the Secured Party or Borrower flout time to time, and claims
fur insurance, indemnity, warranty or guaranty effected or held for the benefit
of the Borrower, with respect to any of the Collateral, and (b) any and all
payments (in any form whatsoever) made or due and payable to the Borrower from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
authority (or any person acting under color of governmental authority).
"Inventory" means all inventory of the Borrower of every type or description,
including all "inventory" as such term is defined in the UCC, now owned or
hereafter acquired and wherever located, whether raw, in process or finished,
and all materials usable in processing the same and all documents of title
covering any inventory, including, without limitation, work in process,
materials used or consumed in the Pledged Stores, now owned or hereafter
acquired or manufactured by the Borrower and held for sale in the ordinary
course of its business; all present and future substitutions thereof, parts and
accessories thereof and all additions thereto; and all Proceeds thereof and
products of such inventory in any form whatsoever.
"Lease Obligations" means with respect to any Person, any obligations or such
Person In connection with any leases for personal property (including Equipment)
or real property, to the extent such obligations are not included in
Indebtedness.
"License" means any license to use the Trademarks in connection with the
operation of the Business.
"Lien" means any deed, mortgage, pledge, security interest, hypothecation,
collateral assignment, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the UCC).
"Liquor License" means all liquor licenses issued to, or used by, Borrower or
any Affiliate of Borrower in connection with the Stores including, but not
limited to, all liquor licenses listed on Schedule 5 attached hereto.
"Loan" and "Loans" have the meanings ascribed to such terms in the
preliminary statements of this Security Agreement.
"Loan Amount" shall have the meaning ascribed to such term in the Promissory
Note.
"Loan Documents" means the Promissory Note, this Security Agreement and any
guarantee, mortgage, deed of trust or other instrument, agreement, certificate
or other writing, now or hereafter executed and delivered in connection with the
Promissory Note or the Obligations.
"Make Whole Premium" means: (a) for a Fixed Rate loan has the meaning
ascribed to such term in the Fixed Rate Promissory Note, and (b) for an
Adjustable rate loan means the same as "Prepayment Premium" as such term is
defined in the Adjustable Promissory Note.
"Non-Recurring Expenses" and "Non-Recurring Income" mean expenses or income,
as the case may be, that is extraordinary and generally not reflected in any
prior period or reasonably anticipated to be incurred in any subsequent period
received.
"Note Amount" has the meaning ascribed to such term in the Promissory Note.
"Obligations" means each and every obligation, covenant, agreement,
Indebtedness and liability of the Borrower to the Secured Party evidenced by,
arising under or in connection with thc Promissory Note (including, without
limitation, indebtedness, obligations and liabilities in respect of principal,
interest, the Make Whole Premium, the Credit Enhancement Amount and the
Scheduled Monthly Credit Enhancement Obligation Payments for each of the Loans),
this Security Agreement, or any other Loan Document, and any future advances
thereon, renewals, extensions, modifications, amendments, substitutions and
consolidations thereof, including the Borrower's obligations to pay (or
reimburse the Secured Party for) all costs and expenses (including attorneys
fees and disbursements) incurred by the Secured Party in obtaining, maintaining,
protecting and preserving its interest in the Collateral or its security
interest therein, foreclosing, retaking, holding, preparing for sale or lease,
selling or otherwise disposing or realizing on the Collateral or in exercising
its rights hereunder or as a secured party under the UCC, any other applicable
law, regulation or rule or this Security Agreement, including interest on such
costs and expenses which shall accrue at the rate of eight percent (8%) per
annum, and all other indebtedness, obligations and liabilities of any kind of
the Borrower to the Secured Party, now or hereafter existing (including future
advances whether or not pursuant to commitment), arising directly between the
Borrower and the Secured Party relating to the Loan Documents, whether absolute
or contingent, joint and/or several, secured or unsecured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, or direct or indirect, including the Borrower's liabilities to the
Secured Party as a member of any partnership, syndicate, association or other
group, and whether incurred by the Borrower as principal, surety, indorser,
guarantor, accommodation party or otherwise.
"Patents" means all United States or other registered and unregistered
patents, all licenses thereto, and all applications therefor, and all reissues,
divisions, continuations, renewals, extensions, modifications, supplements
thereto or to any part thereof, and the right to sue for past, present and
future infringements of the foregoing, and all rights corresponding to the
foregoing throughout the world.
"Permitted Liens" means any and all of the Liens set forth on Exhibit B
attached hereto.
"Person" means any individual, corporation, partnership, unincorporated
association, firm, trust, joint stock company, joint venture or other entity of
whatever nature.
"Pledged Stores" means those Stores listed on Schedule I attached hereto.
"Principal Party" shall have the meaning ascribed to such term in Section
7(e).
"Proceeds" shall mean "proceeds" as such term is defined in the UCC or under
other relevant law and shall include, but shall not be limited to, (a) any and
all proceeds of any insurance (insuring the Collateral or otherwise required to
be maintained hereunder, including return of unearned premium), indemnity,
warranty or guaranty payable to the Secured Party or Borrower from time to time,
and claims for insurance, indemnity, warranty or guaranty effected or held for
the benefit of the Borrower, with respect to any of the Collateral, (b) any and
all payments (in any form whatsoever) made or due and payable to the Borrower
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (c) any and all interest, income, dividends, distributions and
earnings on the Collateral or other monies, revenues or other amounts derived
from the Collateral, including any such amounts received in connection with any
disposition of the Franchise Agreement.
"Program" means the ACLC 1999-2 SBL Program of loans to Program Borrowers.
"Program Borrower" has the meaning ascribed to such term in the Promissory
Note. In addition, in the Secured Party's opinion, all Program Borrowers
substantially comply in all material respects with the Secured Party's current
underwriting guidelines for loans to small business owners, and in no event will
loans be made to Program Borrowers where (a) the Pledged Store has less than one
year of seasoning, and (b) (i) the most recent annual revenue of the Borrower is
less than $500,000 or (ii) the most recent annual Borrower Cash Flow is less
than $100,000.
"Program Loan Deficiencies" has the meaning ascribed to such term in the
Promissory Note.
"Promissory Note" has the meaning ascribed to such term in the preliminary
statements to this Security Agreement.
"Property" means the real property or properties on which the Pledged Stores
are located, as more specifically described on Schedule I attached hereto.
"Rental Expense" means, with respect to any Person, for any period, the
aggregate of all amounts paid or accrued with respect to Lease Obligations
during such period, as determined in accordance with generally accepted
accounting principles.
"Required Consolidated FCCR" has the meaning ascribed to such term in Section
3.15.
"Required Unit FCCR" has the meaning ascribed to such term in Section 3.15.
"Scheduled Monthly Credit Enhancement Obligation Payment" shall have the
meaning ascribed to such term in the Promissory Note.
"Scheduled Monthly Loan Payment" shall have the meaning ascribed to such term
in the Promissory Note.
"Securitization" means the sale, pledge, grant of a security interest,
collateral assignment, transfer and delivery or other encumbrance or disposition
of all or any portion of the Program Loans (or the Secured Party's rights and
powers therein) by the Secured Party, from time to time, to one or more of its
Affiliates or to other Persons, including the sale of the Program Loans by the
Secured Party to one or more Persons who will issue debt instruments or equity
certificates backed by such Program Loans and the servicing of such Program
Loans by Person appointed as servicer in connection therewith.
"State" shall have the meaning ascribed to such term in the Promissory Note.
"Store" means a business/commercial property owned and/or operated by the
Borrower and includes all aspects of the operating unit.
"Trademarks" shall mean all United States or other registered or unregistered
trademarks, trade names, service marks and service names together with the
goodwill of the business connected with the use thereof, and symbolized thereby,
all licenses thereto (including the License, if applicable) and all applications
therefor, and all reissues, divisions, continuations, renewals, extensions,
modifications, supplements thereto or to any part thereof, and the right to sue
for past, present and future infringements of the foregoing, and all rights
corresponding to the foregoing throughout the world.
"UCC" means the Uniform Commercial Code (or any comparable law) in effect in
any relevant jurisdiction the laws of which govern the perfection of security
interests hereunder.
"UCC Search" means the security interest, tax lien, suit and judgment search
of the Borrower conducted in the locations set forth on Schedule 2 hereto.
"Unit FCCR" means, with respect to any Pledged Store, for any period, the
ratio of(a) such Fledged Store's Cash Flow for such period to (b) the sum of
Fixed Charges and Rental Expense of the Borrower for such Pledged Store of such
period.
1.2. Certain Calculations, For the purposes of calculating the Borrower's
Cash Flow, Discretionary Expenses, Non-Recurring Expenses, Non-Recurring Income,
Indebtedness and Lease Obligations, the term "Borrower" shall mean the Borrower
and any Affiliate of the Borrower (an "Affiliate Guarantor") that is providing
the Secured Party with a guarantee of any of the Borrower's Obligations and the
term "financial statement" shall mean a consolidated financial statement of the
Borrower and such Affiliate.
1.3. Rules of Construction. When used in this Security Agreement: (a) "or" is
not exclusive; (b) a reference to a law includes any amendment or modification
of such law; (c) a reference to a Person includes its permitted successors and
permitted assigns; and (d) a reference to an agreement, instrument or document
shall include such agreement, instrument or document as the same may be amended,
modified or supplemented from time to time in accordance with its terms.
