Exhibit 10.7
SECURITY AGREEMENT
This Agreement made
effective the 1st day of July, 2004, between Secured Party and
Debtor, who together agree as follows:
1.
Definitions.
For the purposes
of this Agreement:
a.
"Secured Party" shall
mean Burger Time Corporation, a corporation organized under the
laws of the State of North Dakota, whose mailing address is 675
12th Avenue NE, West Fargo, North Dakota 58078.
b.
"Debtor" shall mean
Burger Time Acquisition Corporation, a corporation organized under
the laws of the State of Minnesota, whose mailing address is 13828
Lincoln Street NE, Ham Lake, Minnesota 55304.
c.
"Indebtedness" shall
mean:
(1)
a Promissory Note of
Debtor given to Secured Party in the original principal amount of
Three Hundred Thousand and 00/100 ($300,000.00) Dollars, together
with all other liabilities and obligations of Debtor to Secured
Party, due or to become due, direct or indirect, absolute or
contingent, now existing or hereafter at any time
arising;
(2)
a Promissory Note of
Debtor given to Secured Party in the original principal amount of
Three Hundred Thousand and 00/100 ($300,000.00) Dollars if the
total purchase price under the Business Transfer Agreement is not
paid full by November 12, 2004; and,
(3)
the ten (10) Contract
for Deeds relating to the sale of the Business, with Secured Party
as vendor and Debtor as vendee.
d.
"Collateral" shall mean
the following assets pertaining to the Business:
(1)
"Equipment and
Fixtures" shall mean the restaurant fixtures and equipment, and
office equipment, including computer, desks, copier and fixtures
and equipment.
(2)
"General Intangibles"
shall mean the trade name of Seller and all assumed names under
which it conducts business, all trade names, including "Burger
Time" (as reserved in North Dakota, Minnesota, South Dakota and
Iowa), all trademarks and service marks and any logos, formulas,
trade secrets, technology, know-how, customer lists and telephone
numbers of Seller which may be used in the operation of the
Business and all Goodwill associated therewith.
(3)
"Goodwill" shall mean
the intangible value of the Business as a going concern.
(4)
"Leasehold
Improvements" shall mean the trade fixtures and improvements made
by Seller during its tenancy under the Real Estate Lease, subject
to the rights of Landlord under the Real Estate Lease relative to
the trade fixtures and improvements.
(5)
"Outdoor Sign and
Assets" shall mean the tables, utility sheds, fences and signs for
the purpose of advertising the Business located on the Real
Estate.
(6)
"Real Estate" shall mean
the real property used in the conduct of the Business, excluding
the real property that is the subject of the Real Estate
Lease.
(7)
“Supplies”
shall mean all non-consumable supplies, utensils and
tools.
(8)
“Inventory”
shall mean all food, paper products and consumable
supplies.
(9)
“Vehicle”
shall mean the 2003 Toyota Corolla CE/LE/S whose VIN is
1NXBR32E03Z058627.
(10)
“Permit”
shall mean all licenses and permits necessary or convenient for
conduct of the Business to the extent transferable.
e.
"Business" shall mean
the fast food restaurants known as Burger Time, which are located
at:
(1)
Fargo, North
Dakota;
(2)
Bismarck, North
Dakota;
(3)
Minot, North
Dakota;
(4)
Grand Forks, North
Dakota;
(5)
Moorhead,
Minnesota;
(6)
Detroit Lakes,
Minnesota;
(7)
Elk River,
Minnesota;
(8)
Waite Park,
Minnesota;
(9)
Sioux City, Iowa;
and,
(10)
Two (2) locations at
Sioux Falls, South Dakota.
f.
"Business Transfer
Agreement" shall mean the agreement between Secured Party and
Debtor in which Secured Party agrees to sell and Debtor agrees to
buy the business assets of the enterprise owned by Secured Party
and known as Burger Time.
g.
"Agreemen
