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Exhbit 10.19
SECURITY AGREEMENT
THIS AGREEMENT ("Agreement") is made on December 18, 2003, by
and
between the Grantor, as herein defined, and
Standard Federal Bank N.A., a
national banking association ("Bank"),
whose address is 2600 West Big Beaver
Road, Troy, Michigan 48084.
IN CONSIDERATION of loans, advances or other financial
accommodations
from the Bank to the Grantor and/or the
Borrower, the Grantor agrees as follows:
1.
DEFINITIONS. The following terms shall have the following
meanings when used in this Agreement:
a. "BORROWER"
means MERITAGE HOSPITALITY GROUP INC., a corporation
organized under the laws of the State of Michigan, whose chief
executive office or residence is located at 1971 East Beltline
Avenue, NE, Suite 200, Grand Rapids, Michigan 49525.
b.
"COLLATERAL" means the property and interests in property
described in Section 3 below.
c. "GRANTOR"
means WM LIMITED PARTNERSHIP - 1998 a limited
partnership organized under the laws of the State of Michigan,
whose chief executive office or residence is located at 1971
East Beltline Avenue, NE, Suite 200, Grand Rapids, Michigan
49525.
d.
"OBLIGATIONS" means all loans, advances and other financial
accommodations, including any renewals or extensions thereof,
from the Bank to the Grantor and/or the Borrower and any and
all
indebtedness, liabilities and obligations of any and every kind
and nature heretofore, now or hereafter owing from the Grantor
and/or the Borrower to the Bank, however incurred or evidenced,
whether primary, secondary, contingent or otherwise, arising
under any security agreement(s), promissory note(s),
guaranty(s), mortgage(s), lease(s), letter(s) of credit,
interest rate protection agreement(s), interest rate swap(s) or
other interest rate hedge arrangement(s) (other than any
interest rate cap or other similar agreement or arrangement
pursuant to which the Grantor and/or the Borrower has no credit
exposure to the Bank), agreement(s) relating to foreign
exchange
transactions, or any other instrument(s), document(s),
contract(s) or agreement(s) heretofore, now or hereafter
executed by the Grantor and/or the Borrower and delivered to
the
Bank or to or under which the Grantor and/or the Borrower or
any
subsidiary or affiliate of the Grantor and/or the Borrower is a
party or beneficiary, or by oral agreement or by operation of
law, plus all interest, costs, expenses and reasonable attorney
fees which may be made or incurred by the Bank in the
disbursement, administration or collection of such
indebtedness,
liabilities and obligations and in the protection, maintenance
and liquidation of any collateral for such indebtedness,
liabilities and obligations.
2. GRANT OF SECURITY INTEREST. Grantor hereby grants to the Bank
a
continuing security interest in the
Collateral to secure the payment of the
Obligations.
3.
COLLATERAL. The Collateral covered by this Agreement is all the
Grantor's property described below which it
now owns or shall hereafter acquire
or create immediately upon the acquisition
or creation thereof:
a. The
following property where an "X" or check mark has been
placed in the applicable box (if none of the following boxes is
checked, it is understood and agreed that Grantor grants Bank a
security interest in all of Grantor's personal property as if
the box adjacent to the paragraph entitled "All Assets" had
been
checked):
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- ALL
ASSETS. All personal property of the Grantor, including without
limitation, all Accounts, including Health-Care-Insurance
Receivables,
Inventory, including without limitation raw materials, work in
process,
materials and finished goods leased by the Grantor as lessor or
held for
sale or lease or furnished or to be furnished under contracts of
service
or used or consumed in a business, Goods, Equipment,
Securities,
Investment Property, Deposit Accounts, Chattel Paper, including
without
limitation, Electronic Chattel Paper; Documents; Instruments,
including
without limitation, Promissory Notes; Letter of Credit Rights
and
proceeds of letters of credit; Supporting Obligations; notes
secured by
real estate; Commercial Tort Claims and General Intangibles,
including
without limitation, Payment Intangibles and Software.