ARTICLE II
SECURITY INTERESTS
2. Security Interests.
2.1. Pledge and Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due of all of the Obligations,
the Borrower hereby pledges and grants to the Secured Party, a continuing
security interest in, and Lien on, all of the Borrower's right, title and
interest in and to the following (collectively, the "Collateral"): all Accounts,
Goods, Documents, Chattel Paper, Deposit Accounts, Instruments, Inventory,
Equipment, General Intangibles, Contracts (including the Franchise Agreement and
License (if applicable), certificates of title, fixtures, money, securities,
deposits, credits, claims, demands, assets and other personal property, now
owned, existing, hereafter acquired, held, used, sold or consumed in connection
with the Pledged Stores and any other property, rights and interests of the
Borrower which at any time relate to, arise out of or in connection with the
foregoing or which shall come into the possession or custody or under the
control of the Secured Party or any of its agents, representatives, associates
or correspondents, in connection with the foregoing; any and all additions and
accessions, replacements, substitutions and improvements, of or to all the
foregoing; and all products, rents, profits, offspring and Proceeds thereof.
Without limiting the generality of the foregoing, this Agreement also secures
the payment of all amounts which constitute part of the Obligations and would be
owed by the Borrower to the Secured Party but for the fact they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
2.2. Security Interest Absolute. All rights of the Secured Party and the
security interests hereunder shall be absolute and unconditional irrespective
of:
(a) any change in the time, manner, amount or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Promissory Note or any other Loan
Document;
(b) any exchange, release or non perfection of all or any part of the
Collateral or any other collateral, or any release from, amendment to, waiver of
or consent to departure from any guaranty, for all or any of the Obligations; or
(c) to the fullest extent permitted by law, any other circumstances which might
otherwise constitute a defense available to, or a discharge of, the Borrower or
a third party pledgor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
3. Representations. Warranties and Covenants. The Borrower hereby represents,
warrants and covenants that:
3.1. Organization. The Borrower (unless the Borrower is an individual) is and
will continue to be duly formed, validly existing and in good standing under the
laws of the state of its organization set forth on Schedule I and is duly
authorized to do business in, and is in good standing in each jurisdiction where
the Business or thc Property is located and where such organization,
qualification or standing is necessary, required or proper in connection with
the Borrower's ownership or use of the Collateral or the Property or the conduct
of the Business.
3.2. Power and Authority. The Borrower (and, with respect to clause (c),
below, in the case of Loan Documents executed by an Affiliate Guarantor, each
such Affiliate Guarantor) has all requisite power, authority and the legal right
and all necessary permits, consents, licenses and authorizations (a) to own the
Collateral, (b) to conduct the Business and (c) to execute, deliver and perform
its obligations under this Security Agreement, the Promissory Note and the other
Loan Documents.
3.3. Execution and Delivery: Enforceability. Upon execution, this Security
Agreement, the Promissory Note and the other Loan Documents will be duly
executed and delivered by the Borrower (and in the case of Loan Documents
executed by an Affiliate Guarantor, by each such Affiliate Guarantor). Upon
execution, each of this Security Agreement, the Promissory Note and the other
Loan Documents will constitute a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower, in accordance with its terms.
3.4. Name: Chief Executive Office: Location.
(a) The Borrower's legal name, federal tax payor identification number, and
mailing address are accurately set forth on Schedule I. The Borrower has not
merged, consolidated, acquired all or substantially all of the assets of any
other Person, or except as disclosed on Schedule I, used any other name (whether
in connection with the Business, Property or the Collateral or for business,
obtaining credit or financing or otherwise) in the last five years.
(b) The Borrower's principal place of business, chief executive office (and,
if the Borrower is an individual, residence) is accurately set forth on Schedule
I.
(c) The Borrower operates and shall continue to operate the Pledged Stores
from the Property at the address (es) and in the county (ies) or parish (ies),
as applicable, and state(s) set forth in Schedule I. Schedule I correctly
discloses that the Borrower either (i) is sole record owner of the Property or
(ii) leases (or subleases) the Property and the record owner of each Property is
the person or entity disclosed on Schedule I. All personal property of the
Borrower owned, acquired, held, used, sold or consumed in the Pledged Stores
including Accounts, Goods, Inventory, Equipment, General Intangibles, Contracts,
Chattel Paper, Instruments, Documents, certificates of title, fixtures,
securities and money, and all writings relating thereto and records thereof,
books of record or account, employees, business, offices and operations are
located at and conducted out of such Property or at its chief executive office.
(d) The Borrower will neither change its name, federal tax payor
identification number, or its chief executive office (or, if an individual,
residence), nor the location of its business, property or assets (including the
Pledged Stores and the Collateral), nor assume a different name, nor conduct its
business or affairs under any other name or in any other location, nor merge,
consolidate, or change its corporate structure (whether by stock sale, issuance,
purchase or otherwise), nor change its use of any item of Collateral, without in
each instance providing the Secured Party with not less than sixty (60) days
prior written notice of the proposed action and specifying within such notice
and with reasonable clarity and particularity the timing and nature of such
proposed action. Additionally, the Borrower shall provide such other information
in connection with the proposed action as the Secured Party may reasonably
request and shall have taken all action, reasonably satisfactory to the Secured
Party, to maintain the security interest of the Secured Party in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
3.5. No Conflict. The Borrower's (and in the case of Loan Documents executed
by an Affiliate Guarantor, such Affiliate Guarantor's) execution, delivery and
consummation of the transactions contemplated by this Security Agreement, the
Promissory Note and other Loan Documents do not and will not (with the passage
of time or otherwise) (a) conflict with, violate or constitute a default under
any law, rule, regulation, order, decree, contract, agreement (including the
Franchise Agreement, if applicable), note, mortgage, bond, indenture, lease,
license, or obligation of or applicable to the Borrower (or such Affiliate
Guarantor) or the Collateral or (b) grant, create or result in any Lien in favor
of any person (other than the Secured Party) on or to the Business or any other
property or assets of the Borrower (including the Collateral and the Franchise
Agreement, if applicable).
3.6. No Consent Required. Except for the filing of the Financing Statements
in the locations set forth on Schedule 2 hereto (and, if applicable, the
recording of the mortgage or deed of trust included in the Loan Documents), no
consent of any other Person and no authorization, approval or other action by
and no notice to or filing with, any court, government, agency or regulatory
authority is required (a) for the grant byte Borrower of the pledge and security
interest granted hereby or for the execution, delivery or performance of this
Security Agreement, the Promissory Note and other Loan Documents or (b) for
validity, perfection or maintenance of the pledge, lien and security interest
created hereby.
3.7. Affiliates. Schedule 3 contains a complete and accurate list of all
Affiliates of the Borrower (including Affiliate Guarantors) who have executed
and delivered any note, security agreement, guarantee or other loan document to
the Secured Party.
3.8. Title to the Collateral. The Borrower has and, subject to Section 4,
will maintain good and marketable title to the Collateral and the Franchise
Agreement (if applicable), free of all Liens (other than Permitted Liens and the
security interest granted to the Secured Party hereunder) and such Collateral
and Franchise Agreement (if applicable), are sufficient to enable a franchisee
to operate the Pledged Stores at the Property in accordance with the Franchise
Agreement.
3.9. No Liens. Except as shown on the 13CC List attached hereto as Exhibit A,
there is no Lien (including any federal or state tax lien), suit (including any
action, proceeding, or other litigation pending, or to the Borrower's knowledge,
threatened) or judgment (including any award, injunction, order) filed with,
registered, indexed or recorded in any public office, court, arbitration panel,
administrative agency or regulatory authority (or intended so to be), directly
or indirectly, identifying or encumbering or covering or involving the
Collateral or the Franchise Agreement (if applicable) or which could have a
material adverse effect on the Borrower, any Pledged Store or the Borrower's
ability to perform its Obligations. All Liens listed on Exhibit A shall be
removed upon funding of the Loan unless such lien is specifically identified as
a Permitted Lien. Other than the security interest granted to the Secured Party
hereunder and the Permitted Liens, and except as provided in Section 4 hereof,
the Borrower has not and, without the prior written consent of the Secured
Party, will not enter into any agreement or understanding or take, permit or
suffer to exist any action (including the filing of a financing statement,
agreement, pledge, mortgage, notice or registration) or event (whether by
operation of law or otherwise) for the purpose of, or that may have the effect
of, directly or indirectly, (a) granting a Lien on (including any state of
federal tax lien), pledging, transferring, assigning, selling, disposing of, or
encumbering any Collateral or the Franchise Agreement (if applicable), any
interest therein or rights pertaining thereto or involving the Borrower or the
Pledged Stores, or (b) changing, modifying, supplementing, or increasing the
amount of credit, loans, indebtedness or value secured by the Permitted Liens,
if any, or the amount, property or assets encumbered thereby.
3.10. Maintenance of Collateral and Business. At the Borrower's sole cost
and expense, the Borrower shall (a) keep, use, operate and maintain the
Collateral, the Pledged Stores, the Business and the Property in accordance with
applicable laws, rules, and regulations, and in accordance with the standards
established by the franchisor under the Franchise Agreement (if applicable), (b)
operate the Pledged Stores at the Property and in accordance with the Franchise
Agreement (if applicable) and customary, prudent business practices, and at all
times fully comply with terms and provisions of the Franchise Agreement (if
applicable), (c) fully comply with all current and future laws and regulations
concerning the storage and sale of petroleum products, if applicable, and (d)
not do or suffer to be done any act whereby the value of the Collateral, the
Property or any Pledged Store or any part or interest therein may be lessened in
any material respect. The Borrower shall notify the Secured Party promptly of
any actual or threatened destruction or material damage or impairment of any
Pledged Store, the Collateral or the Property or if Borrower receives a notice
of violation from any governmental entity or agency.
