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Exhibit 10.31
COMMERCIAL
SECURITY AGREEMENT
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PRINCIPAL
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LOAN
DATE
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MATURITY
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LOAN
NO
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CALL/
COLL
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ACCOUNT
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OFFICER
INITIALS
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$800,000.00
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04-25-2008
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04-25-2009
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R-13166891
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422
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086
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References
in the boxes above are for Lender's use only and do not limit
the applicability of this document to any particular loan or
item. Any item above containing "- - - " has been omitted due
to text length limitations.
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GRANTOR:
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AMERICAN
CONSUMERS, INC., DBA SHOP RITE
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LENDER:
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GATEWAY
BANK & TRUST
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55
HANNAH WAY
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MAIN
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ROSSVILLE,
GA 30741
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5102
ALABAMA HWY
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RINGGOLD,
GA 30736
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(706)
965-5500
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THIS
COMMERCIAL SECURITY AGREEMENT dated April 25, 2008, is made
and executed between AMERICAN CONSUMERS, INC. DBA SHOP RITE
("Grantor") and GATEWAY BANK & TRUST
("Lender").
GRANT
OF SECURITY INTEREST. For valuable consideration, Grantor
grants to Lender a security interest in the Collateral to
secure the Indebtedness and agrees that Lender shall have the
rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may
have by law.
COLLATERAL
DESCRIPTION. The word "Collateral" as used in this Agreement
means the following described property, whether now owned or
hereafter acquired, whether now existing or hereafter arising,
and wherever located, in which Grantor is giving to Lender a
security interest for the payment of the Indebtedness and
performance of all other obligations under the Note and this
Agreement:
UCC
ON ALL BUSINESS ASSETS, INCLUDING BUT NOT LIMITED TO:
ACCOUNTS, A/R, CASH FLOW, INVENTORY, FURNITURE, FIXTURES,
EQUIPMENT, REFIRIGERATORS, FREEZERS, MACHINERY, COMPUTERS,
REGISTERS, LEASEHOLD IMPROVEMENTS.
In
addition, the word "Collateral" also includes all the
following, whether now owned or hereafter acquired, whether
now existing or hereafter arising, and wherever
located:
(A)
All accessions, attachments, accessories, replacements of and
additions to any of the collateral described herein, whether
added now or later.
(B)
All products and produce of any of the property described in
this Collateral section.
(C)
All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease,
consignment or other disposition of any of the property
described in this Collateral section.
(D)
All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section, and sums due from a
third party who has damaged or destroyed the Collateral or
from that party's insurer, whether due to judgment, settlement
or other process.
(E)
All records and data relating to any of the property described
in this Collateral section, whether in the form of a writing,
photograph, microfilm, microfiche, or electronic media,
together with all of Grantor's right, title, and interest in
and to all computer software required to utilize, create,
maintain, and process any such records or data on electronic
media.
CROSS-COLLATERALIZATION.
In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of
Grantor to Lender, or any one or more of them, as well as all
claims by Lender against Grantor or any one or more of them,
whether now existing or hereafter arising, whether related or
unrelated to the purpose of the Note, whether voluntary or
otherwise, whether due or not due, direct or indirect,
determined or undetermined, absolute or contingent, liquidated
or unliquidated, whether Grantor may be liable individually or
jointly with others, whether obligated as guarantor, surety,
accommodation party or otherwise, and whether recovery upon
such amounts may be or hereafter may become barred by any
statute of limitations, and whether the obligation to repay
such amounts may be or hereafter may become otherwise
unenforceable.
COMMERCIAL
SECURITY AGREEMENT
(Continued)
Loan
No: R-13166891
RIGHT
OF SETOFF. To the extent permitted by applicable law, Lender
reserves a right of setoff in all Grantor's accounts with
Lender (whether checking, savings, or some other account).
This includes all accounts Grantor holds jointly with someone
else and all accounts Grantor may open in the future. However,
this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Grantor
authorizes Lender, to the extent permitted by applicable law,
to charge or setoff all sums owing on the Indebtedness against
any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to
protect Lender's charge and setoff rights provided in this
paragraph.