-
ACCOUNTS. All Accounts, including Health-Care-Insurance
Receivables, and
all Goods whose sale, lease or other disposition has given rise
to
Accounts and have been returned to, or repossessed or stopped in
transit
by, the Grantor, or rejected or refused by an Account Debtor.
-
INVENTORY. All Inventory, including without limitation raw
materials,
work in process, materials and finished goods leased by the Grantor
as
lessor or held for sale or lease or furnished or to be furnished
under
contracts of service or used or consumed in a business.
-
GOODS. All Goods (other than Inventory), including without
limitation,
Equipment.
-
INVESTMENT PROPERTY AND DEPOSIT ACCOUNTS. All Securities,
Investment
Property and Deposit Accounts.
-
DOCUMENTS AND INSTRUMENTS. All Chattel Paper, including without
limitation, Electronic Chattel Paper; Documents; Instruments,
including
without limitation, Promissory Notes; Letter of Credit Rights
and
proceeds of letters of credit; Supporting Obligations; notes
secured by
real estate; Commercial Tort Claims and General Intangibles,
including
without limitation, Payment Intangibles and Software.
X
SPECIFIC PROPERTY. The following specifically described property of
the
Grantor:
A. ACCOUNTS.
All Accounts representing gift certificate
receivables.
B. INVENTORY.
All Inventory, including without limitation raw
materials, work in process, materials and finished goods leased
by the Grantor as lessor or held for sale or lease or furnished
or to be furnished under contracts of service or used or
consumed in a business, located now or hereafter at any of the
below listed Wendy's Restaurant sites.
C. EQUIPMENT
AND FIXTURES. All Equipment and Fixtures now or
hereafter located at any of the below listed Wendy's Restaurant
sites.
WENDY'S RESTAURANT SITES:
1. 2814
Portage, Kalamazoo, Michigan
2. 5455 West
Main, Kalamazoo, Michigan
3. 3921 28th
Street, SE, Kalamazoo, Michigan
4. 2730 West
Michigan, Kalamazoo, Michigan
5. 828 South
Kalamazoo Avenue, Paw Paw, Michigan
6. 1185 M-89,
Plainwell, Michigan
7. 1920 44th
Street, SE, Kentwood, Michigan
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b. Together
with:
- All
Proceeds (whether Cash Proceeds or Noncash Proceeds) of the
foregoing property, including without limitation proceeds of
insurance payable by reason of loss or damage to the foregoing
property and of eminent domain or condemnation awards.
- All
products of, additions and accessions to, and substitutions,
betterments and replacements for the foregoing property.
- All
sums at any time credited by or due from the Bank to
Grantor.
- All
property in which the Grantor has an interest now or at any
time hereafter coming into the possession or under the control
of the Bank or in transit by mail or carrier to or from the
Bank
or in possession of or under the control of any third party
acting on the Bank's behalf without regard to whether the Bank
received the same in pledge, for safekeeping, as agent for
collection or transmission or otherwise or whether the Bank has
conditionally released the same (excluding, nevertheless, any
of
the foregoing property of the Grantor which now or any time
hereafter is in possession or control of the Bank under any
written trust agreement wherein the Bank is trustee and Grantor
is trustor).
Terms used and not otherwise defined in this Agreement shall have
the
meaning given such terms in the Michigan
Uniform Commercial Code. In the event
the meaning of any term defined in the
Michigan Uniform Code is amended after
the date of this Agreement, the meaning of
such term as used in this Agreement
shall be that of the more encompassing of:
(i) the definition contained in the
Michigan Uniform Commercial Code prior to
the amendment, and (ii) the definition
contained in the Michigan Uniform
Commercial Code after the amendment.