3.11. Perfected Security Interest. This Security Agreement and this grant
and transfer of the Collateral hereunder creates a valid and enforceable
security interest in the Collateral. Upon filing of the Financing Statements in
the locations set forth on Schedule 2 hereto, such security interest will be
perfected and subject to no prior or equal security interest other than and only
to the extent of the Permitted Liens. The execution and filing of the Financing
Statements has been duly authorized by all appropriate action on the part of the
Borrower (and any other Person named as debtor therein) and the Borrower (and
any other Person named as debtor therein) has duly executed the Financing
Statements.
3.12. No Violation: Indemnity. The Borrower has not and shall not acquire,
obtain, make, manufacture, produce, operate, hold, possess, maintain, use, sell,
transfer, grant, pledge, or dispose of (for purposes of this Section 3.12,
collectively "the Borrowers use") any of its Business, securities, property or
assets (including any proceeds of the Loans, the Collateral and the Property) in
violation of any statute, law, rule, ordinance, regulation, policy, procedure,
injunction, award, decree, judgment, contract, agreement (including the
Franchise Agreement, if applicable), understanding, or right or interest of any
other Person (for purposes of this Section 3.12, each such event a "violation"),
and to the Borrower's knowledge no such violation has been made by any other
Person and no basis for a claim of any such violation exists. The Borrower shall
indemnify and hold the Secured Party harmless from and against any such
violation, and any other loss, liability, damage, cost or expense whatsoever
(including attorneys' fees and disbursements) arising out of or in connection
with the Borrower's use of any of its Business, securities, property or assets
(including any proceeds of the Loans, the Collateral and the Property).
3.13. Franchise Agreement. The Borrower, if a franchisee or a franchisor
under a Franchise Agreement, is and will continue to be in good standing under
such Franchise Agreement. The Borrower, if a franchisee or franchisor under a
Franchise Agreement, has not breached and is not in default under the Franchise
Agreement; the Borrower shall not terminate, fail to renew, breach or be in
default under the Franchise Agreement; and the Borrower has no knowledge of any
claim of (or basis for any claim of) any such termination, nonrenewal, breach or
default. The Borrower agrees to fully comply, at the Borrower's own cost and
expense, with the terms of the License and the Franchise Agreement (including
any renewal option) and to promptly notice the Secured Party of any adverse
development with regard to the Franchise Agreement or the License, including any
claim of breach of or default under, or threat of nonrenewal or termination of,
or litigation involving the Franchise Agreement or the License.
3.14. Operating Experience. The Borrower has had at least two years
experience operating a business or businesses similar to the Business of the
Pledged Store. In addition, each Pledged Store has been operating for at least
twelve months.
3.15. FCCR. During the term of this Security Agreement, thc Borrower shall
maintain (a) a Unit FCCR for each Pledged Store of not less than 1.30:1 (the
"Required Unit FCCR") and (b) a Consolidated FCCR of not less than 1.35:1 (the
"Required Consolidated FCCR"). All calculations of each Unit FCCR and the
Consolidated FCCR shall be based upon the financial information furnished by the
Borrower hereunder (see Sections 3.21 and 3.22) for the twelve-month period
ending December 31 of each year or more frequently as the Secured Party may from
time to time reasonably request.
3.16. Limitation on Indebtedness. Lease Obligations and Distributions. The
Borrower shall not, directly or indirectly, incur any Indebtedness, Lease
Obligations or make or become obligated to make any Distributions if after
giving effect to such incurrence or payments, any Unit FCCR would be less than
the Required Unit FCCR or the Consolidated FCCR would be less than the Required
Consolidated FCCR.
3.17. Inspection. The Borrower shall allow the Secured Party, its agents and
representatives, from time to time, to inspect the Collateral, the Property and
the Borrower's books and records pertaining thereto or otherwise to the
Business, and the Borrower will assist (and permit abstracts and photocopies of
the Borrower's books and records to be taken and retained by) the Secured Party,
its agents and representatives in making any such inspection.
3.18. Insurance. At the Borrower's sole cost and expense, the Borrower shall:
(a) (i) keep the Collateral (which for purposes of this Section 3.18 includes
the Property) insured against loss or damage by fire, theft, collision and other
hazards (including flood, if no certification or other evidence satisfactory to
the Secured Party is delivered to the Secured Party to the effect that the
Property is not located within a federally designated special flood hazard area)
as may be required by the Franchise Agreement (if applicable), or the Secured
Party and by policies of fire, extended coverage and other insurance with such
company or companies, in such amounts (and, with respect to policies required
for property, fire and flood insurance in an amount not less than the lesser of
(A) the replacement value thereof, and (B) the Loan Amount payable under the
Promissory Note), as may be required by the Franchise Agreement (if applicable)
and the Secured Party, but in no event less than the minimum amount required to
prevent the imposition of any coinsurance requirement on the insured, (ii)
maintain liability insurance of not less than one million dollars, (iii)
maintain business interruption insurance with scope and coverage reasonably
satisfactory to the Secured Party, and (iv) maintain such other insurance
(including certain minimum levels of acceptable workers' compensation, property
damage, general public liability insurance) as may be required by law or by the
Franchise Agreement (if applicable);
(b) cause all insurance policies required hereunder (i) to be maintained by
providers either (A) having ratings of not less than B++ from A.M. Best Company
Inc. (or comparable ratings from a comparable rating agency) or (B) who, if not
so rated, have been approved by the Secured Party and (ii) to contain a standard
lender's loss payable endorsement or mortgagee's endorsement providing for
payment directly to the Secured Party and/or its designees and to provide for a
minimum of thirty (30) days notice to the Secured Party prior to cancellation or
modification or nonrenewal;
(c) timely pay all premiums, fees and charges required in connection with all
of its insurance policies and otherwise continue to maintain such policies in
full force and effect;
(d) promptly deliver the insurance policies, certificates (and renewals)
thereof or other evidence of compliance herewith to the Secured Party; and
(e) promptly notify the Secured Party of any loss covered by such insurance
policies and allow the Secured Party to join the Borrower in adjusting any loss
in excess of $50,000.
3.1. Loan Proceeds. No part of the proceeds of the Loans will be used,
directly or indirectly, for the purpose of buying or carrying any "margin stock"
within the meaning of Regulation 0 or U of the Board of Governors of the Federal
Reserve System. The Borrower intends to and agrees to use the proceeds of the
Loans solely for the lawful, proper business or commercial purpose(s) set forth
in its application for the Loans and Secured Party's commitment letter.
3.20. Solvency. The Borrower (and each Affiliate Guarantor) is solvent and,
after giving effect to the Obligations, will continue to be solvent.
3.21. Reporting Requirements. The Borrower agrees to provide to the Secured
Party within twenty (20) days after June 30 and December31 of each calendar year
during the term of this Security Agreement, a compliance certificate (in the
form attached hereto as Exhibit C). The Borrower further agrees to provide to
the Secured Party: (a) within seventy-five (75) days after December 31st of each
calendar year and a, the Secured Party may reasonably request from time to time,
consolidated Borrower and individual Pledged Store internally generated
financial statements covering the twelve 02) month period then-ended; and (b)
copies of such other reports and information as the Secured Party may from time
to time request. The financial statements furnished to the Secured Party in
connection with the Borrower's application for the Loans and hereunder shall
reflect all Indebtedness and Lease Obligations of the Person covered thereby and
shall be sufficiently detailed to allow the Secured Party to calculate the Unit
FCCR of each Pledged Store and the Consolidated FCCR.
3.22. Accuracy of Information. All information, reports, statements and
financial and other data furnished (or hereafter furnished) by the Borrower to
the Secured Party, its agents or representatives hereunder or in connection with
the Borrower's application for the Loans and the Obligations, are (and shall be
on the date so furnished) true, complete and correct. Borrower hereby authorizes
Secured Party to request credit bureau reports while any of die Obligations are
outstanding.
3.23. Employee Benefit Plans.
(a) Definitions.
"Employee Benefit Plan" means any group health insurance, group life
insurance, medical, Sec. 401(k), profit sharing, defined benefit, pension,
cafeteria, SIMPLE, SEP, Bonower-sponsored IRA or any other employee benefit plan
sponsored by the Borrower, including without limitation any program, arrangement
or plan within the meaning of Section 3(3) of ERISA.
"Borrower." For purposes of this Section 3.23, the term "Borrower" shall
include all employers (whether or not incorporated) which by reason of common
control or otherwise are treated together with Borrower as a single employer
within the meaning of the Internal Revenue Code ("Code"), including without
limitation under Code Sections 414(b), (c), (in), (ii) or (o).
(b) Employee Benefit Plans Comply With ERISA and Code. For every Employee
Benefit Plan (i) the Employee Benefit Plan is in compliance with ERISA and the
Code, (ii) no accumulated funding deficiency within the meaning of ERISA or the
Code has been incurred, and (iii) neither Borrower nor any other party has
applied for or obtained a waiver from the Internal Revenue Service of any
minimum funding requirement. Each Employee Benefit Plan intended to be qualified
under the Code has been determined to be qualified by the Internal Revenue
Service and nothing has occurred since the date of the last determination which
resulted or is likely to result in the revocation of the determination.