GRANTOR'S
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
With respect to the Collateral, Grantor represents and
promises to Lender that:
Perfection
of Security Interest. Grantor agrees to take whatever actions
are requested by Lender to perfect and continue Lender's
security interest in the Collateral. Upon request of Lender,
Grantor will deliver to Lender any and all of the documents
evidencing or constituting the Collateral, and Grantor will
note Lender's interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by
Lender. This is a continuing Security Agreement and will
continue in effect even though all or any part of the
Indebtedness is paid in full and even though for a period of
time Grantor may not be indebted to Lender.
Notices
to Lender. Grantor will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as
Lender may designate from time to time) prior to any (1)
change in Grantor's name; (2) change in Grantor's assumed
business name(s); (3) change in the management of the
Corporation Grantor; (4) change in the authorized signer(s);
(5) change in Grantor's principal office address; (6) change
in Grantor's state of organization; (7) conversion of Grantor
to a new or different type of business entity; or (8) change
in any other aspect of Grantor that directly or indirectly
relates to any agreements between Grantor and Lender. No
change in Grantor's name or state of organization will take
effect until after Lender has received notice.
No
Violation. The execution and delivery of this Agreement will
not violate any law or agreement governing Grantor or to which
Grantor is a party, and its certificate or articles of
incorporation and bylaws do not prohibit any term or condition
of this Agreement.
Enforceability
of Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by
the Uniform Commercial Code, the Collateral is enforceable in
accordance with its terms, is genuine, and fully complies with
all applicable laws and regulations concerning form, content
and manner of preparation and execution, and all persons
appearing to be obligated on the Collateral have authority and
capacity to contract and are in fact obligated as they appear
to be on the Collateral. There shall be no setoffs or
counterclaims against any of the Collateral, and no agreement
shall have been made under which any deductions or discounts
may be claimed concerning the Collateral except those
disclosed to Lender in writing.
Location
of the Collateral. Except in the ordinary course of Grantor's
business, Grantor agrees to keep the Collateral at Grantor's
address shown above or at such other locations as are
acceptable to Lender. Upon Lender's request, Grantor will
deliver to Lender in form satisfactory to Lender a schedule of
real properties and Collateral locations relating to Grantor's
operations, including without limitation the following: (1)
all real property Grantor owns or is purchasing; (2) all real
property Grantor is renting or leasing; (3) all storage
facilities Grantor owns, rents, leases, or uses; and (4) all
other properties where Collateral is or may be
located.
Removal
of the Collateral. Except in the ordinary course of Grantor's
business, Grantor shall not remove the Collateral from its
existing location without Lender's prior written consent.
Grantor shall, whenever requested, advise Lender of the exact
location of the Collateral.
Transactions
Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, or as
otherwise provided for in this Agreement, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the
Collateral. Grantor shall not pledge, mortgage, encumber or
otherwise permit the Collateral to be subject to any lien,
security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the
prior written consent of Lender. This includes security
interests even if junior in right to the security interests
granted under this Agreement. Unless waived by Lender, all
proceeds from any disposition of the Collateral (for whatever
reason) shall be held in trust for Lender and shall not be
commingled with any other funds; provided however, this
requirement shall not constitute consent by Lender to any sale
or other disposition. Upon receipt, Grantor shall immediately
deliver any such proceeds to Lender.
Title.
Grantor represents and warrants to Lender that Grantor holds
good and marketable title to the Collateral, free and clear of
all liens and encumbrances except for the lien of this
Agreement. No financing statement covering any of the
Collateral is on file in any public office other than those
which reflect the security interest created by this Agreement
or to which Lender has specifically consented. Grantor shall
defend Lender's rights in the Collateral against the claims
and demands of all other persons.
Repairs
and Maintenance. Grantor agrees to keep and maintain, and to
cause others to keep and maintain, the Collateral in good
order, repair and condition at all times while this Agreement
remains in effect. Grantor further agrees to pay when due all
claims for work done on, or services rendered or material
furnished in connection with the Collateral so that no lien or
encumbrance may ever attach to or be filed against the
Collateral.