4. PERFECTION OF SECURITY INTEREST. Grantor hereby irrevocably
authorizes the Bank to file financing
statement(s) describing the Collateral in
all public offices deemed necessary by the
Bank, and to take any and all
actions, including, without limitation,
filing all financing statements,
continuation financing statements and all
other documents that the Bank may
reasonably determine to be necessary to
perfect and maintain the Bank's security
interests in the Collateral. Grantor shall
have possession of the Collateral,
except where expressly otherwise provided
in this Agreement or where the Bank
chooses to perfect its security interest by
possession, whether or not in
addition to the filing of a financing
statement. Where Collateral is in the
possession of a third party, Grantor will
join with the Bank in notifying the
third party of the Bank's security interest
and obtaining an acknowledgement
from the third party that it is holding the
Collateral for the benefit of the
Bank. Grantor will cooperate with the Bank
in obtaining control with respect to
Collateral consisting of Deposit Accounts,
Investment Property, Letter-of-Credit
Rights and Electronic Chattel Paper.
Grantor will not create any Chattel Paper
without placing a legend on the Chattel
Paper acceptable to the Bank indicating
that the Bank has a security interest in
the Chattel Paper. Grantor shall pay
the cost of filing or recording all
financing statement(s) and other documents.
Grantor agrees to promptly execute and
deliver to the Bank all financing
statements, continuation financing
statements, assignments, certificates of
title, applications for vehicle titles,
affidavits, reports, notices, schedules
of Accounts, designations of Inventory,
letters of authority and all other
documents that the Bank may reasonably
request in form satisfactory to the Bank
to perfect and maintain the Bank's security
interests in the Collateral. In
order to fully consummate all of the
transactions contemplated hereunder,
Grantor shall make appropriate entries on
its books and records disclosing the
Bank's security interests in the
Collateral.
5. WARRANTIES AND REPRESENTATIONS. Grantor warrants and
represents,
except as may be otherwise disclosed in an
attachment to this Agreement: (a)
Grantor has rights in or the power to
transfer the Collateral and its title to
the Collateral is free and clear of all
liens or security interests, except the
Bank's security interests, (b) all Chattel
Paper constituting Collateral
evidences a perfected security interest in
the goods covered by it free from all
other liens and security interests, (c) no
financing statements, other than that
of the Bank, are on file covering the
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Collateral or any of it, (d) if Inventory
is represented or covered by documents
of title, Grantor is the owner of the
documents free of all liens and security
interests other than the Bank's security
interest and warehousemen's charges, if
any, not delinquent; (e) the Grantor's
exact legal name and the address of the
Grantor's chief executive office are as set
forth in the first paragraph of this
Agreement; (f) if the Grantor is a
Registered Organization, the form of its
organization and the State under which it
is organized are as set forth in the
first paragraph of this Agreement; (g) all
Collateral consisting of Goods is
located in the State under which the
Grantor is organized, if the Grantor is a
Registered Organization, or in the State in
which the Grantor's chief executive
office is located, if the Grantor is not a
Registered Organization, except as
the Grantor has otherwise disclosed to the
Bank in writing; (h) the Collateral,
wherever located, is covered by this
Agreement; (i) each Account, Chattel Paper
and General Intangible constituting
Collateral is genuine and enforceable
against the account debtor according to its
terms, and it, and the transaction
out of which it arose, comply with all
applicable laws and regulations, the
amount represented by Grantor to the Bank
as owing by each account debtor is the
amount actually owing and is not subject to
setoff, credit, allowance or
adjustment except any discount for prompt
payment, nor has any account debtor
returned the goods or disputed his
liability, there has been no default
according to the terms of any such
Collateral, and no step has been taken to
foreclose the security interest it
evidences or to otherwise enforce its
payment; (j) the execution and delivery of
this Agreement and any instruments
evidencing Obligations will not violate nor
constitute a breach of Grantor's
Articles of Incorporation, By-Laws,
Articles of Organization, Partnership
Agreement, or any agreement or restriction
of any type whatsoever to which
Grantor is a party or is subject; (k) all
financial statements and information
relating to Grantor delivered or to be
delivered by Grantor to the Bank are true
and correct and prepared in accordance with
generally accepted accounting
principles, and there has been no material
adverse change in the financial
condition of Grantor since the submission
of any such financial information to
the Bank; (l) there are no actions or
proceedings which are threatened or
pending against Grantor which might result
in any material adverse change in
Grantor's financial condition or whi