(c) No PBGC or Withdrawal Liability. Borrower has not incurred any liability
to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any
Employee Benefit Plan or ceased operations at any facility or withdrawn from any
Employee Benefit Plan in a manner which could give rise to liability under
ERISA. For example and without limitation, no Employee Benefit Plan has been a
plan for which "reportable event," within the meaning of Section 4043 of ERISA,
has occurred, or to the knowledge of Borrower, has been a plan for which any
liability to the PBGC has been or is expected to be incurred. Borrower has not
incurred any withdrawal liability (including any contingent or secondary
withdrawal liability) within thc meaning of ERISA to any Employee Benefit Plan
which is a multiemployer plan (as defined by ERISA), and no event has occurred,
and there exists no condition or set of circumstances, which presents a material
risk of the occurrence of any withdrawal from or the partition, termination,
reorganization or insolvency of any multiemployer plan which could result in any
liability with respect to a multiemployer plan. Borrower has not been notified
by the sponsor of any multiemployer plan that the multiemployer plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA,
and operations have not ceased at any facility which would subject Borrower to
the provisions of Section 4062(e) of ERISA. No proceeding has been instituted on
behalf of any multi-employer plan against Borrower to enforce Section 515 of
ERISA.
(d) No Tax or Other Liability. Borrower has no liability for any Employee
Benefit Plan for any lien, tax, penalty or excise tax under ERISA or the Code.
Other than claims for benefits submitted by participants or beneficiaries, no
claim, lawsuit or cause of action against or proceeding involving any Employee
Benefit Plan is pending or, to Borrower's knowledge, threatened by any party.
Except to the extent required under Section 601 et seq. of ERISA and Section
4980B of the Code, Borrower provides no benefits described in Section 3(1) of
ERISA to any retired or former employee or is obligated to provide benefits to
or on behalf of any employee following the employee's retirement or other
termination of service with Borrower.
(e) No Prohibited Transactions. No transaction relating to any Employee
Benefit Plan proscribed by Section 406 of ERISA ("Prohibited Transaction") has
occurred for which an exemption is not expressly available and applicable under
ERISA. Furthermore, to the extent within the knowledge or control of the
Borrower, neither the execution and delivery of this Security Agreement, the
acquisition of the Promissory Note by Secured Party or its Assigns, nor the
consummation of any other transaction contemplated by this Security Agreement
constitutes or will constitute a Prohibited Transaction with respect to any
Employee Benefit Plan for which an exemption is not expressly available and
applicable under ERISA.
(f) All Employee Benefit Plans Funded and Currently In Compliance. Borrower
has performed all of Borrower's obligations under all Employee Benefit Plans.
Full and timely payment has been made of all amounts which Borrower is required,
under applicable law or under any Employee Benefit Plan or any other agreement
to which Borrower is a party, to have paid for each Employee Benefit Plan.
Borrower has made adequate provision for reserves for all obligations and
liabilities under each Employee Benefit Plan that have accrued hut are not yet
due under the terms of any Employee Benefit Plan or related agreements.
(g) Transaction Will Not Trigger Benefits. The execution and delivery of this
Security Agreement, and the consummation of the transactions contemplated by
this Security Agreement, will not (i) result in any payment by Borrower
(including, without limitation, severance, unemployment compensation, parachute
payment, bonus or otherwise) becoming due to any director, employee, or
independent contractor of Borrower under any Employee Benefit Plan, agreement or
otherwise, (ii) increase any benefits otherwise payable under any Employee
Benefit Plan or agreement, or (iii) increase or create any liability referred to
in either Section 3.23(b) or 3.23(c) above.
3.24. Taxes. The Borrower and each of its Affiliates and each entity which
might have tax liabilities for which the Borrower or any of its Affiliates is or
may be liable, has filed all tax returns and paid all taxes required by law to
be filed or paid, which have become due pursuant to said returns (or which to
the knowledge of the Borrower are due and payable) and on all assessments
received by the Borrower, such Affiliate or such entity, as the case may be. No
extensions of the time for the assessment of deficiencies have been granted by
the Borrower or any of its Affiliates. There are no material Liens on any
properties or assets of the Borrower or any of its Affiliates imposed or arising
as a result of the delinquent payment or the nonpayment of any tax, assessment,
fee or other governmental charge. The income tax returns of the Borrower and its
Affiliates have been examined and reported upon by the relevant tax authorities,
or closed by applicable statutes of limitations, for all fiscal years through
the fiscal year ended ______N/A________ 19 and neither the Borrower nor any of
its Affiliates nor any such entity has given or consented to any waiver of the
statute of limitations with respect to its tax liabilities for any such year.
Adequate provision has also been made for all other taxes (whether past, current
or deferred, federal, provincial, local or foreign, due or to come due) on such
balance sheet, and the Borrower knows of no transaction or matter which might or
could result in additional tax assessments to the Borrower or any of its
Affiliates in the ordinary course since the date of such balance sheet. There
are no applicable taxes, fees or other governmental charges payable by the
Borrower or any of its Affiliates in connection with the execution and delivery
of this Agreement, and the other Loan Documents by the Borrower or any of its
Affiliates or the offer, issuance, sale and delivery of the Promissory Note by
the Borrower.
3.25. Property Leases. The Borrower, if a tenant or subtenant under a lease
or sublease of the Property, shall not terminate any such lease or sublease, and
the Borrower has no knowledge of any claim of (or basis for any claim of) any
such termination. The Borrower agrees to exercise and fully comply with the
terms of all renewal options provided for in such lease or sublease, and to
promptly notify the Secured Party of any adverse development with regard to the
threat of nonrenewal or termination of such lease of sublease.
3.26. Guaranty from FFP Marketing Company. Inc. Borrower shall enforce the
guaranty ("Affiliate Guaranty") provided by FFP Marketing Company, Inc. to
Borrower and Secured Party in connection with all leases between Borrower and
FFP Operating Partners, L.P., including that certain Master Lease Agreement of
equal date hereto, immediately upon any default by FFP Operating Partners, L.P.
under the terms of any such lease or master lease.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING INVENTORY, EQUIPMENT AND
REAL PROPERTY
4. Special Provisions Concerning Inventory. Equipment and Real Property. The
Borrower shall do nothing to impair the rights of the Secured Party in the
Inventory and the Equipment and shall cause the Inventory and the Equipment to
at all times be, constitute and remain personal property subject to the security
interest granted to the Secured Party. Notwithstanding the preceding sentence,
provided the Borrower is not in default under any of its Obligations (and no
event which with the passage of time would be an Event of Default has occurred
and is continuing), in the ordinary course of the Borrower's Business, (a) the
Borrower may sell its Inventory, and (b) subject to sections 3.15 and 3.16
hereto, with the prior consent of the Secured Party, which will not be
unreasonably withheld, the Borrower may, from time to time, refinance existing
Permitted Liens in accordance with the terms thereof, replace its Equipment,
acquire new Equipment and accessions to its Equipment, or acquire fee interest
in (or ground lease of) any Property, subject to purchase money security
interests; provided that, if the Secured Party has a leasehold mortgage or deed
of trust on any lease of such Property such lease remains in full force and
effect, subject to the Secured Party's security interest and any Person with a
lien on the fee interest in (or ground lease of) such Property provides the
Secured Party with a nondisturbance agreement and such other assurances as the
Secured Party shall reasonably request.
ARTICLE V
SPECIAL PROVISIONS CONCERNING INSURANCE AND
CONDEMNATION PROCEEDS AND PROCEEDS
5. Special Provisions Concerning Insurance and Condemnation Proceeds and
Proceeds.
5.1. Special Provisions Concerning Insurance and Condemnation Proceeds.
Unless prohibited under the terms of the Property lease, if applicable, the
Borrower hereby directs any and all transferors, distributors or payors
(including insurance companies with whom the Borrower maintains insurance) to
make payment of all Insurance and Condemnation Proceeds directly to the Secured
Party and authorizes the Secured Party, in its sole discretion, to apply the
same toward repayment of the Loans, whether or not due, or, toward replacement
of the Collateral. Notwithstanding the tens of the Property lease, if
applicable, the Borrower will use its best efforts and hereby assigns the
Insurance and Condemnation Proceeds toward replacement of the Collateral and
shall keep any lease or options to extend the lease in effect until the Loans
are paid.
5.2. Special Provisions Concerning Proceeds. All Proceeds, whether received
by the Secured Party or by the Borrower, or by any other Person will be included
in the Collateral subject to the security interest granted to the Secured Party
hereunder. Upon and during the continuation of an Event of Default, the Borrower
shall (a) identify, earmark, segregate and keep separate all Proceeds received
by it, (b) upon the Secured Party's request, promptly account to the Secured
Party for all Proceeds, and (c) hold all Proceeds received by the Borrower in
trust for the benefit of the Secured Party and shall promptly (and in any event
not later than the fifth day after receipt) deliver (or cause to be delivered)
the same to the Secured Party and into its possession in the form received by
the Borrower and at a time and in a manner satisfactory to the Secured Party.
ARTICLE VI
SPECIAL PROVISION CONCERNING RIGHTS AND
DUTIES WHILE IN POSSESSION OF COLLATERAL
6. Special Provision Concerning Rights and Duties While in Possession of
Collateral.