COMMERCIAL
SECURITY AGREEMENT
(Continued)
Loan
No: R-13166891
Inspection
of Collateral. Lender and Lender's designated representatives
and agents shall have the right at all reasonable times to
examine and inspect the Collateral wherever
located.
Taxes,
Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or
operation, upon this Agreement, upon any promissory note or
notes evidencing the Indebtedness, or upon any of the other
Related Documents. Grantor may withhold any such payment or
may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation
to pay and so long as Lender's interest in the Collateral is
not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen
(15) days, Grantor shall deposit with Lender cash, a
sufficient corporate surety bond or other security
satisfactory to Lender in an amount adequate to provide for
the discharge of the lien plus any interest, costs, attorneys'
fees or other charges that could accrue as a result of
foreclosure or sale of the Collateral. In any contest Grantor
shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral.
Grantor shall name Lender as an additional obligee under any
surety bond furnished in the contest proceedings. Grantor
further agrees to furnish Lender with evidence that such
taxes, assessments, and governmental and other charges have
been paid in full and in a timely manner. Grantor may withhold
any such payment or may elect to contest any lien if Grantor
is in good faith conducting an appropriate proceeding to
contest the obligation to pay and so long as Lender's interest
in the Collateral is not jeopardized.
Compliance
with Governmental Requirements. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect,
applicable to the ownership, production, disposition, or use
of the Collateral, including all laws or regulations relating
to the undue erosion of highly-erodible land or relating to
the conversion of wetlands for the production of an
agricultural product or commodity. Grantor may contest in good
faith any such law, ordinance or regulation and withhold
compliance during any proceeding, including appropriate
appeals, so long as Lender's interest in the Collateral, in
Lender's opinion, is not jeopardized.
Hazardous
Substances. Grantor represents and warrants that the
Collateral never has been, and never will be so long as this
Agreement remains a lien on the Collateral, used in violation
of any Environmental Laws or for the generation, manufacture,
storage, transportation, treatment, disposal, release or
threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on
Grantor's due diligence in investigating the Collateral for
Hazardous Substances. Grantor hereby (1) releases and waives
any future claims against Lender for indemnity or contribution
in the event Grantor becomes liable for cleanup or other costs
under any Environmental Laws, and (2) agrees to indemnify,
defend, and hold harmless Lender against any and all claims
and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify and defend shall
survive the payment of the Indebtedness and the satisfaction
of this Agreement.
Maintenance
of Casualty Insurance. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and
liability coverage together with such other insurance as
Lender may require with respect to the Collateral, in form,
amounts, coverages and basis reasonably acceptable to Lender
and issued by a company or companies reasonably acceptable to
Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or
diminished without at least thirty (30) days' prior written
notice to Lender and not including any disclaimer of the
insurer's liability for failure to give such a notice. Each
insurance policy also shall include an endorsement providing
that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Grantor or any other
person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor
will provide Lender with such loss payable or other
endorsements as Lender may require. If Grantor at any time
fails to obtain or maintain any insurance as required under
this Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate, including
if Lender so chooses "single interest insurance," which will
cover only Lender's interest in the Collateral.
COMMERCIAL
SECURITY AGREEMENT
(Continued)
Loan
No: R-13166891
Application
of Insurance Proceeds. Grantor shall promptly notify Lender of
any loss or damage to the Collateral, whether or not such
casualty or loss is covered by insurance. Lender may make
proof of loss if Grantor fails to do so within fifteen (15)
days of the casualty. All proceeds of any insurance on the
Collateral, including accrued proceeds thereon, shall be held
by Lender as part of the Collateral. If Lender consents to
repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or
reimburse Grantor from the proceeds for the reasonable cost of
repair or restoration. If Lender does not consent to repair or
replacement of the Collateral, Lender shall retain a
sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months
after their receipt and which Grantor has not committed to the
repair or restoration of the Collateral shall be used to
prepay the Indebtedness.
Insurance
Reserves. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves
shall be created by monthly payments from Grantor of a sum
estimated by Lender to be sufficient to produce, at least
fifteen (15) days bef
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