6.1 Borrower's Possession. Upon and during the continuance of an Event of
Default, to the extent the same shall, from time to time, be in the Borrower's
possession, the Borrower will hold all securities, Instruments, Chattel Paper,
Documents, certificates and money and other writings evidencing or relating to
the Collateral in trust for the Secured Party and, upon request or as otherwise
provided herein, promptly deliver the same to the Secured Party in a form
received and at a time and in a manner satisfactory to the Secured Party. With
respect to the Collateral in the Borrower's possession the Borrower shall at the
Secured Party's request take such action as the Secured Party in its discretion
deems necessary or desirable to create, perfect and protect the Secured Party's
security interest in any of the Collateral.
6.2. Secured Party's Possession. With respect to all of the Collateral
delivered or transferred to, or otherwise in the custody or control of
(including any items in transit to or set apart for) the Secured Party or any of
agents, associates or correspondence in accordance with this Security Agreement,
the Borrower agrees that: (a) such Collateral will be, and is deemed to be in
the sole possession of the Secured Party; (b) subject to Section4, the Borrower
has no right to withdraw or substitute any such Collateral with out the consent
of the Secured Party, which consent may be withheld or delayed in the Secured
Party's sole discretion; (c) the Borrower shall not take or permit any action,
or exercise any voting and other rights, powers and privileges in respect of the
Collateral inconsistent with the Secured Party's sole possession thereof; and
(d) the Secured Party may in its sole discretion and without notice, without
obligation or liability except to account for property actually received by it,
and without affecting or discharging the Obligations (i) further transfer and
segregate the Collateral in its possession; (ii) receive Proceeds and hold the
same as part of the Collateral and/or apply the same as herein after provided;
and (iii) exchange any of the Collateral for other property upon reorganization,
recapitalization or other readjustment. Following the occurrence of an Event of
Default, the Secured Party is authorized (A) to exercise or cause its nominee to
exercise all or any rights, powers and privileges (including to vote) on or with
respect to the Collateral with he same force and effect as an absolute owner
thereof; (B) whether any of the Obligations be due, in its name or in the
Borrower's name or otherwise, to demand, sue for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for,
or make any compromise or settlement the Secured Party deems desirable with
respect to, any of the Collateral; and (C) to extend the time of payment,
arrange for payment in installments, or otherwise modify the terms of, or
release, any of the Collateral. Notwithstanding the rights accorded the Secured
Party with respect to the Collateral and except to the extent provided below or
required by the UCC or other applicable law (which requirement cannot be
modified, waived or excused), the Secured Party's sole duty with respect to the
Collateral in its possession (with respect to custody, preservation, safekeeping
or otherwise) will be to deal with it in the same manner that the Secured Party
deals with similar property owned and possessed by it. Without limiting the
foregoing, the Secured Party, and any of its officers, directors, partners,
trustees, owners, employees and agents, to the extent permitted by law (I) will
have no duty with respect to the Collateral or the rights granted hereunder; (2)
will not be required to sell, invest, substitute, replace or otherwise dispose
of the Collateral; (3) will not be required to take any steps necessary to
preserve any rights against prior parties to any of the Collateral; (4) will not
be liable for (or deemed to have made an election of or exercised any right or
remedy on account of) any delay or failure to demand, collect or realize upon
any of the Collateral; and (5) will have no obligation or liability in
connection with the Collateral or arising under this Security Agreement. The
Borrower agrees that such standard of care is reasonable and appropriate under
the circumstances.
ARTICLE VII
EVENTS OF DEFAULT
7. Events of Default. The happening of any one or more of the following
events shall constitute an "Event of Default" hereunder:
(a) the Borrower shall fail to make any payment under this Security
Agreement, the Promissory Note or any Loan Document when the same becomes due
and payable and such failure shall continue for five (5) Business Days after the
Secured Party provides notice to the Borrower of such failure; or
(b) the Borrower shall default under, fail to perform or observe any covenant
or condition of or agreement in, or breach, or make a material inaccuracy in or
omission from, any representation or warranty under or in, this Security
Agreement, the Promissory Note, any other Loan Document, the Franchise Agreement
or the License (if applicable), any financial or other statement delivered to
the Secured Party or any agreement, instrument or obligation in connection with
any Permitted Lien, and such default, failure, breach, inaccuracy or omission
shall continue unremedied for the earliest of (i) fifteen (15) days following
the date that notice of such default, failure, breach, inaccuracy or omission is
given to the Borrower by the Secured Party, (ii) fifteen (15) days following the
date that the Borrower first obtains knowledge of such default, failure, breach,
inaccuracy or omission, or (iii) in the case of any Permitted Lien, the
occurrence of such event (or, if there exists an applicable cure period, the
expiration of such cure period); or
(c) if the Borrower is a party to a Franchise Agreement as of the execution
of this Security Agreement with regard to a Pledged Store and the other party to
such Franchise Agreement shall terminate or not renew such Franchise Agreement;
or
(d) any of the Borrower's Affiliates listed on Schedule 3 shall fail to make
any payment when due under or default under, fail to perform or observe any
covenant of or condition or agreement in breach of, or make any material
inaccuracy in or omission from any representation and warranty under, any
security agreement with the Secured Party or note held by the Secured Party or
any other loan document with the Secured Party or in any other agreement,
instrument, document or certificate, or financial or other statement delivered
to the Secured Party and such failure, default or breach continues beyond any
applicable grace period provided therein or
(e) the Borrower or any Affiliate Guarantor or any partnership in which the
Borrower is a partner (each hereinafter called a "Principal Party") shall die,
dissolve, merge or consolidate, suspend the transaction of business or incur any
material adverse change in its financial condition or prospects; or
(f) the Borrower or any other Principal Party shall be expelled from or
suspended by any stock or securities exchange or other exchange, or any
proceeding, procedure or remedy supplementary to or in enforcement of judgment
(involving an amount in excess of $20,000 in the aggregate) shall be resorted to
or commenced against, or with respect to any property of, the Borrower or any
other Principal Party; or
(g) the Borrower or any other Principal Party shall make an assignment for
the benefit of, or composition with, creditors, or shall be or become insolvent
or unable, or generally fail, to pay its debts when due, or shall be or become a
party or subject to any bankruptcy, reorganization, insolvency or other similar
proceeding, or a receiver or liquidator, custodian or trustee shall be appointed
for the Borrower or any other liable party, or a substantial portion of any of
the Borrower's or their respective assets and, if any of the foregoing shall
occur involuntarily as to the Borrower and any other Principal Party, it shall
not be dismissed with prejudice, stayed or discharged within forty-five (45)
days; or
(h) the Borrower or any other Principal Party shall take any action to
effect, or which indicates its acquiescence in, any of (e), (f) or (g), above;
or
(i) the Borrower defaults under any other loan or note to any other lender or
(j) the Obligations defined in the Affiliate Guaranty shall become due; or
(k) notwithstanding the foregoing, if a notice of default is given to the
Borrower under the lease, (if any) of the Property and such default is not cured
within three (3) days from the date of such notice.
ARTICLE VIII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
8. Remedies Upon Occurrence of Event of Default.
8.1.Cumulative Rights and Remedies. Upon the occurrence of an Event of
Default, the Secured Party shall have the rights, powers and remedies (a)
granted to secured parties under the UCC; (b) granted to the Secured Party under
any other applicable statute, law, rule or regulation; and (c) granted to the
Secured Party under this Security Agreement, the Promissory Note or any other
Loan Document or any other agreement between the Borrower and the Secured Party.
In addition, all such rights, powers and remedies shall be cumulative and not
alternative. Any single or partial exercise of, or forbearance, failure or delay
in exercising any right, power or remedy shall not be, nor shall any such single
or partial exercise of, or forbearance, failure or delay be deemed to be a
limitation, modification or waiver or any right, power or remedy and shall not
preclude the further exercise thereof; and every right power and remedy of the
Secured Party shall continue in full force and effect until such right, power
and remedy is specifically waived by an instrument in writing executed and
delivered with respect to each such waiver by the Secured Party.
8.2.Acceleration of Obligations. Upon the occurrence of an Event of Default,
and at any time thereafter if any Event of Default shall then be continuing, the
Secured Party may, from time to time in its discretion, by written notice to the
Borrower declare the Promissory Note (including any Make Whole Premium required
to be paid upon prepayment of any Loan) and any other Obligations to be
immediately due and payable whereupon (and, automatically without any notice,
demand or other action by the Secured Party, upon the occurrence of any Event of
Default set forth in subsections (e) through (h) of Section 7) such principal,
interest and other Obligations shall be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower to the maximum extent permitted by law.
8.3.Additional Rights of the Secured Party. Upon the occurrence of an Event
of Default, the Secured Party may, from time to time, in its discretion, and
without the Borrower's assent, without advertisements or notices of any kind
(except for the notice specified in Section 8.5 below regarding notice required
in connection with a public or private sale), or demand of performance or other
demand, or obligation or liability (except to account for amounts actually
received) to or upon the Borrower or any other person (all such advertisements,
notices and demands, obligations and liabilities, if any, hereby being expressly
waived and discharged to the extent permitted by law), forthwith, directly or
through its agents or representatives, (a) disclose such default and other
matters (including the name, address and telephone number of the Borrower) in
connection therewith in the Secured Party's reasonable discretion to any other
Program Borrower, the Borrower's franchisor or franchisee (if applicable) and
other creditors or obligors of the Borrower (and the Borrower understands that
the Secured Party intends to make such disclosure, from time to time); (b) to
the extent permitted by applicable law enter any premises, with or without the
assistance of other persons or legal process; (c) require the Borrower to
account for (including accounting for any products and proceeds of any
Collateral), segregate, assemble, make available arid deliver to the Secured
Party, its agents or representatives, the Collateral; (d) take possession of,
operate, render unusable, collect, transfer and receive, recover, appropriate,
foreclose, extend payment of, adjust, compromise, settle, release any claims
included in, and do all other acts or things necessary or, in the Secured
Party's sole discretion appropriate, to protect, maintain, preserve and realize
upon, the Collateral and any products and proceeds thereof, in whole or in part;
and (e) exercise all rights, powers and interests with respect to any and all
Collateral, and sell, assign, lease, license, pledge, transfer, negotiate
(including endorse checks, drafts, orders, or instruments), deliver or otherwise
dispose (by contract, option(s) or otherwise) of the Collateral or any part
thereof. Any such disposition may be in one or more public or private sales, at
or upon an exchange, board or system or in the county (ies) or parish (ies), as
applicable, in the state(s) set forth on Schedule I or elsewhere, at such price,
for cash or credit (or for future delivery without credit risk) and upon such
other terms and conditions as it deems appropriate, with the right of the
Secured Party to the extent permitted by law upon any cash sale or sales, public
or private, to purchase the whole or any part of said Collateral, free of any
right, claim or equity of redemption of or in the Borrower (such rights, claims
and equity or redemption, if any, hereby being expressly waived).
Notwithstanding that the Secured Party, whether in its own behalf and/or on
behalf of another or others, may continue to hold the Collateral and regardless
of the value thereof, or any delay or failure to dispose thereof, unless and
then only to the extent that the Secured Party proposes to retain the Collateral
in satisfaction of the Obligations by written notice in accordance with the UCC,
the Borrower shall be and remain liable for the payment in full of any balance
of the Obligations and expenses at any time unpaid. Without limiting the
foregoing, upon the Borrower's failure to abide by and comply with its
obligations under Section 3 (including Sections 3,9, 3.10 or 3.18) or Section 13
hereof, in addition to its other rights and remedies, the Secured Party may (but
is not required to), in its sole discretion and to the extent it deems
necessary, advisable or appropriate, take or cause to be taken such actions or
things to be done (including the payment or advancement of funds, or requiring
advancement of funds to be held by the Secured Party to fund such obligations,
including taxes or insurance) as may be required hereby (or necessary or
desirable in connection herewith) to correct such failure (including causing the
Collateral to be maintained or insurance protection required hereby to be
procured and maintained) and any and all costs and expenses incurred (including
attorney's fees and disbursements) in connection therewith shall be included in
the Borrower's Obligations and shall be immediately due and payable and bear
interest at the Default Rate.
8.4. Application of Proceeds. The Secured Party may apply the net proceeds,
if any, of any collection, receipt, recovery, appropriation, foreclosure or
realization, or from any use, operation, sale, assignment, lease, pledge,
transfer, delivery or disposition of all or any of the Collateral, after
deducting all reasonable costs and expenses (including attorneys fees, court
costs and legal expenses) incurred in connection therewith or with respect to
the care, safekeeping, custody, maintenance, protection, administration or
otherwise of any and all of said Collateral or in any way relating to the rights
of the Secured Party under this Security Agreement, (a) first, to the
satisfaction of the Obligations, in whole or in pan, in such order as the
Secured Party may, in its discretion, elect; (b) second, to the payment,
satisfaction or discharge of any of other Indebtedness or obligation as required
by any law, rule or regulation; and (c) lastly, the surplus, if any, to the
Borrower.
8.5. Required Notice of Sale. In exercising its rights, powers and remedies
as secured party, the Secured Party agrees to give the Borrower five (5) days
notice of the time and place of any public sale of Collateral or of the time
after which any private sale of Collateral may take place, unless the Collateral
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Borrower agrees that such period
and notice is commercially reasonable under the circumstances.
8.6. Applicable Collateral. In furtherance and not in limitation of the
foregoing, in no event shall the designation of all or any portion of the
Collateral as "Applicable Collateral" restrict or limit he Secured Party in the
exercise of its remedies under this Section 8. Such designation is intended
solely for the purposes set forth in Section 14.2. All of the Collateral shall
secure all of the Obligations. The Borrower expressly waives any right (a) to
limit the Secured Party solely to the Applicable Collateral with respect to any
Loan or (b) to require the Secured Party to proceed against the Applicable
Collateral with respect to any Loan before proceeding against any other
Collateral with respect to such Loan. The Borrower agrees that, upon the
occurrence of an Event of Default, the Secured Party may proceed against the
Collateral in satisfaction of any Obligation, in such manner and in such order
as the Secured Party may determine in its sole and absolute discretion.
8.7. Confession of Judgment. In the event that Secured Party is domiciled in,
or any of the Collateral is located in Louisiana, and to the extent of such
domicile or location where Louisiana law is applicable to this Security
Agreement regarding the enforcement of liens created by this Security Agreement:
(a) Borrower hereby acknowledges to be indebted under and confesses judgment
in favor of Secured Party for the full amount of the Obligations, in principal
and interest, together with all attorneys fees, and other fees and charges as
specified herein, including without limitation any and all sums that Secured
Party may advance during the life of this Security Agreement for the payment of
premiums of insurance, municipal charges, taxes, costs, and expenses, or for the
protection and preservation of this Security Agreement as authorized herein, and
does, by these presents, consent, agree and stipulate that in the event of any
payment of principal and interest due hereunder not being properly and fully
paid when the same becomes due and payable, or in the event of failure to comply
with any of the obligations set forth herein, the Obligations shall, at the
option of the Secured Party, become due and payable, and it shall be lawful for
Secured Party, without making a demand and without notice or putting in default,
the same being hereby expressly waived, to cause all and singular the Collateral
herein secured to be seized and sold by ordinary or executory process, issued by
any competent court or to proceed with enforcement of its rights under this
Security Agreement in any other manner provided by law; and
(b) Borrower hereby expressly waives allotment, citation, and all legal
notices, including the three (3) and five (5) day notice of demand and delays
provided for by the Code of Civil Procedure of the State of Louisiana, and
consents that said judgment or order for executory or ordinary process may be
rendered, signed and executed immediately, either in vacation or in term time,
and also waives the benefit of any and all laws or parts of laws relative to the
appraisement of the property seized and sold under executory or other legal
process, and consents that said property be sold with or without appraisement,
at Secured Party's option, to the highest bidder for cash, or on such terms as
Secured Party may direct, and that in the event of any such sale the property
may be sold at the option of Secured Party either as a whole or in such lots and
parcels as Secured Party may elect. In accordance with the foregoing, Borrower
hereby waives (a) the benefit of appraisal as provided in Articles 2332,
2336,2723, and 2724 of the Louisiana Code of Civil Procedure and all other laws
with regard to appraisal upon judicial sale; (b) the demand and three (3) days'
delay as provided under Articles 2639 and 2721 of the Louisiana Code of Civil
Procedure; (c) the notice of seizure as provided under Articles 2293 and 2721 of
the Louisiana Code of Civil Procedure; (d) the three (3) days' delay provided
under Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (e)
all other benefits provided under Articles 2331, 2722, and 2723 of the Louisiana
Code of Civil Procedure and all other similar provisions of the Louisiana Code
of Civil Procedure not specifically listed hereinabove.
(c) In the event the Collateral, or any part thereof, is seized as an
incident to an action for the recognition or the enforcement of this Security
Agreement, whether by executory process, writ of fieri facias, sequestration or
otherwise, Borrower and Secured Party do hereby designate Secured Party or its
agent as the keeper of the property, all in accordance with the provisions of
Louisiana Revised Statutes, Title 9, Section 5136, et seq. Borrower agrees to
pay the reasonable fees of such keeper, which compensation to the keeper shall
also be a part of the Obligations under this Security Agreement.
(d) Should it become necessary for Secured Party to foreclose against the
Collateral, all declarations of fact that are made under an authentic act before
a Notary Public in the presence of two witnesses, by a person declaring such
facts to lie within his or her knowledge, shall constitute authentic evidence
for purposes of executory process and also for purposes of La. R.S. 9:3509.1,
La. R.S. 9:3504(D)(6) and La. R.S. 10:9-508, as applicable.
ARTICLE IX
POST-DEFAULT POWER OF ATTORNEY
9. Post-Default Power of Attorney. The Borrower hereby irrevocably
constitutes and appoints, effective on and after the occurrence of an Event of
Default, the Secured Party acting through any officer or agent thereof, with
full power of substitution, as the Borrowers true and lawful attorney-in-fact
with full irrevocable power and authority in the Borrowers place and stead and
in the Borrowers name or in its own name, from time to time in the Secured
Party's discretion, to receive, open and dispose of mail addressed to the
Borrower, to take any and all action, to do all things, to execute, endorse,
deliver and file any and all writings, documents, instruments, notices,
statements (including financing statements, and writings to correct any error or
ambiguity in any Loan Document), applications and registrations (including
registrations and licenses for securities, Copyrights, Patents and Trademarks),
checks, drafts, acceptances, money orders, or other evidence of payment or
proceeds, which may be or become necessary or desirable in the sole discretion
of the Secured Party to accomplish the terms, purposes and intent of this
Security Agreement and the other Loan Documents, including the right to appear
in and defend any action or proceeding brought with respect to the Collateral or
Property, and to bring any action or proceeding, in the name and on behalf of
the Borrower, which the Secured Party, in its discretion, deems necessary or
desirable to protect its interest in the Collateral or Property. Said attorney
or designee shall not be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law, unless and then only to the
extent that the same constitutes its gross negligence or willful misconduct.
This power is coupled with an interest and is irrevocable. THIS POWER DOES NOT
AND SHALL NOT BE CONSTRUED TO AUTHORIZE ANY CONFESSION OF JUDGMENT.
ARTICLE X
INDEMNIFICATION
10. Indemnification. The Borrower agrees to indemnify the Secured Party and
hold the Secured Party harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions. judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Secured Party in any way relating, in
any way arising out of or in connection with this Security Agreement, the Loan
Documents or the transactions contemplated hereby or thereby. Without limitation
of the foregoing, the Borrower will reimburse the Secured Party for all expenses
(including expenses for legal services of every kind) of, or incidental to, the
negotiation of, entering into and enforcement of any of the provisions hereof
and of any of the Obligations, and any actual or attempted sale, lease or other
disposition of, and any exchange, enforcement, collection, compromise or
settlement of any of the Collateral and receipt of the Proceeds thereof, and for
the care of the Collateral and defending or asserting the rights and claims of
the Secured Party in respect thereof and for the care of the Collateral and
defending or asserting the rights and claims of the Secured Party in respect
thereof, by litigation or otherwise, including expense of insurance, and all
such expenses shall be the Borrowers Obligations.
ARTICLE XI
OBLIGATIONS ABSOLUTE
11. Obligations Absolute. The Borrower's Obligations will be absolute,
unconditional and irrevocable and will be paid or satisfied strictly in
accordance with their respective terms under all circumstances whatsoever,
including: (a) the invalidity or unenforceability of all or any of, or any part
of, this Security Agreement, the Promissory Note or any other Loan Document, or
any consent, waiver, amendment or modification thereof; (b) the existence of any
claim, setoff, defense or other right which the Borrower may have at any time
against the Secured Party, or any other Person, whether in connection with this
Security Agreement, any other Loan Documents, the transactions contemplated
hereby, thereby or otherwise all of which the Borrower hereby waives to the
maximum extent permitted by law; or (c) the loss, theft, damage, destruction or
unavailability of the Collateral to the Borrower for any reason whatsoever, it
being understood and agreed that the Borrower retains all liability and
responsibility with respect to the Collateral.
ARTICLE XII
ASSIGNMENT AND DISSEMINATION OF INFORMATION
12. Assignment and Dissemination of Information.
12.1. Assignment. This Security Agreement is freely assignable, in whole or
in part, by the Secured Party and, to the extent of any such assignment, the
Secured Party shall be fully discharged from all responsibility. The Borrower
understands and agrees that the Secured Party intends to and may, from time to
time, sell, pledge, grant a security interest in and collaterally assign,
transfer and deliver or otherwise encumber or dispose of the Promissory Note,
this Security Agreement and the other Loan Documents and its rights and powers
hereunder and thereunder, in whole or in part, in connection with the
Securitization or any other assignment or other disposition of the Promissory
Note. The Borrower may not, in whole or in part, directly or indirectly, assign
this Security Agreement or any Loan Document or its rights hereunder or
thereunder or delegate its duties hereunder without, in each instance, the
specific prior written consent of the Secured Party, which consent may be
withheld or delayed in the Secured Party's sole discretion, and payment of the
amounts required under and compliance with Section 13(b) of the Promissory Note.
For purposes of this Security Agreement, a change in control of the Borrower
(whether by stock sale, issuance or otherwise) shall constitute an assignment
hereof.
12.2. Dissemination of Information. If Secured Party determines at any time
to sell, transfer or assign the Promissory Note, Security Agreement, or other
Loan Documents, and any or all servicing rights with respect thereto, or to
otherwise issue a Securitization involving the Loan Documents, Secured Party may
forward to each purchaser, transferee, assignee, investor or their perspective
successors in such Securitization or any rating agency rating such
Securitization and each prospective investor, all documents and information
which Secured Party now has or may hereafter acquire relating to the Loan
Documents, the Borrower, any Guarantor and the Property, which shall have been
furnished by Borrower or any Guarantor, as Secured Party determines necessary or
desirable.
ARTICLE XIII
FURTHER ASSURANCE
13. Further Assurance. The Borrower agrees at any time and from time to time,
at the Borrower's sole cost and expense, to obtain, procure, execute and
deliver, file and affix such further agreements, bills of sale and assignments,
instruments, documents, warehouse receipts, bills of lading, vouchers, invoices,
notices, statements, writings, (including financing statements, and writings to
correct any error or ambiguity in any Loan Document), powers (including stock
and bond powers, and powers of attorney), tax stamps and information, and to
door cause to be done all such further acts and things (including the execution,
delivery and filing of financing statements, on Form UCC-1, payment of filing
fees and transfer, gains and recording taxes) as the Secured Party may
reasonably request, from time to time, in its discretion. Without limiting the
foregoing, the Borrower authorizes the Secured Party to the extent permitted
under the UCC to execute and file, or file without the Borrower's signature, any
and all financing statements, amendments thereto and continuations thereof as
the Secured Party deems necessary or appropriate and the Borrower shall pay and
indemnify the Secured Party for and hold the Secured Party harmless from any and
all costs and expenses in connection therewith. The Borrower agrees that it will
promptly notify the Secured Party of and agree to correct any defect, error or
omission in the contents of any of the Loan Documents or in the execution,
delivery or acknowledgement thereof The Borrower further agrees to execute,
prior to or within three months following closing, a Form 4506 Request for Copy
or Transcript of Tax Form, which form will be provided by Secured Party.
ARTICLE XIV
TERM, PARTIAL RELEASE AND REINSTATEMENT
14. Term. Partial Release and Reinstatement
14.1. Term. This Security Agreement shall be immediately in fill force and
effect upon the Borrower's execution below, whether or not it is signed by the
Secured Party. Upon indefeasible payment in 11:11 of the Obligations in
accordance with the terms thereof, this Security Agreement and the security
interest granted hereunder shall terminate and the Secured Party, at the
Borrower's expense, will execute and deliver to the Borrower the proper
instruments (including UCC termination statements) acknowledging the termination
of such security interest, and will duly assign, transfer and deliver (without
recourse, representation or warranty) such Collateral as may be in the Secured
Party's possession, and not to be retained, sold, or otherwise applied or
released pursuant to this Security Agreement, to the Borrower, except that the
Borrower's obligations under Sections 10, 11, 13 and IS shall survive
indefinitely.
14.2. Partial Release. Upon the indefeasible payment in full of any Loan
(including, without imitation, any Make Whole Premium or other amounts payable
by the Borrower with respect to such Loan) in accordance with the provisions of
the Promissory Note, the security interest hereunder with respect to the
Applicable Collateral shall terminate, and the Secured Party, at the expense of
the Borrower, will execute and deliver to the Borrower the proper instruments
(including UCC partial release statements) acknowledging the termination of such
security interest, and will duly assign, transfer and deliver (without recourse,
representation or warranty) such of the Applicable Collateral a_ may be in the
possession of the Secured Party and has not theretofore been sold or otherwise
applied or released pursuant to this Security Agreement, to the Borrower, and
shall take such other action as the Borrower may reasonably request to
effectuate the foregoing.
14.3. Reinstatement. This Security Agreement shall continue to be effective
or be reinstated, as the case may be, if at any time any amount received by the
Secured Party in respect of the Obligations is rescinded or must otherwise be
restored or returned by the Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Principal
Party or upon the appointment of any interferon or conservator of, or trustee or
similar official for, the Borrower, any Principal Party or any substantial part
of the Borrower's or any Principal Party's assets, or otherwise, all as though
such payments had not been made.
ARTICLE XV
MISCELLANEOUS
15.1. FINAL AGREEMENT: AMENDMENTS. CONSENTS. AUTHORIZATIONS. THIS SECURITY
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE BORROWER ANT) THE SECURED
PARTY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE BORROWER AND THE SECURED PARTY. THE BORROWER
UNDERSTANDS AND AGREES THAT ORAL AGREEMENTS AND ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE, THE BORROWER ACKNOWLEDGES AND AGREES THERE ARE NO ORAL AGREEMENTS
BETWEEN THE BORROWER AND THE SECURED PARTY. This Security Agreement and the Loan
Documents represent the entire understanding of the Secured Party and the
Borrower with respect to the transactions contemplated hereby and thereby. None
of the terms or provisions of this Security Agreement or any other Loan Document
may be waived, altered, modified, or amended except in each instance by a
specific written instrument duly executed by the Secured Party. Without limiting
the foregoing, no action or omission to act shall be deemed to be a consent,
authorization, representation or agreement of the Secured Party, under the UCC
or otherwise, unless, in each instance, the same is in a specific writing signed
by the Secured Party. The inclusion of Proceeds in the Collateral does not and
shall not be deemed to authorize the Borrower to sell, exchange or dispose of
the Collateral or the Franchise Agreement or otherwise use the Collateral in any
manner not otherwise specifically authorized herein.
15.2. Notices. All notices and other communications given pursuant to or in
connection with this Security Agreement shall be in duly executed writing
delivered to the parties at the addresses set forth below (or such other address
as may be provided by one party in a notice to the other party):
If to the Secured Party: If to the Assignee of Secured Party:
AMRESCO COMMERCIAL FINANCE, INC. NORWEST BANK MINNESOTA, NA.
112 E. Parkcenter Blvd. Sixth & Marquette
Suite 300 Minneapolis, MN 55479-0070
Boise, Idaho 83706
Facsimile Number: (208) 333-2050 Facsimile Number: (612) 667-9825
If to the Borrower, to the Borrower's chief executive office (or residence),
as represented by the Borrower herein.
Notice delivered in accordance with the foregoing shall be effective (a) when
delivered, if delivered personally or by receipted-for telex, telecopier, or
facsimile transmission. (b) two (2) days after being delivered in the United
States (properly addressed and all fees paid) for overnight delivery service to
a courier (such as Federal Express) which regularly provides such service and
regularly obtains executed receipts evidencing delivery or (c) five (5) days
after being deposited (properly addressed and stamped for first-class delivery)
in a daily serviced United States mail box.
15.3. Reasonableness. If at any time the Borrower believes that the Secured
Party has not acted reasonably in granting or withholding any approval or
consent under the Promissory Note, this Security Agreement, or any other Loan
Document or otherwise with respect to the Obligations, as to which approval or
consent either the Secured Party has expressly agreed to act reasonably, or
absent such agreement, a court of law having jurisdiction over the subject
matter would require the Secured Party to act reasonably, then the Borrower's
sole remedy shall be to seek injunctive relief or specific performance and no
action for monetary damages or punitive damages shall in any event or under any
circumstance be maintained by the Borrower against the Secured Party.
15.4. Recovery of Sums Required To Be Paid. The Secured Party shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of the Secured Party thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by the Borrower
existing at the time such earlier action was commenced.
15.5. WAIVERS. THE BORROWER HEREBY MAKES AND ACKNOWLEDGES THAT IT MAKES ALL
OF THE WAIVERS SET FORTH IN THIS SECURITY AGREEMENT, THE PROMISSORY NOTE AND THE
OTHER LOAN DOCUMENTS KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS, AND
ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH ITS
ATTORNEY; THE BORROWER FURTHER ACKNOWLEDGES THAT SUCH WAIVERS ARE A MATERIAL
INDUCEMENT TO THE SECURED PARTY TO MAKE THE LOANS TO THE BORROWER AND THAT THE
SECURED PARTY WOULD NOT HAVE MADE THE LOANS WITHOUT SUCH WAIVERS; AND THE
BORROWER HEREBY MAKES AND ACKNOWLEDGES THAT IT MAKES SUCH WAIVERS WITH RESPECT
TO EACH OTHER LOAN IN THE PROGRAM.
15.6. WAIVER OF TRIAL BY JURY. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, AND THE SECURED PARTY BY ITS ACCEPTANCE OF THE
PROMISSORY NOTE AND THIS SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS IRREVOCABLY
AND UNCONDITIONALLY WAIVES, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR ARTICLE XV OTHER LOAN
DOCUMENT OR THE OBLIGATIONS.
15.7. Relationship. The relationship of the Secured Party to the Borrower
hereunder is strictly and solely that of secured lender on the one hand and
borrower and guarantor on the other and nothing contained in the Promissory
Note, this Security Agreement or any other Loan Document or otherwise in
connection with the Obligations is intended to create, or shall in any event or
under any circumstance be construed as creating, a partnership, joint venture,
tenancy-in-common, joint tenancy or other relationship of any nature whatsoever
between the Secured Party and the Borrower other than as secured lender on the
one hand and borrower and guarantor on the other.
15.8. Time is of the Essence. For all payments to be made and all obligations
to be performed under the Loan Documents, time is of the essence.
15.9. Governing Law: Binding Effect. THIS SECURITY AGREEMENT AND ALL LOAN
DOCUMENTS ARE ENTERED INTO IN THE STATE OF IDAHO, SECURED PARTY'S CHIEF
EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS IS LOCATED IN THE STATE OF
IDAHO, AND ALL NOTICES AND SUMS PAYABLE UNDER THE LOAN DOCUMENTS RELATING TO
THIS SECURITY AGREEMENT WILL BE SENT TO THE SECURED PARTY IN THE STATE OF IDAHO.
BORROWER AND SECURED PARTY AGREE THAT THE VALIDITY, ENFORCEABILITY, CONSTRUCTION
AND INTERPRETATION OF THIS SECURITY AGREEMENT, AND OF ALL TRANSACTIONS AND
DOCUMENTS UNDER OR RELATING TO IT, WILL BE CONSTRUED, APPLIED, ENFORCED AND
GOVERNED UNDER THE LAWS OF THE STATE OF IDAHO (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW), PROVIDED HOWEVER, THAT WITH RESPECT TO THE
CREATION, ATTACHMENT, PERFECTION, PRIORITY AND ENFORCEMENT TO ANY LIENS CREATED
BY THIS SECURITY AGREEMENT, THE LAWS OF THE STATE WHERE THE APPLICABLE PROPERTY
IS LOCATED IS LOCATED SHALL APPLY. This Security Agreement shall be binding upon
the Borrower, and the heirs, devises, administrators executives, personal
representatives, successors, receivers, trustees, and (without limiting Section
12 hereof) assignees, including all successors in interest of the Borrower in
and to all or any part of the Collateral, and shall inure to the benefit of the
Secured Party, and the successors and assignees of the Secured Party.
15.10. Severability. Whenever possible this Security Agreement, the
Promissory Note and each Loan Document and each provision hereof and thereof
shall be interpreted in such manner as to be effective, valid and enforceable
under applicable law. If and to the extent that any such provision shall he held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof or
thereof, and any determination that the application of any provision hereof or
thereof to any person or under any circumstance is illegal and unenforceable
shall not affect the legality, validity and enforceability of such provision as
it may be applied to any other person or in any other circumstance.
15.11. Headings Descriptive. The headings, titles and captions used herein
are for convenience only and shall not affect the construction of this Security
Agreement or any term or provision hereof.
15.12. Counteparts. This Security Agreement may be executed in a number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one and
the same agreement.
15.13. Acknowledgement. Borrower acknowledges that Secured Party's
underwriting guidelines and standards are applied on a case by case basis and
that waivers may be granted in any particular case (including in the case of a
borrower to be included in a pool with Borrower). Borrower further acknowledges
that Secured Party's underwriting guidelines or standards may be modified at any
time by Secured Party without notice to Borrower.
15.4 Attorneys Fees and Costs. Borrower agrees that upon the occurrence of an
Event of Default, the Borrower shall pay all costs and expenses actually
incurred by Secured Party (including without limitation attorneys fees and
disbursements) incident to the enforcement, collection, protection or
preservation of any right or claim of Secured Party under the Loan Documents,
including any such fees or costs incurred in connection with any bankruptcy or
insolvency proceeding of Borrower.
15.15. Loan Pool Flexibility. Secured Party shall have the right, at its sole
and absolute discretion upon written notice to Borrower, to transfer (a
"Transfer"), within eighteen (18) months from the effective date of this
Security Agreement, all or any of the Loans and all Liens related to such Loam,
from the Program to any other loan program formed by Secured Party. Upon the
occurrence of a Transfer, the Loan Documents shall be automatically amended and
reclassified to reflect the Transfer. Borrower shall execute all amendments or
other documents Secured party deems necessary to effectuate a Transfer.
15.16. Public Announcement. Upon the closing of the Loans, Secured Party is
authorized in its discretion to issue news releases and at its own expense to
publish "tombstone ads" and other announcements in newspapers, trade journals
and other appropriate media, containing information about the Loans as may be
deemed noteworthy by Secured Party, including without limitation the legal and
trade name of Borrowers, the amount of the Loan and the name, nature and
location of the Collateral.
IN WITNESS WHEREOF, the Borrower has executed and entered into this Security
Agreement and delivered it to the Secured Party on and as of the date set forth
below. This document is executed under seal and intended to take effect as a
sealed instrument.
Date: September 22, 1999
FFP Properties, L. P.
WITNESS
By: FFP Real Estate Trust
sole general partner
(SEAL)
By:___________________
Craig T. Scott
Vice President
STATE OF TEXAS )
) ss.
COUNTY OF Tarrant )
This instrument was acknowledged before me on the 17th day of September, 1999
by, Craig T. Scott, Vice President of FFP Real Estate Trust, a Texas real estate
investment trust and the sole general partner of FFP Partners, L. P., a Delaware
limited partnership, sole general partner of FFP Properties, L.P., a Texas
limited partnership, who stated that the same was signed for the purposes and in
the capacity indicated therein and on behalf of said entities.
__________________________________
Notary Public State of Texas
__________________________________
Notary's commission expires:
SECURED PARTY:
AMRESCO Commercial Finance, Inc.
By:_____________________________
Dale Conder
Vice President
SCHEDULE I
A. Borrower Information
If an individual, the Borrower's residence address:
Street:
City:
County or Parish, as applicable:
State:
Zip:
The Borrower's chief executive office: 2801 Glenda Avenue
Fort Worth, TX 76117-4391
The Borrower's state of organization: