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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1999
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[_] Transition report under to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________________ to ________________
Commission file number 000-26175
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DISCOVERY INVESTMENTS, INC.
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(Name of Small Business Issuer in Its Charter)
Nevada 88-049151
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
23805 Stuart Ranch Road, Suite 220, Malibu, CA 90265
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(Address of Principal Executive Offices) (Zip Code)
(310) 456-8494
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange
Title of Each Class on Which Registered
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__________________________ ___________________________
__________________________ ___________________________
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No __
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation SB is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]
State issuer's revenues for its most recent fiscal year: $3,680,003.
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of a specified date within the past 60 days. (See definition of affiliate in
Rule 12b-2 of the Exchange Act.) $10,500,000 as of April 7, 2000.
Note. If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
Indicate by check mark whether the issuer has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court. Yes __
No __
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 14,000,000 as of April 7,
2000.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 31, 1999).
No documents are incorporated by reference into this Annual Report on Form
10K-SB.
Transitional Small Business Disclosure Format (check one): Yes __ No X
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DISCOVERY INVESTMENTS, INC.
ANNUAL REPORT ON FORM 10-KSB
For the Year Ended December 31, 1999
TABLE OF CONTENTS
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Page No.
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PART 1
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Item 1. Description of Business............................................................................... 1
Item 2. Description of Property............................................................................... 15
Item 3. Legal Proceedings..................................................................................... 16
Item 4. Submission of Matters to a Vote of Security Holders................................................... 17
PART II
Item 5. Market for Common Equity and Related Shareholder Matters.............................................. 18
Item 6. Management's Discussion and Analysis or Plan of Operation............................................. 20
Item 7. Financial Statements.................................................................................. 26
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure............................................................................ 27
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act................................................... 28
Item 10. Executive Compensation................................................................................ 29
Item 11. Security Ownership of Certain Beneficial Owners
and Management...................................................................................... 30
Item 12. Certain Relationships and Related Transactions........................................................ 31
PART IV
Item 13. Exhibits and Reports on Form 8-K...................................................................... 32
SIGNATURES..................................................................... .................................. 41
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Certain statements contained in this Annual Report on Form 10-KSB that are
not related to historical results, including, without limitation, statements
regarding the Company's business strategy and objectives, future financial
position and expectations about future operations, are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and involve risks and uncertainties.
Although the Company believes that the assumptions on which these forward-
looking statements are based are reasonable, there can be no assurance that such
assumptions will prove to be accurate and actual results could differ materially
from those discussed in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, regulatory
policies, competition from other similar businesses, and market and general
economic factors. All forward-looking statements contained in this Annual Report
on Form 10-KSB are qualified in their entirety by this statement.
PART I
Item 1. Description of Business
General
Discovery Investments, Inc. ("DCIV"), through its wholly-owned operating
subsidiary, LLO-Gas, Inc. ("LLO-Gas"), owns and operates seven ARCO am/pm(R) gas
station/mini market convenience stores in California and Phoenix, Arizona (the
"ARCO Facilities") and owns one "card lock" gasoline and diesel dispensing
facility in Mammoth, California (the "Card Lock Facility"). Six of the ARCO
Facilities were recently acquired directly from Atlantic Richfield Company
("ARCO"), and one of the ARCO Facilities was acquired from an independent owner
operator. Unless the context otherwise requires, DCIV and its consolidated
subsidiaries, including LLO-Gas, are collectively referred to herein as the
"Company".
DCIV was incorporated on September 10, 1996, under the laws of the State of
Nevada, to engage in any lawful corporate activity. The Company has been in the
development stage since inception. Prior to October 26, 1999, the Company could
be defined as a "shell" company, whose sole purpose was to locate and consummate
a merger or acquisition with a private entity, and the Company did not have any
operations. On October 26, 1999, LLO-Gas acquired the ARCO Facilities and the
Card Lock Facility and commenced operations. LLO-Gas was incorporated in July
1998 under the laws of the State of Delaware. On December 20, 1999, DCIV engaged
in a reorganization (the "Reorganization"), pursuant to which LLO-Gas became a
wholly-owned subsidiary of DCIV and there was a change of control of DCIV. The
Company's principal offices are located at 23805 Stuart Ranch Road, Suite 220,
Malibu, California 90265 (telephone: (310) 456-8494).
Recent Developments
LLO-Gas owns and operates the ARCO Facilities, six of which it acquired
from ARCO on October 26, 1999 and one of which it acquired from an independent
owner operator. LLO-Gas also owns the Card Lock Facility, which it acquired
from a subsidiary of West Star Energy Group, Inc. ("West Star"), an affiliate of
the Company, on October 26, 1999, and to which it has leased back the Card Lock
Facility. The acquisition by LLO-Gas of all eight facilities included the
operating business, assets and real estate. The aggregate purchase price for
the eight
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facilities was approximately $9,500,000. LLO-Gas also has an option to purchase
38 acres of unimproved real estate in Tulare, California.
On December 10, 1999, DCIV entered into a Plan and Agreement of
Reorganization (the "Plan of Reorganization") with LLO-Gas and John Castellucci,
then the sole shareholder of LLO-Gas, pursuant to which Mr. Castellucci was
issued 11,900,000 shares of common stock, par value $.001 (the "Common Stock")
of the Company, and DCIV acquired all of the issued and outstanding shares of
stock of LLO-Gas. The closing of the transactions occurred on December 20,
1999.
In connection with the Reorganization, the previous officers and directors
of the Company resigned. The change in control of the Company resulted in new
management of the Company and a substantial dilution of the percentage of equity
of the Company held by the Company's shareholders prior to the Reorganization.
The Reorganization was structured as a so-called "tax-free" reorganization
under Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, Mr. Castellucci, the sole
shareholder of LLO-Gas prior to the Reorganization, was issued more than 80% of
the voting stock of the Company. See Item 11, "Security Ownership of Certain
Beneficial Owners and Management".
ARCO Facilities
The total purchase price paid by LLO-Gas for the six ARCO Facilities
purchased from ARCO was approximately $5,850,000. The funds used to acquire the
ARCO Facilities came from Convenience Store Finance Company, LLC ("CSFC"), which
provided secured financing to LLO-Gas in the principal amount of $7,800,000 (the
"CSFC Loan") to complete this and the other acquisitions. See Item 6,
"Management's Discussion and Analysis or Plan of Operation-Financing
Activities".
On September 2, 1999, LLO-Gas entered into a series of Agreements For Sale
of Real Estate To Contract Dealer (the "Sale Agreements") with ARCO to purchase
land and improvements owned by ARCO and concurrently entered into a series of
Agreements For Sale of Business To Contract Dealer with Prestige Stations, Inc.
("PSI"), a Delaware corporation and a wholly owned subsidiary of ARCO
(collectively, the "ARCO Agreements"), for the purchase of PSI's interest in
certain assets that PSI used in connection with the operation of gasoline
stations and am/pm(R) mini market businesses on the real properties purchased by
LLO-Gas from ARCO (the "PSI Agreements"). At the same time the ARCO Agreements
were entered into, LLO-Gas also entered into a series of franchise and purchase-
supply agreements with ARCO in connection with the business operations at each
of the acquired locations (the "Supporting Agreements").
Information regarding the six ARCO Facilities purchased by LLO-Gas from
ARCO and information regarding the business operations purchased by LLO-Gas from
PSI at those six locations (the "ARCO Locations") is set forth below:
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(1) ARCO Facility No.: 01860
Street Address, City and State: 3817 W. Third Street
Los Angeles, CA 90020
Land and Improvement
Acquisition Costs: $950,000.00
Equipment: $ 10,000.00
Estimated Price of Store Inventory: $ 60,000.00
Estimated Price of Petroleum Inventory: $ 15,000.00
Franchise Fee: $ 95,000.00
(2) ARCO Facility No.: 05502
Street Address, City and State: 702 W. Broadway
Phoenix, AZ 85032
Land and Improvement
Acquisition Costs: $1,165,000.00
Equipment: $ 10,000.00
Estimated Price of Store Inventory: $ 60,000.00
Estimated Price of Petroleum Inventory: $ 15,000.00
Franchise Fee: $ 70,000.00
(3) ARCO Facility No.: 05212
Street Address, City and State: 3366 N. San Gabriel Boulevard
Rosemead, CA 91770
Land and Improvement
Acquisition Costs: $765,000.00
Equipment: $ 10,000.00
Estimated Price of Store Inventory: $ 7,000.00
Estimated Price of Petroleum Inventory: $ 25,000.00
Franchise Fee: $ N/A
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(4) ARCO Facility No.: 05513
Street Address, City and State: 13001 Stockdale Highway
Bakersfield, CA 93312
Land and Improvement
Acquisition Costs: $900,000.00
Equipment: $ 10,000.00
Estimated Price of Store Inventory: $ 60,000.00
Estimated Price of Petroleum Inventory: $ 15,000.00
Franchise Fee: $ 95,000.00
(5) ARCO Facility No.: 05972
Street Address, City and State: 64200 20th Street
North Palm Springs, CA 92258
Land and Improvement
Acquisition Costs: $800,000.00
Equipment: $ 10,000.00
Estimated Price of Store Inventory: $ 60,000.00
Estimated Price of Petroleum Inventory: $ 15,000.00
Franchise Fees: $ 95,000.00
(6) ARCO Facility No.: 06202
Street Address, City and State: 4100 California Avenue
Bakersfield, CA 93309
Land and Improvement
Acquisition Costs: $820,000.00
Equipment: $ 10,000.00
Estimated Price of Store Inventory: $ 60,000.00
Estimated Price of Petroleum Inventory: $ 15,000.00
Franchise Fee: $ 95,000.00
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The ARCO Agreements
For each of the ARCO Locations, LLO-Gas and ARCO executed certain real
estate purchase and sale agreements, all of which are substantially similar and
consist of the following documents:
Agreement For Sale of Real Estate To Contract Dealer
Each of the six Sale Agreements contains provisions governing the purchase
and sale of real property and improvements for the six ARCO Locations. Each Sale
Agreement provides for: (i) payment of the respective Land and Improvement
Acquisition costs set forth above; (ii) reservation by ARCO of mineral rights
below the depth of 500 feet to minerals and oil, gas and other hydrocarbon
substances in and under the land being sold, but without the right of surface
entry; (iii) escrow and closing conditions, which include consummation of the
Sale Agreements relating to the purchase and sale of the other five ARCO
Locations, as well as the PSI Agreements; (iv) deliveries by LLO-Gas and ARCO
and their respective representations and warranties; (v) transfer and vesting of
title; (vi) disclosures, including pending litigation and environmental matters;
(vii) an "as-is" sale clause; (viii) execution of a Right of First Refusal
Agreement, discussed below; (ix) liquidated damages; (x) underground storage
tank disclosures; and (xi) miscellaneous general contract provisions.
Declaration of Environmental Restrictions and Other Environmental Covenants
and Conditions
For each of the ARCO Locations, LLO-Gas executed a Declaration of
Environmental Restriction and Other Environmental Covenants and Conditions (the
"Declaration"). The Declaration is a recordable document which imposes certain
restrictions on the real estate conveyed by ARCO to LLO-Gas pursuant to the Sale
Agreements. Each Declaration grants to ARCO an unrestricted right to enter onto
the real estate purchased and perform remediation activities concerning
petroleum products released into the soil or groundwater at the properties
during gasoline station operations conducted on the ARCO Locations. Pursuant to
these Declarations, ARCO has the right, without limitation, to: (i) perform soil
and groundwater investigations; (ii) install, operate, monitor, maintain,
repair, close and remove equipment, including, piping and wells; (iii) have
service trucks on the ARCO Locations; and (iv) cut and remove portions of the
asphalt and concrete, subject to a requirement to patch any cut or removed
aggregate. ARCO is not required to pay any rent or other compensation to the
Company for the right to enter or occupy any of the properties. Furthermore,
each Declaration contains additional property disclosures such as a further
statement regarding the "as-is" sale and purchase of the ARCO Locations, an
affirmative statement regarding the presence of pre-closing contamination, a
hazardous materials waiver, a 25-year excavation and environmental remediation
restriction, and general miscellaneous contract provisions.
Right of First Refusal Agreement
LLO-Gas and ARCO entered into a Right of First Refusal Agreement (the
"First Refusal Agreement") in connection with the sale and purchase of each ARCO
Location. The First
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Refusal Agreements are substantially similar to each other and grant to ARCO
certain rights to buy or lease the ARCO Locations and certain other property.
Under the First Refusal Agreements, for a 25-year period, LLO-Gas must notify
ARCO whenever it enters into a bona fide agreement for transfer of an interest
in any of the ARCO Locations, subject to certain exclusions, including any
transfer for the purpose of a financing transaction and any transaction
including a parent corporation as long as John Castellucci retains 75% of the
stock of the company, as well as management and control. ARCO's rights under the
First Refusal Agreements include the right to match the terms of any lease or
sublease for all or any part of any of the real estate of the ARCO Locations.
The First Refusal Agreements also contain detailed procedural provisions for
notice and exercise of ARCO's rights, including: (i) additional purchase terms;
(ii) methods for resolution of valuation disputes; (iii) escrow-related matters;
(iv) entity changes and effects of stock and asset transfers; (v) environmental
indemnification; (vi) default obligations; and (vii) general miscellaneous
contract provisions.
The PSI Agreements
As part of the acquisition of the ARCO Locations, LLO-Gas and PSI entered
into the PSI Agreements. Other than the purchase price for each ARCO Location,
the PSI Agreements are substantially similar to each other and provide for the
purchase and sale of certain equipment, convenience store inventory and
petroleum inventory. The PSI Agreements contain, among other things, provisions
regarding: (i) LLO-Gas and PSI's representations and warranties; (ii) the
equipment, convenience store inventory, petroleum inventory and business
permits, including beer and wine licenses, underground storage tank permits,
conditional use permits and operating permits; (iii) purchase price, escrow,
closing and delivery; (iv) assumption of liabilities, bulk sale notices and tax
matters; (v) an "as-is" sale clause; (vi) the First Refusal Agreements and the
agreements with ARCO; (vii) possession, governmental notices and liquidated
damages; and (viii) general miscellaneous contract provisions.
Recent Developments
The Company has recently been advised by ARCO that it is ARCO's position
that the Company breached the terms of the Supporting Agreements and may have
breached the First Refusal Agreements when the Company engaged in the
Reorganization, in that the Company was required to obtain ARCO's written
permission to transfer the ARCO Facilities franchises, including the one for the
ARCO Facility in Fontana, California, discussed below. The Company's position is
that since LLO-Gas remained the owner of all the ARCO Facilities after the
Reorganization and John Castellucci owns more than 75% of the equity in LLO-Gas'
parent, DCIV, none of the agreements with ARCO was breached. The Company and
ARCO are engaged in discussions to resolve the matter; however, the outcome of
those discussions cannot be predicted at present. If the Company and ARCO are
unable to resolve the matter, ARCO could seek to declare the ARCO Facilities
franchises terminated. Such action would have an immediate and material adverse
affect on the Company's business, financial condition, results of operations and
prospects. See "Risk Factors" below.
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Fontana Facility
The ARCO Facility in Fontana, California was acquired from Time Out, LLC
("Time Out"), the independent owner operator, for approximately $3,200,000. Of
this amount, $2,400,000 was for the real property and equipment and $800,000 was
for the business, franchise of the am/pm(R) mini market and inventory. The
$2,400,000 came from the CSFC Loan and the $800,000 was paid in the form of
promissory notes payable to the seller, $200,000 eight months after the closing
and the balance 24 months after the closing. Of the $800,000, $200,000 is
secured by a letter of credit issued by Capstone Capital, LLC ("Capstone") and
the remainder is secured by trust deeds on the Fontana Facility. See Item 6,
"Management's Discussion and Analysis or Plan of Operation-Financing
Activities".
The closing of the sale of the real property and equipment occurred on
October 26, 1999 and the closing of the sale of the business and franchise
occurred on January 12, 2000.
Card Lock Facility
LLO-Gas owns the Card Lock Facility, which also sells ARCO(R)-branded
gasoline. A card lock facility permits authorized customers to use a card
similar to a credit card to obtain gasoline from the pump, which they
subsequently pay for upon receipt of billing statements. The
customers for card-lock facilities include farmers, industrial companies,
commercial companies and trucking firms.
LLO-Gas acquired the Card Lock Facility from a wholly-owned subsidiary of
West Star on October 26, 1999, for $450,000. The purchase price was paid by LLO-
Gas with proceeds from the CSFC Loan in the amount of $300,000, with the balance
coming from third party loans. See Item 6, "Management's Discussion and Analysis
or Plan of Operation -- Financing Activities". LLO-Gas has leased the Card Lock
Facility to the seller for one year at a rent of $5,000 per month. John
Castellucci, President, Chief Financial Officer, Secretary, Director and the
principal shareholder of the Company, is also President, a director and the
principal shareholder of West Star. See Item 9, "Directors, Executive Officers,
Promoters and Control Persons; Compliance with Section 16(a) of the Exchange
Act" and Item 12, "Certain Relationships and Related Transactions".
Tulare Property Option
On March 1, 2000, Carl Lindros granted LLO-Gas Truck Stop No. 1, LLC, a
California limited liability company ("Truck Stop LLC"), a one-year option (the
"Option") to purchase 38 acres of unimproved real estate in Tulare, California
(the "Tulare Property"), on which to build a truck stop, for a purchase price of
approximately $1,183,000. Truck Stop LLC is owned 90% by LLO-Gas and 10% by an
individual, who purchased his interest from Truck Stop LLC for $500,000 in
October 1999.
On October 16, 1999, Truck Stop LLC loaned $450,000 of this amount to its
parent, LLO-Gas. The loan is a demand loan, bears interest at 10% per annum
and, under certain circumstances, may be converted into equity of LLO-Gas. See
Item 6, "Management's Discussion and Analysis or Plan of Operation -- Financing
Activities".
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Business Operations
The Company sells gasoline at all seven ARCO Facilities and at the Card
Lock Facility. Six of the seven ARCO Facilities have am/pm(R) mini markets and
some food and non-food items are available for purchase at the seventh ARCO
Facility in Rosemead, California. Sales of gasoline have been more than 80% of
total Company sales since business operations commenced.
The Company's am/pm(R) mini market convenience stores are extended-hour
retail stores, emphasizing convenience to the customer and providing beverages,
candy, fresh take-out foods, groceries, tobacco items, self-serve gasoline,
dairy products, non-food merchandise, specialty items, lottery tickets and
incidental services. Generally, the Company's stores are open every day of the
year and are located on main thoroughfares or other sites where they are easily
accessible and have ample parking facilities for quick in-and-out shopping. The
mini markets are generally from approximately 1,100 to 2,300 square feet in size
and carry approximately 1,100 to 1,500 items. The mini markets operate 24 hours
a day. The mini markets attract early and late shoppers, lunch-time customers,
weekend shoppers and customers who may need only a few items at any one time
and desire rapid service. The Company's sales are affected by seasonality and
weather, because many of the Company's traditional products attract more
shoppers during warm and dry weather and during the longer daylight hours of
the summer months, when leisure-time activities are more prevalent.
Substantially all mini market sales are for cash (including sales for
which checks are accepted), although ATM cards are accepted in most mini markets
for purchases of both merchandise and gasoline.
During the next 12 months, the Company intends to focus on implementing its
business strategy of emphasizing the importance of meeting the needs of each
store's customers with a broad selection of quality products and services. The
Company will emphasize: (i) quality and freshness (fresh products with high
quality ingredients); (ii) selection/availability (being in-stock on the fastest
selling items and introducing new items, with merchandise placed in the best
possible location); (iii) fast, friendly service to provide a pleasant and
speedy shopping experience; (iv) cleanliness (exceeding health code requirements
and providing a clean store at all times); and (v) value (merchandise priced
fairly with price tags or cards that are easy for customers to see).
Merchandising
Each convenience store's merchandise includes a selection of core items
which is supplemented by certain optional items that are selected to meet the
customers' needs and preferences. There is continuing focus on the need to
delete slow moving or "dead" merchandise and to update the stores' selection of
products by adding new items to the mix. Merchandising strategy also includes
searching for new products that will appeal to customers.
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Food Products
The mini markets offer a range of food products, including prepared food
items, delicatessen selections, dairy products, groceries, snacks, candy, baked
goods, ice cream and other frozen novelty treats.
The mini markets offer leading national brands of bottled and fountain soft
drinks, as well as waters and juices. The mini markets sell such popular hot
beverage items as coffee and coffee roasts, cappuccino and hot chocolate. The
mini markets also sell brands of leading national and imported beer and a
selection of wine. Sales of beer, wine and soft drinks are expected to
constitute a significant percentage of non-gasoline sales in 2000 and
thereafter.
Non-Food Items
The mini markets sell a variety of merchandise, including prepaid long
distance phone cards, sundries, generic pharmaceuticals, film, newspapers and
magazines, and lottery tickets.
Tobacco Products
All mini markets sell tobacco products. The Company anticipates that the
tobacco category will continue to be impacted by changes in the way
manufacturers are pricing and marketing tobacco. The Company uses "back counter"
merchandising display and storage racks, which comply with all current local,
state, and federal regulations relating to the sale of cigarettes and other
tobacco products, as well as with any anticipated future restrictions. At the
same time, it greatly improves the total category presentation to adult smoker
customers. The Company anticipates there will be ever-increasing restrictions
and regulations relating to the display and sale of tobacco products. See "Risk
Factors" below. Sales of tobacco products are expected to constitute a
significant percentage of the Company's non-gasoline sales in 2000 and
thereafter.
Gasoline
All of the Company's ARCO Facilities and the Card Lock Facility offer
ARCO(R)-branded gasoline. ARCO markets its gasoline under the ARCO(R) trademark.
ARCO sells its gasoline at ARCO(R)-branded retail outlets located in Arizona,
California, Nevada, Oregon, Utah and Washington, and in British Columbia. ARCO
currently has more than 1,700 branded retail outlets, which include franchisee
and company-operated am/pm(R) convenience stores and SmogPros(R) Service
Centers, along with traditional service stations. ARCO also sells gasoline to
dealers and resellers who do not use the ARCO(R) brand in connection with retail
sales.
At its ARCO Facilities, the Company provides easy access to the pumps, fast
equipment and "pay-at-the-pump" options. In addition, cash accepter machines on
the gas pump islands accept cash and ATM cards, to facilitate point-of-sale
transactions. The Company's mini markets are also all equipped to accept ATM
cards for the purchase of gasoline at the ARCO Facilities.
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At the Card Lock Facility, authorized customers use a card similar to a
credit card to obtain gasoline from the pump, which they subsequently pay for
upon receipt of billing statements.
The Company monitors gasoline sales daily to maintain a steady supply of
petroleum products, determine competitive retail pricing, provide the
appropriate product mix at each location and manage inventory levels, based
on market conditions.
Pursuant to am/pm Mini Market Agreements entered into between the Company
and ARCO for each ARCO Facility, the Company has a product purchase arrangement
with ARCO under which the Company purchases its United States gasoline
requirements from ARCO at market-related prices until October 2014. The Company
purchases gasoline for the Card Lock Facility on the spot market through Delta
Oil Company. See "Risk Factors" below.
Sales of gasoline are expected to constitute the majority of the Company's
revenues in 2000 and thereafter.
Supply Agreements
The Company makes purchases for all of its mini market convenience stores
through local distributors. None of such arrangements are pursuant to written
agreements. To date, the Company has not experienced any difficulties in
obtaining food and non-food items for its convenience stores.
Business Segment Information
The Company operates in only one business segment, namely the convenience
store industry.
Franchises, Licenses and Trademarks
All seven ARCO Facilities are ARCO franchises. In addition, the six ARCO
Facilities which have an am/pm(R) mini market also have a franchise to operate
the mini market.
Pursuant to the Company's various agreements with ARCO and its affiliates,
the Company has a non-exclusive right and license to use the trade secrets,
know-how, trademarks and service marks of ARCO(R) and am/pm(R) mini markets, as
well as the PayPoint Network Service(R), in the operation of the Company's
business.
These agreements are each for a ten year term and can be renewed by the
Company at the then prevailing royalty rates and terms. The initial royalty and
monthly royalty fee for the Company is 5% of gross sales, as that term is
defined in the agreements. The Company also pays an advertising and promotional
fee of 4.5% of monthly gross sales. Additional provisions of these agreements
include: (i) ARCO's ability to terminate and/or not renew the agreements and the
franchises only in accordance with both the Petroleum Marketing Practices Act
and the agreements; (ii) the Company's right to terminate its franchises with
cause; (iii) the Company's right to purchase supplies, products, fixtures and
other goods from persons other than ARCO or ARCO designated suppliers, except
for fuels and petroleum products, which must be purchased from ARCO; and (iv)
the non-exclusivity of territories for the Company's franchises.
Competition
The Company, like other traditional convenience retailers, experiences
competitive pressures from supermarkets and drug stores offering extended hours
and services, as well as from an increasing number of convenience-type stores
built by the oil companies. While many retailers are also facing increased
competition from the Internet, the Company does not currently think that its
traditional sales categories will be significantly impacted by the availability
of merchandise over the Internet.
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While it is difficult to determine the exact number of competitive
convenience store outlets in the United States, the Company estimates, based on
industry surveys, that approximately 120,000 convenience stores (including
gasoline retailers that carry at least 500 sku's) are in operation in the United
States. Independent industry sources estimate that in the United States annual
sales in 1998 (the most recent data available) for the convenience store
industry were approximately $164 billion (including $88.9 billion of gasoline).
The Company's convenience stores compete with a number of national,
regional, local and independent retailers, including grocery and supermarket
chains, grocery wholesalers and buying clubs, other convenience store chains,
oil company gasoline/convenience stores, independent food stores, and fast food
chains as well as variety, drug and candy stores. In sales of gasoline, the
Company's convenience stores compete with other food stores and service stations
and generate only a very small percentage of the gasoline sales in the United
States. The ability of each of the Company's convenience stores to compete is
dependent on its location, accessibility and individual service. Growing
competitive pressures from new participants in the convenience store industry
and the rapid growth in numbers of convenience-type stores opened by oil
companies over the past several years also present competitive pressures for the
Company.
ARCO markets its gasoline under the ARCO(R) trademark. ARCO sells its
gasoline at ARCO(R)-branded retail outlets located in Arizona, California,
Nevada, Oregon, Utah and Washington, and in British Columbia. ARCO currently
has more than 1,700 branded retail outlets, which include franchisee and
company-operated am/pm(R) convenience stores and SmogPros(R) Service Centers,
along with traditional service stations. ARCO also sells gasoline to dealers
and resellers who do not use the ARCO(R) brand in connection with retail sales.
The Company is an insignificant participant among businesses which operate
in the convenience store industry. There are many established companies which
have significantly greater financial and personnel resources and technical
expertise than the Company. In view of the Company's limited financial resources
and small number of locations, the Company will continue to be at a significant
competitive disadvantage compared to the Company's larger competitors.
Environmental Issues
The Company's operations are subject to various federal, state and local
laws and regulations relating to the environment. Certain of the more
significant federal laws are the Resource Conservation and Recovery Act of 1976,
The Comprehensive Environmental Response Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986 and the Clean Air Act.
The implementation of these laws by the United States Environmental Protection
Agency ("EPA") and the states will continue to affect the Company's operations
by imposing increased operating and maintenance costs and capital expenditures
required for compliance. Additionally, the procedural provisions of these laws
can result in increased lead times and costs for new facilities.
11
<PAGE>
Violation of any federal environmental statutes or regulations or orders
issued thereunder, as well as relevant state and local laws and regulations,
could result in civil or criminal enforcement actions.
The EPA enacted regulations effective January 1, 1988, governing
underground storage tanks ("USTs"). These regulations required the upgrade of
every UST location in the United States and included the replacement of tanks
and piping and the installation of lead detection, inventory monitoring and
overfill protection equipment. The upgrade timetable included a 10-year phase
in schedule with all work to be completed by December 28, 1998.
ARCO has guaranteed all EPA matters prior to the acquisition of the ARCO
Facilities. All ARCO Facilities have double wall tanks and pipes. The Company
believes that all current EPA standards have been met at the ARCO Facilities.
A Phase One environmental study was completed for the Card Lock Facility
and concluded that no remediation was required.
All owners and operators of USTs in California are required to participate
in the California UST Pollution Fund by paying a fee based on gallons put
through each tank to fund the State's $1,000,000 Pollution Cleanup Program.
These monies are collected by the Excise Tax Board and the UST Program is
administered by the California Department of Water Resources. All owners and
operators of USTs in Arizona are required to participate in Arizona's UST
Pollution Fund by paying a fee equal to 1 cent per gallon put through each tank.
The Company has been advised that all future environmental risks are
insurable from AAA-rated insurance companies at a rate of $1,000 per year per
unit. The Company has such insurance in place for each of its facilities.
Employees
At December 31, 1999, the Company had 71 employees, of whom approximately
20 were considered to be either temporary or part-time employees. None of the
Company's employees was subject to collective bargaining agreements at year-end.
Risks Factors
Limited Operating History. We are in the start-up phase of our business
-------------------------
operations, having only begun operations in October 1999. There can be no
assurance that we can operate our business profitably. Management has
significant experience owning and managing convenience stores, meaning that the
Company is largely dependent upon senior management to provide the expertise
necessary to run our business. We do not currently have key person insurance in
place. The loss of senior management could have a material adverse impact on our
business, financial condition and results of operations.
Limited Financial Resources. We do not have sufficient assets to expand
---------------------------
our business operations at the present time beyond our current operations or to
exercise the Option on the real property in Tulare, California. Any expansion
of the number of convenience stores or card lock facilities, or any
diversification of our business, would require substantial additional
12
<PAGE>
financial resources. We have no understandings or agreements with any party to
provide any such required financing. There can be no guarantee that we would be
able to negotiate any such financing in the future, or negotiate any such
financing on favorable terms.
Changes in Gasoline Supply, Prices and Demand Affect Our Business. Gasoline
-----------------------------------------------------------------
sales comprise, and are expected to continue to comprise, the majority of our
revenues. Therefore, interruptions in the supply of gasoline and increases in
the cost of gasoline could adversely affect our business, financial condition or
results of operations. Gasoline profit margins have a significant impact on our
earnings. Although we have a long-term product purchase and a product supply
agreement with ARCO, the following factors are beyond our control and affect the
volume of gasoline we sell and the gasoline profit margins we achieve:
. the worldwide supply and demand for gasoline;
. any volatility in the wholesale gasoline market; and
. the pricing policies of competitors in local markets.
In addition, because gasoline sales generate customer traffic to our
stores, decreases in gasoline sales could impact merchandise sales.
Changes in Tobacco Legislation, Pricing and Demand Affect Our Business.
----------------------------------------------------------------------
Future tobacco legislation and increased pricing by cigarette manufacturers
could have an impact on sales and margins in the tobacco category. If we are
unable to pass along price increases of tobacco products to our customers, our
business, financial condition and results of operations could be materially
adversely affected because tobacco sales comprise an important part of our
revenues. National and local campaigns to discourage smoking, as well as
increases in taxes on cigarettes and other tobacco products, may have a material
impact on our sales of tobacco products. The consumer price index for 1999 on
tobacco products increased approximately 9%. In addition, major cigarette
manufacturers have increased the wholesale prices and then offered rebates to
offset the price increases. We cannot assure you that major cigarette
manufacturers will continue to offer these rebates or that any resulting
increase in prices to our customers will not have a material adverse effect on
our cigarette sales and gross profit dollars. In addition, federal regulations
now require retailers to have procedures in place to determine the age of
persons wanting to purchase tobacco products. We anticipate that in the future
there may be additional restrictions on the sale of tobacco products. A
reduction in the amount of cigarettes sold by us could have a material adverse
affect our business, financial condition and results of operations.
The Convenience Store and Retail Gasoline Industries Are Highly
---------------------------------------------------------------
Competitive. We compete with numerous other convenience stores and
- - -----------
supermarkets. In addition, our convenience stores offering self-service gasoline
compete with gasoline service stations and, more recently, supermarkets. Our
convenience stores also compete to some extent with supermarket chains, drug
stores, fast food operations and other similar retail outlets. Major competitive
factors include, among others, location, ease of access, gasoline brands,
pricing, product and service selections, customer service, store appearance,
cleanliness and safety. In addition, inflation, increased labor and benefit
costs and the lack of availability of experienced management and hourly
employees may adversely affect the profitability of the convenience store
industry. In addition, changes in the minimum wage can impact both the
availability of labor and the competitive cost of doing
13
<PAGE>
business. Any or all of these factors could create heavy competitive pressures
and have a material adverse affect on our business, financial condition and
results of operations.
Our Business is Seasonal. Unfavorable weather conditions could adversely
------------------------
affect our business, financial condition or results of operations. During the
spring and summer vacation season, customers are more likely to purchase higher
profit margin items at our stores, such as fast foods, fountain drinks and other
beverages, and more gasoline at our gasoline locations. As a result, we
typically generate higher revenues and gross margins during warmer weather
months.
Our Business is Subject to Extensive and Changing Environmental Regulation.
--------------------------------------------------------------------------
We are subject to extensive environmental regulation, and increased regulation
or our failure to comply with existing regulations could require substantial
capital expenditures or affect our business, financial condition or results of
operations. In addition, our business is subject to extensive environmental
requirements, particularly environmental laws regulating USTs.
Our Business is Subject to Numerous Local Regulations. In certain areas
-----------------------------------------------------
where convenience stores are located, state or local laws limit the hours of
operation or sale of certain products, most significantly alcoholic beverages,
tobacco products, possible inhalants and lottery tickets. State and local
regulatory agencies have the authority to approve, revoke, suspend or deny
applications for and renewals of permits and licenses relating to the sale of
these products or to seek other remedies. Typically, such agencies have
discretion to determine if a licensee is qualified to be licensed, and denials
may be based on past noncompliance with applicable statutes and regulations, as
well as on the involvement of the licensee in criminal proceedings or activities
which in such agencies' discretion are determined to adversely reflect on the
licensee's qualifications. Such regulation is subject to legislative and
administrative change from time to time.
There is a Disagreement with ARCO Concerning the Franchises. We have
-----------------------------------------------------------
recently been advised by ARCO that it is their position that we breached the
terms of the Supporting Documents when we engaged in the Reorganization, and
that we were required to obtain ARCO's written permission to transfer the ARCO
Facilities franchises. We believe that we have not breached these agreements,
because LLO-Gas is still the owner of the ARCO Facilities and John Castellucci
owns more than 75% of our Common Stock, which we believe is consistent with an
exception to the transfer restrictions imposed by the First Refusal Agreements.
We are discussing the matter with ARCO but, at this time, we cannot be certain
of the outcome of those discussions. If we cannot resolve our disagreement, ARCO
could terminate our franchises, which would have an immediate and material
adverse affect on our business, financial condition, results of operations and
prospects.
We Are Involved in Litigation With West Star. West Star, an affiliate of
--------------------------------------------
our company, has sued John Castellucci and us, in connection with certain
matters relating to our acquisition of the ARCO Facilities. Among other things,
West Star seeks a constructive trust on the ARCO Facilities and a court order
requiring us to return the ARCO Facilities, and any proceeds from the ARCO
Facilities, to West Star. West Star also seeks more than $3.5 million in
damages against us for unfair competition. Mr. Castellucci and the Company are
engaged in meaningful
14
<PAGE>
settlement negotiations with West Star. However, in view of the inherent
uncertainties of litigation, we cannot predict the outcome of the settlement
negotiations, or the litigation itself.
These factors, among others, may have an impact on the Company in 2000
and thereafter.
Item 2. Description of Property
The Company owns and operates seven ARCO Facilities and owns the Card Lock
Facility. See Item 1, "Description of Business - ARCO Facilities" and
"Description of Business-Card Lock Facility".
Certain information about the ARCO Facilities follows:
Approximate
Location Type Square Feet of Location
-------- ---- -----------------------
Phoenix, Arizona Diamond 42,564
North Palm Springs Diamond 92,225
Fontana Diamond 75,657
Bakersfield/Stockdale Highway Diamond 32,352
Bakersfield/California Avenue 3-Bay Conversion 26,166
Los Angeles/3rd Street 3-Bay Conversion 12,911
Rosemead Pumper 23,753
The Company's Diamond facilities represent a newer, larger type of ARCO
gas station layout. They include both gas station islands and an am/pm(R) mini
market that averages approximately 2,300 square feet. The 3-Bay Conversion
facilities are more conventional ARCO gas station/convenience stores. They
include a gas station and an am/pm(R) mini market that averages approximately
1,100 square feet. The Pumper facility is a gas station only, although some food
and non-food items are available for purchase. The ARCO Facilities are subject
to certain encumbrances, which arose in connection with their acquisition. See
Item 6, "Management's Discussion and Analysis or Plan of Operation -- Financing
Activities".
The Card Lock Facility is located in Mammoth, California, comprises
approximately 13,945 square feet and consists of a restricted-use gas station.
The Company leases the Card Lock Facility to a wholly-owned subsidiary of West
Star under a one year lease commencing October, 1999, at a rent of $5,000 per
month. John Castellucci, President, Chief Financial Officer, Secretary,
director, and the principal shareholder of the Company, is President, a director
and the principal shareholder of West Star. See Item 12, "Certain Relationships
and Related Transactions". The Card Lock Facility is subject to certain
encumbrances, which arose in connection with its acquisition. See Item 6,
"Management's Discussion and Analysis or Plan of Operation -- Financing
Activities".
The Company has an Option to purchase the Tulare Property, which consists
of 38 undeveloped acres in Tulare, California, for approximately $1,183,000.
The Option was granted
15
<PAGE>
on March 1, 2000 and is for one year. See Item 1, "Description of Business --
Tulare Property Option".
The Company believes that all of its owned properties are suitable and
adequate for their current uses. There are no present plans to renovate,
improve or develop any of the Company's owned properties, other than basic
renovations. See Item 6, "Management's Discussion and Analysis or Plan of
Operation -- Management's Plan of Operation". If the Company were to exercise
the Option for the Tulare Property, it would be with the intention of
constructing a truck stop and full-service facility thereon. Such acquisition
and construction would require additional capital, in the form of equity or
debt, for which the Company has no commitments or agreements at the present
time. See Item 1, "Description of Business -- Risk Factors" and Item 6,
"Management's Discussion and Analysis or Plan of Operation - Management's Plan
of Operation".
Prior to the Reorganization, the Company occupied office space supplied by
Paul W. Andre and Sandra Andre, a shareholder of the Company and his wife, at
2980 S. Rainbow Boulevard, Suite 108, Las Vegas, Nevada 89146. This space was
provided to the Company on a rent-free basis. The Company no longer uses these
facilities.
Since the Reorganization, the Company's principal offices have been located
at 23805 Stuart Ranch Road, Suite 220, Malibu, California 90265 (telephone:
(310) 456-8494). The premises are leased from Miramar Investment Co., and
comprise approximately 1,434 square feet. The term of the lease is three years
beginning October 1, 1999, at a rent of $3,810 per month during the first year,
$4,326 per month during the second year and $5,645 per month during the third
year of the term.
In the opinion of management, the Company's properties are adequately
covered by insurance.
Item 3. Legal Proceedings
Except as set forth below, the Company is not a party to any material
pending legal proceedings other than ordinary routine litigation incidental to
its business.
On February 29, 2000, West Star sued John Castellucci, LLO-GAS and DCIV, in
the Superior Court of the State of California, County of Los Angeles (Case No.
BC 225568). Mr. Castellucci is President, Chief Financial Officer, Secretary,
director and the principal shareholder of the Company, and President, a director
and the principal shareholder of West Star. West Star, through its Board of
Directors (other than Mr. Castellucci), alleges that Mr. Castellucci breached
his fiduciary duty to West Star and engaged in a series of unauthorized
transactions for his personal benefit. The Plaintiff also alleges that Mr.
Castellucci made certain fraudulent statements to the West Star Board of
Directors, which induced them not to exercise a West Star business opportunity
to acquire the ARCO Facilities for itself and to consent to the acquisition of
the ARCO Facilities by LLO-Gas.
West Star seeks general and special damages of at least $3.5 million
against Mr. Castellucci. West Star seeks the imposition of a constructive trust
on the ARCO Facilities and an order compelling the Company to return the ARCO
Facilities, and all proceeds therefrom, to West Star. West Star also seeks
damages against Mr. Castelucci and the Company of at least $3.5 million for
unfair competition. In addition, West Star seeks an accounting from the
16
<PAGE>
defendants. West Star also seeks to recover the costs of the suit, prejudgment
interest, attorneys' fees and such other relief as the court may deem just and
proper.
The Company has not yet filed an answer to the complaint. The Company
believes that it has meritorious defenses and affirmative defenses to the
lawsuit.
The parties have been engaged in meaningful settlement negotiations. In
view of the inherent uncertainties of litigation, the outcome of the settlement
negotiations, or the litigation itself, cannot be predicted.
Item 4. Submission of Matters to a Vote of Security Holders
None.
17
<PAGE>
PART II
Item 5. Market Price for Common Equity and Related Shareholder Matters.
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.001 per share. The Company's Common Stock has been
quoted on the Over the Counter ("OTC") Bulletin Board (OTCBB symbol: DCIV) since
September 7, 1999. Prior to such date there was no market for the Company's
Common Stock.
The table below sets forth, for the periods indicated, the high and low bid
prices of the Company's Common Stock, for the period September 7, 1999 through
December 31, 1999, as reported by online financial services:
<TABLE>
<CAPTION>
1999
---------------------------------
High Bid Low Bid
-------- -------
<S> <C> <C>
1st Quarter................................... $ - $ -
2nd Quarter................................... $ - $ -
3rd Quarter (commencing September 7, 1999).... $ 5.625 $ 5.50
4th Quarter................................... $ 6.00 $ 5.125
</TABLE>
On April 7, 2000, the closing bid price of the Company's Common Stock on
the OTC Bulletin Board was $5.00 per share.
The above quotations represent prices between market makers, do not include
retail markup, markdown or commission and do not necessarily represent actual
transactions.
There were approximately 15 record holders of the Company's Common Stock as
of April 7, 2000.
On May 24, 1999, the Company filed a Registration Statement on Form 10-SB
(the "Form 10-SB") under the Exchange Act on a voluntary basis because the
primary attraction of the Company as a merger partner or acquisition vehicle was
considered to be its status as a public company. In addition, the Company filed
the Form 10-SB to enhance investor protection and to provide information once a
trading market commenced. On December 11, 1997, the National Association of
Securities Dealers, Inc. announced that its Board of Governors had approved a
series of proposed changes for the OTC Bulletin Board and the OTC market. The
principal changes, which were approved by the Securities and Exchange Commission
(the "SEC") on January 4, 1999, allow only those companies that report their
current financial information to the SEC, banking, or insurance regulators, to
be quoted on the OTC Bulletin Board.
The Company has never declared or paid any cash dividends and does not
intend to pay cash dividends in the foreseeable future on the shares of Common
Stock. Cash dividends, if any, that may be paid in the future to holders of
Common Stock will be payable when, as and if
18
<PAGE>
declared by the Board of Directors of the Company, based upon the Board's
assessment of the financial condition of the Company, its earnings, need for
funds, capital requirements, and other factors, including any applicable laws.
The Company is not currently a party to any agreement restricting the payment of
dividends.
Recent Sales of Unregistered Securities
On September 15, 1996, the Company issued 21,000 shares of Common Stock, at
$.10 per share, for an aggregate of $2,100 in cash, as follows:
Name Number of Shares
---- ----------------
Kimberly Lynn Jack 5,500
Scott A. Jack 5,500
Debra S. Hackney 3,400
Sandra J. Andre 400
Bart W. Andre 100
Jeffery D. Andre 100
Gail Kunz 100
Patrick C. Fisher 300
M. Paula Rowe 300
Rebecca M. Popma 200
Kelly J. Ryan 400
Carrie Ryan 400
Vivian M. Krueger 300
Paige D. Price 200
Deborah L. Ford 300
Jesse J. Ford 400
Fred C. Kunz 300
J.D. Allred 400
Lisa Ann Jones 400
Joyce Allred 300
James M. Bone 300
Christina Escobedo 400
Randall D. Kirwan 400
Lorie Mapstead 300
George Mapstead 300
Kimberly Lynn Jack and Scott A. Jack, Gail Kunz and Fred C. Kunz, Deborah
L. Ford and Jesse J. Ford, Joyce Allred and J.D. Allred and Lorie Mapstead and
George Mapstead are, respectively, husbands and wives. Kelly J. Ryan and Carrie
Ryan are sisters. Bart W. Andre and Jeffery D. Andre are brothers, and Sandra J.
Andre is the stepmother of each.
On March 15, 1999, the State of Nevada approved the Company's restated
Articles of Incorporation, which increased its capitalization from 25,000 common
shares to 25,000,000 common shares. The no par value was changed to $0.001. On
March 15, 1999, the Company
19
<PAGE>
split its common stock 100:1, thus increasing the number of outstanding shares
of Common Stock from 21,000 shares to 2,100,000 shares.
On November 1, 1999, the Company issued convertible debentures to three
persons. The proceeds to the Company were $1,500,000 and were used for
acquisition of the Card Lock Facility and general corporate purposes. The
debentures are convertible into shares of the Company's Common Stock under
certain conditions. There were no offering expenses associated with the
issuances.
On December 20, 1999, the Company issued 11,900,000 shares of its Common
Stock to John Castellucci, in connection with the Reorganization. In exchange
therefore, the Company received all of the shares of common stock of LLO-Gas
owned by Mr. Castellucci. There were no proceeds to the Company from this
transaction.
All the sales and issuances of the Company's securities described above
were exempt from registration under the Securities Act, by virtue of Section
4(2) as a transaction not involving a public offering.
Item 6. Management's Discussion and Analysis or Plan of Operation
Overview
Until October 26, 1999, the Company was a "shell" company with no
operations, assets or financial resources. During the period from inception
(September 10, 1996) until October 26, 1999, the Company sustained operating
expenses without corresponding revenues. This resulted in the Company's
incurring a net operating loss, which loss will increase until the Company can
begin operating its new business profitably.
The Company's business operations commenced on October 26, 1999. Because
the Company's business activities are not diversified, the Company may be
subject to economic fluctuations within its business or industry and therefore
increase the risks associated with the Company's operations.
Management's Plan of Operation
During the next 12 months, the Company intends to focus on implementing its
business strategy of emphasizing the importance of meeting the needs of each
store's customers with a broad selection of quality products and services.
The Company will emphasize: (i) quality and freshness (fresh products with high
quality ingredients); (ii) selection/availability (being in-stock on the fastest
selling items and introducing new items, with merchandise placed in the best
possible location); (iii) fast, friendly service to provide a pleasant and
speedy shopping experience; (iv) cleanliness (exceeding health code requirements
and providing a clean store at all times); and (v) value (merchandise priced
fairly with price tags or cards that are easy for customers to see).
The Company's primary mission over the next 12 months and thereafter is to
solidify, streamline and expand the operations and profitability of its ARCO
Facilities and other operations; and expand the number of facilities.
20
<PAGE>
The Company will focus on its financial performance, service, information
capability and operational efficiency, to differentiate itself from existing
operations and other convenience stores with which the Company competes. The
Company intends to market and position its ARCO Facilities to be recognized as a
convenient destination to pick up daily items. To the extent that ARCO will
allow under its rules and regulations that apply to its franchises, the Company
intends to focus on new strategies and programs consistent with modern retail
strategies, including in-store concepts, merchandising techniques, improved in-
store promotions, competitive pricing policies, use of the point-of-sale system
to expand into database marketing capabilities and improved shrinkage control.
The Company also intends to focus on ongoing management and staff training to
ensure high levels of performance and motivation, and training and incentive
programs to improve employee performance.
In order to accomplish some of these goals, the Company will consider store
format, merchandise mix, and promotions to promote consumer interest. The
Company would also consider sponsorship programs that target customers at home,
online and in the stores.
Refining security systems to reduce theft is another priority that the
Company intends to pursue aggressively. Two areas that the Company is looking
at are lighting in the stores, as required, and installing cash accepter safes,
which counts money as it is deposited into the cash register, in all of the
Company's convenience stores.
The Company is also contemplating expansions at two of its ARCO Facilities,
which would significantly increase sales at each facility. There would be
significant expenses associated with each contemplated expansion. These
expansion plans are only preliminary at this time and their implementation would
require raising additional capital, either as equity or debt, or a combination
of both. At present, there are no arrangements or agreements for any such
financing. There can be no assurance that any such financing will be available
or, if financing is available, if it will be on terms that are favorable to the
Company.
The Company believes that it will be able to meet its needs to fund
existing operations at its ARCO Facilities and Card Lock Facility, and to make
basic improvements and enhancements at those facilities, from working capital,
for at least the next 12 months. However, the Company does not have adequate
resources to acquire the Tulare Property or any additional facilities. In order
to implement this part of the Company's plan of operations, the Company will
have to raise additional capital, either as equity or debt, or a combination of
both. At present, there are no arrangements or agreements for any such
financing. There can be no assurance that any such financing will be available
when acquisition opportunities present themselves or, if financing is available,
if it will be on terms that are favorable to the Company.
The Company does not foresee significant changes in the number of employees
at the existing ARCO Facilities and Card Lock Facility. Any significant
increase in the number of Company employees would be as a result of the
acquisition of additional facilities, or the construction of the truck stop
pursuant to the exercise of the Option to acquire the Tulare Property.
21
<PAGE>
Financing Activities
The Company has borrowed funds in connection with the acquisition of the
ARCO Facilities and the Card Lock Facility, and for general corporate purposes.
1. CSFC Loan
On October 26, 1999, the Company obtained financing of approximately
$7,800,000 from CSFC, through Credit Suisse First Boston (collectively referred
to as "Credit Suisse/CSFC") for the acquisition of the ARCO Facilities and the
Card Lock Facility. The CSFC Loan is structured through a series of secured
promissory notes and deeds of trust, as well as through a loan and security
agreement, and allonges in favor of Credit Suisse First Boston Mortgage Capital,
LLC for each of the secured promissory notes.
John Castellucci, President, Chief Financial Officer, Secretary,
Director and the principal shareholder of the Company, has executed a personal
guarantee in connection with the CSFC Loan.
Secured Promissory Notes. On October 26, 1999, in connection with
------------------------
the CSFC Loan, LLO-Gas executed eight secured promissory notes in favor of
Credit Suisse/CSFC (the "Secured Notes"). The principal amount of each of the
Secured Notes is set forth below:
<TABLE>
<S> <C>
Secured Note 1 $ 300,000
Secured Note 2 $ 585,000
Secured Note 3 $1,230,000
Secured Note 4 $ 975,000
Secured Note 5 $2,500,000
Secured Note 6 $ 750,000
Secured Note 7 $ 760,000
Secured Note 8 $ 700,000
</TABLE>
The Secured Notes bear interest at 10.75% per annum and the first
payment date is December 11, 1999. The maturity date of the Secured Notes is
November 11, 2014.
The amortization period for the Secured Notes is 180 months and
commences on the eleventh day of the month following the date of the Secured
Notes. There is a defeasance period for the Secured Notes commencing on the
earlier of (x) the third anniversary of the first payment date of each of the
Secured Notes and (y) two years after the securitization of the loans by Credit
Suisse/CSFC, and ending on the maturing dates of each of the Secured Notes.
In addition to the principal terms, each of the Secured Notes contains
substantially similar form provisions which address: (i) payment of principal,
interest, default interest and late charges; (ii) form, time, calculation and
amortization of payments; (iii) acceleration of the note; (iv) waiver of trial
by jury and appraisal rights; (v) sale or participation of loan; and (vi)
general miscellaneous contract provisions.
22
<PAGE>
The Secured Notes may not be prepaid. The collateral for the Secured
Notes can, however, be released under the defeasance option. Under this option,
the Company, after providing the requisite notice and satisfying certain other
conditions, may deliver to Credit Suisse/CSFC, or its successors-in-interest, an
amount equal to the remaining principal amount of any of the Secured Notes plus
a yield maintenance premium, sufficient to purchase direct, non-callable
obligations of the United States that provide for payment prior, but as close as
possible, to all successive monthly payments due under the given Secured Note
through its maturity date. Upon such delivery and upon the satisfaction of
related conditions set forth in the Secured Notes, such as execution of the
necessary documentation, Credit Suisse/CSFC will release its lien on the
collateral and properties securing the Secured Notes.
Deeds of Trust. In connection with the CSFC Loan, the Company granted
--------------
eight Deeds of Trust and Absolute Assignments of Leases and Rents and Fixture
Filings to Credit Suisse/CSFC (the "Deeds"), securing, among other things, the
amount of the Secured Notes. All of the Deeds are substantially similar
documents and attached as an exhibit to each Deed there is one description of
collateral for each of the relating to securing the respective Deeds. The eight
Deeds are recorded in various counties in California and Arizona corresponding
to the state and counties of each of the properties.
Loan and Security Agreement. The Loan and Security Agreement dated
---------------------------
October 26, 1999 (the "CSFC Loan Agreement"), is the principal document
outlining the terms and provisions of the CSFC Loan. The CSFC Loan Agreement
grants Credit Suisse/CSFC a continuing security interest in the collateral
described in the Deeds and various financing statements. Credit Suisse/CSFC has
a right of first refusal to extend financing to the Company for the acquisition
or operation of any new business location within Los Angeles, Kern, Riverside,
Mono and San Bernardino Counties, in California, and Maricopa County, in
Arizona. The CSFC Loan Agreement also provides for cross-defaults under the
Secured Notes and other documents entered into in connection with the CSFC Loan,
as well as other obligations of the Company which inure to the benefit of Credit
Suisse/CSFC, including the intercreditor subordination agreement with Capstone,
discussed below.
The Company has recently been advised by Credit Suisse/CFSC that there
may be a technical breach of the CFSC Loan Agreement in that the Company was
required to obtain the consent of Credit Suisse/CFSC to engage in the
Reorganization. At present, the Company believes that such consent will be
obtained; however, there can be no assurance that such consent will be obtained.
If the Company were unable to obtain such consent, Credit Suisse/CFSC could
declare the CFSC Loan in default, but the Company believes this is unlikely.
2. ARCO Credit Agreements
Line of Credit. The Company had a $450,000 line of credit with ARCO
--------------
(the "First ARCO Line") to facilitate the purchase of gasoline and other
products from ARCO and for payment of royalties by the Company to ARCO. The
ARCO Line could not be used for any other purposes. The Company was required to
secure the First ARCO Line with a $250,000 letter of credit, which the Company
obtained from Capstone (the "First Capstone Letter of Credit").
The Company had become delinquent under the First ARCO Line in the
amount of approximately $398,311 as of March 23, 2000. On that date, the
Company and ARCO entered into a Memorandum of Understanding (the "ARCO MOU") and
related Loan Agreement and Promissory Note for Line of Credit (the "First ARCO
Note"). Pursuant to the ARCO MOU,
23
<PAGE>
the Company has agreed to maintain the First Capstone Letter of Credit in effect
for the benefit of ARCO for not less than approximately $322,116, and to have
certain amendments made to the First Capstone Letter of Credit affecting, among
other things, the term and notice provisions thereof. ARCO agreed not to draw
down the First Capstone Letter of Credit and agreed further to extend to the
Company a new line of credit of up to $300,000, secured by a new letter of
credit from Capstone in the amount of $150,000 (the "Second Capstone Letter of
Credit") and evidenced by a promissory note dated March 23, 2000 (the "Second
ARCO Note").
The First ARCO Note bears interest at 10% per annum. Under the First
ARCO Note, the Company has agreed to make weekly payments of principal and
interest in the amount of $4,000, commencing on March 29, 2000 and continuing
until maturity on May 8, 2002, on which date the entire remaining principal, and
all accrued and unpaid interest, is due and payable. The First ARCO Note is
secured by the First Capstone Letter of Credit.
The Second ARCO Note matures on September 22, 2000 and is secured by
the Second Capstone Letter of Credit.
3. Capstone Credit Facility
Capstone has issued to the Company a revolving line of credit pursuant
to a Promissory Note and Security Agreement, both dated August 2, 1999
(collectively, the "Capstone Credit Facility"). Under the terms of the Capstone
Credit Facility, Capstone will extend up to $900,000 to the Company for its
business operations. There is a variable interest rate on the Capstone Credit
Facility set at Chase Manhattan Bank Prime Rate plus four percent. The default
rate of interest on the Capstone Credit Facility is 24%. Draws against the
Capstone Credit Facility are due on their respective maturity dates.
The Company has three outstanding draws against the Capstone Credit
Facility: (i) a $450,000 draw for the First Capstone Letter of Credit securing
the First ARCO Note; (ii) a $150,000 draw for the Second Capstone Letter of
Credit securing the Second ARCO Note; and (iii) a $200,000 draw for the letter
of credit partially securing the $800,000 obligation to Time Out, in connection
with the acquisition of the ARCO Facility in Fontana, California. See Item 1,
"Description of Business-ARCO Facilities" and "Description of Business-Fontana
Facility".
Capstone has a security interest in certain assets, including certain
petroleum inventory, pursuant to the Loan and Security Agreement dated October
25, 1999. Pursuant to an intercreditor subordination agreement required as a
condition of the CSFC Loan, Capstone subordinated its security interest in
respect of the First Capstone Letter of Credit, in an amount not to exceed
$450,000, in petroleum inventory only.
4. Fontana Facility Financing
In connection with the acquisition of the Fontana Facility, the
Company executed three promissory notes payable to Time Out, the seller. One
note, dated November 23, 1999, is in the principal amount of $200,000, bears
interest at 8% per annum and is payable as to interest only in monthly
installments of $10,000 over a six-month period, at the end of which period the
entire unpaid principal balance, plus any accrued and unpaid interest, is due
and payable. This
24
<PAGE>
note matures on May 23, 2000. This note is secured by a second deed of trust in
favor of Capstone, which issued a letter of credit to Time Out to guarantee
monthly interest installments and the balloon payment of principal upon maturity
of the note.
There are also two additional promissory notes dated October 28, 1999,
each in the principal amount of $300,000, with substantially similar terms to
each other. These notes bear interest at 8% per annum and are payable as to
interest only in monthly installments of $2,000 over a 60-month period
commencing January 12, 2000, at the end of which period the entire unpaid
principal balance, plus any accrued and unpaid interest, is due and payable.
The first of these two notes has also been executed by John Castellucci
personally and is secured by a third deed of trust on the Fontana Facility. The
second of these two notes is an obligation of the Company only, and is secured
by a fourth deed of trust on the Fontana Facility.
5. Other Third Party Financings
Farrer Loan. In February 1999, Cameron Farrer loaned LLO-Gas $250,000
-----------
in connection with its contemplated acquisition of the ARCO Facilities. The
loan is a demand loan and bears interest at the rate of 10% per annum.
Interlochen Loan. In July 1999, Interlochen Enterprises, Inc. loaned
----------------
the Company $150.000. The Company and John Castellucci jointly executed a
promissory note dated July 19, 1999 (the "Interlochen Note") in the principal
amount of $150,000. The Interlochen Note bears interest at the rate of 8% per
annum and is due and payable on July 18, 2000. All unpaid interest was due on
January 1, 2000 and monthly thereafter, until maturity. To date, the Company has
not made any payments of interest under the Interlochen Note.
Mostaedi Loan. In December 1999, M. Mehdi Mostaedi loaned the Company
-------------
$150,000. The Company and John Castellucci jointly executed a promissory note
dated December 16, 1999 (the "Mostaedi Note") in the principal amount of
$150,000. The Mostaedi Note bears interest at the rate of 9% per annum and was
due and payable as to principal and interest on February 16, 2000. The Mostaedi
Note is secured with a pledge of 2,000,000 shares of the Company's Common Stock
owned by Mr. Castellucci pursuant to a Pledge Agreement dated December 16, 1999
between Messrs. Castellucci and Mostaedi. Mr. Mostaedi has orally extended the
maturity date of the loan until the Company raises additional capital.
Convertible Debentures. In November 1999, the Company raised
----------------------
$1,500,000 from third parties. In connection therewith, the Company issued a
series of six 3-Year 10 Percent Convertible Debentures dated as of November 1,
1999 (the "Convertible Debentures"), each in the amount of $250,000, and in the
aggregate principal amount of $1,500,000.
All Convertible Debentures rank equally and ratably without priority
over one another. The holders of the Convertible Debentures may at any time
prior to the maturity, convert the principal amount hereof into the Company's
Common Stock at the conversion ratio of $5.00 of debenture principal for one
share of Common Stock (except that, if the Company has called the Convertible
Debenture for redemption, the right to convert shall terminate at the close of
business on the second business day prior to the day fixed as the date for such
redemption).
If the Company at any time pays to its shareholders a dividend in
Common Stock, the number of shares of Common Stock issuable upon the conversion
of the Convertible Debentures shall be proportionally increased. If the Company
at any time subdivides or combines in a larger or smaller number of shares its
outstanding shares of Common Stock, then the number of shares of Common Stock
issuable upon the conversion of the Convertible Debentures shall be
proportionally increased in the case of a subdivision and decreased in the case
of a combination .
If the Company is recapitalized, consolidated with or merged into any
other corporation, or sells or conveys to any other corporation all or
substantially all of its property as an entity, provision shall be made as part
of the terms of the recapitalization, consolidation,
25
<PAGE>
merger, sale, or conveyance so that the holders of the Convertible Debentures
may receive, in lieu of the Common Stock otherwise issuable to them upon
conversion of the Convertible Debentures, at the same conversion ratio, the same
kind and amount of securities or assets as may be distributable upon the
recapitalization, consolidation, merger, sale, or conveyance with respect to the
Common Stock.
In lieu of issuing any fraction of a share upon the conversion of the
Convertible Debentures, the Company shall pay to the holder the then current per
share market price of the Company's Common Stock for the fractional amount.
In the event the Company fails to make any payment of principal and
interest under the Convertible Debentures, said failure shall constitute a
default and, subject to the terms and conditions contained in the Convertible
Debenture, the entire unpaid principal and interest shall be due and payable. No
Convertible Debenture holder may institute any suit or proceeding for the
enforcement of the payment of principal or interest unless the holders of more
than 25% in amount of all outstanding Convertible Debentures of the issue join
in the suit or proceeding.
The Company may at any time prepay, in whole or in part, the principal
amount, plus accrued interest to the date of prepayment, of all outstanding
Convertible Debentures.
Except for Convertible Debentures Number 1 and 2, for which John
Castellucci is personally obligated for an amount equal to $150,000, the
Convertible Debentures are the obligation of the Company only.
6. Intercompany Loan
On October 16, 1999, Truck Stop LLC loaned $450,000 to LLO-Gas. Truck
Stop LLC is owned 90% by LLO-Gas and 10% by an individual. The loan is a demand
loan, bears interest at 10% per annum and, under certain circumstances, may be
converted into equity of LLO-Gas.
Item 7. Financial Statements
The Financial Statements of the Company are submitted as a separate section
of this Form 10-KSB commencing on Page F-1 immediately following Part IV of this
Report on Form 10-KSB.
26
<PAGE>
Item 8. Changes in and Disagreements on Accounting and Financial Disclosure
On March 30, 1999, the Company retained Hollander Lumer & Co. LLP as the
Company's independent auditor. The Company had previously engaged the services
of Barry L. Friedman in connection with the preparation of the Company's Form
10-SB.
The Independent Auditor's Report dated May 10, 1999, prepared by Mr.
Friedman and filed as part of the Company's Form 10-SB, contained a "going
concern" exception. This report was filed at a time when the Company was a
"shell" company with no operations.
The decision to change accountants was approved by John Castellucci, the
sole director of the Company. Mr. Castellucci became the sole director of the
Company in connection with the Reorganization. Given the fact that the Company
has now commenced business operations, Mr. Castellucci believed that it was in
the best interests of the Company to engage the services of an accounting firm
known for its work in the field of public company representation.
There were no disagreements with Mr. Friedman, whether or not resolved, on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
The Company filed a Current Report on Form 8-K with the SEC with respect to
this matter on April 11, 2000.
27
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Directors and Executive Officers
The directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John D. Castellucci 56 President/Chief Financial
Officer/Secretary/Director
</TABLE>
John D. Castellucci has served as President, Chief Financial Officer,
Secretary and Director of the Company since December 20, 1999. Mr. Castellucci
was a part owner of three beer distributorships from 1993 through 1995. Mr.
Castellucci graduated from Southwestern School of Law in 1970.
Key Employees
James R. Mandich, 55, has served as Chief Operating Officer of LLO-Gas
since October 1999. From 1995 to 1999, Mr. Mandich served as Manager,
Commercial Sales for ARCO Products Company, providing leadership for a team of
marketing specialists for petroleum products and petrochemicals to the wholesale
and industrial markets. From 1994 to 1995, Mr. Mandich served as Manager, Sales
and Supply for ARCO Products Company, directing combined domestic and
international marketing, trading and shipping operations for light petroleum
products and refinery feedstocks. Mr. Mandich has a three-year employment
agreement with the Company. See Item 10, "Executive Compensation-Employment
Agreements".
There are no agreements or understandings for any officer or director to
serve as such or resign at the request of another person, other than that on
December 20, 1999, all then-serving directors and officers resigned all
positions in connection with the Reorganization, pursuant to the terms of the
Plan of Reorganization.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file reports of beneficial ownership and
changes in beneficial ownership of the Company's securities with the SEC.
Officers, directors and beneficial owners of more than 10% of the Company's
Common Stock are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms that they file. Based solely on review of the copies
of such forms furnished to the Company, or written representations that no
reports on Form 5 were required, the Company believes that for the period from
January 1, 1999 through December 31, 1999, all officers, directors and greater
than 10% beneficial owners complied with all Section 16(a) filing requirements
applicable to them, except that John Castellucci was late in
28
<PAGE>
filing his Form 3 upon his acquisition of controlling interest in, and becoming
a director and officer of, the Company. That filing has been made as of the date
hereof.
Item 10. Executive Compensation
Cash Compensation
The following table sets forth compensation paid or awarded to the Chief
Executive Officer and all officers of the Company whose compensation exceeded
$100,000 for all services rendered to the Company during the last three fiscal
years:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Name and Principal Position Year Salary Bonus All Other Compensation(1)
- - --------------------------- ---- ------ ----- ----------------------
<S> <C> <C> <C> <C>
John Castellucci 1999 $34,616 $ - $ -
President 1998 $ - $ - $ -
(Chief Executive Officer), 1997 $ - $ - $ -
Chief Financial Officer and
Secretary
</TABLE>
During 1999, Mr. Castellucci was also reimbursed approximately $27,000 for
business expenses he incurred on behalf of the Company.
During the last three years, none of the Company's previously serving
officers or directors received any compensation for their services rendered to
the Company. During the same period, the Company did not accrue compensation
for any such persons pursuant to any agreement or otherwise.
Employment Agreements
The Company has entered into an Employment Contract For Senior Executive
with James R. Mandich (the "Employment Agreement"). The Employment Agreement is
for a term of three years, commencing August 1, 1999. Mr. Mandich is
responsible for marketing and operations, personnel, product pricing, sales
promotion and acquisitions. Mr. Mandich's responsibilities also include a range
of administrative duties and business planning responsibilities. Mr. Mandich is
prohibited from pursuing competitive activities and from misappropriating or
disclosing the Company's trade secrets and confidential information. His
compensation under this agreement is $100,000 in the first year, $150,000 in the
second year, and $175,000 in the third year, of the term. If Mr. Mandich
exercises his option to extend the term of his employment agreement with the
Company, his annual salary will be $175,000, plus a Consumer Price Index
increase. Mr. Mandich is eligible for a bonus in any employment year in which
retail and wholesale sales exceed certain percentages above the previous year's
sales. Mr. Mandich is entitled to 50% of his annual salary if he becomes
permanently disabled for any reason. Mr. Mandich can elect to receive Company
stock in lieu of profit sharing and also receives a variety of employee
benefits. Under the terms of the Employment Agreement, Mr. Mandich
29
<PAGE>
can be terminated for cause and without cause upon his death and three months
after any disability preventing performance of his duties.
No retirement, pension, profit sharing, stock option, deferred compensation
or bonus plan, or other similar plans for the benefit of its employees, has been
adopted by the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned by all directors and officers, and all persons owning
more than five percent (5%) of the Company's Common Stock:
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address of Owner of Common Stock Owned Common Stock Owned
- - ------------------------- --------------------- ------------------
<S> <C> <C>
John Castellucci 11,900,000 85.0%
23805 Stewart Ranch Road
Suite 265
Malibu, CA 90265
Kimberly Lynn Jack 1,100,000 (1) 7.9%
1916 East 50th South
Wichita, KS 67216
Scott A. Jack 1,100,000 (1) 7.9%
1916 East 50th South
Wichita, KS 67216
All Directors and Executive Officers 11,900,000 85.0%
as a Group ((1) individual)
</TABLE>
________________
(1) Kimberly Lynn Jack and Scott A. Jack are husband and wife. Each of them
owns 550,000 shares of the Company's Common Stock in their own name. Until
December 20, 1999, Mr. and Mrs. Scott served as President and
Secretary/Treasurer, respectively, of the Company, and both served as Directors.
Pursuant to the Plan of Reorganization, John Castellucci was issued
11,900,000 shares of the Company's Common Stock on December 20, 1999, resulting
in a change of control of the Company.
30
<PAGE>
Item 12. Certain Relationships and Related Transactions
John Castellucci is associated with other firms involved in a range of
business activities. Consequently, there are potential inherent conflicts of
interest in his acting as an officer and director of the Company.
Mr. Castellucci is now and may in the future become a shareholder,
officer or director of other companies which may be engaged in business
activities similar to those conducted by the Company. Accordingly, additional
direct conflicts of interest may arise in the future with respect to his acting
on behalf of the Company or other entities. Moreover, additional conflicts of
interest may arise with respect to opportunities which come to his attention in
the performance of his duties or otherwise.
In general, officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to, the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement would be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers and directors
are affiliated with both desire to take advantage of an opportunity, then said
officers and directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take advantage of
opportunities if the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy with respect
to such transactions. It should be noted that at the present time Mr.
Castellucci is the sole director of the Company, although it is likely that the
size of the Board of Directors will be increased during 2000.
John Castellucci, President, Chief Financial Officer, Secretary, Director
and the principal shareholder of the Company, is also President, a director and
the principal shareholder of West Star. The Company purchased the Card Lock
Facility from a wholly-owned subsidiary of West Star for $450,000, and leased
the Card Lock Facility back to the seller for $5,000 per month on a one-year
lease. The Company believes that the terms of the purchase and lease of the
Card Lock Facility are at least as favorable as each transaction would have been
between two unaffiliated parties negotiating in arms-length transactions.
During 1999, the Company made advances to John Castellucci in the aggregate
amount of approximately $63,000.
West Star has sued Mr. Castellucci and the Company in connection with
certain matters, including matters relating to the acquisition of the ARCO
Facilities. See Item 3, "Legal Proceedings".
31
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
2.1 Plan and Agreement of Reorganization dated December 10, 1999 by and
between the Company, LLO-Gas, and John Castellucci (1)
3.1 Articles of Incorporation (2)
3.2 Bylaws (2)
*4.1 Form of Common Stock certificate
10.1 3-Year 10 Percent Convertible Note, Number 1 payable to Interlochen
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000
(1)
10.2 3-Year 10 Percent Convertible Note, Number 2 payable to Meridian
Enterprises, Inc. dated as of November 1, 1999 in the sum of $250,000
(1)
10.3 3-Year 10 Percent Convertible Note, Number 3 payable to CRS Financial
Corp., Ltd, dated as of November 1, 1999 in the sum of $250,000 (1)
10.4 3-Year 10 Percent Convertible Note, Number 4 payable to CRS Financial
Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
10.5 3-Year 10 Percent Convertible Note, Number 5 payable to CRS Financial
Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
10.6 3-Year 10 Percent Convertible Note, Number 6 payable to CRS Financial
Corp., Ltd. dated as of November 1, 1999 in the sum of $250,000 (1)
**10.7 Loan and Security Agreement, dated August 2, 1999, between West Star
Energy Group, LLO-Gas, a California corporation and LLO-Gas, and
Capstone Capital, LLC
**10.8 Promissory Note, dated August 2, 1999, between West Star Energy
Group, LLO-Gas, a California corporation and LLO-Gas, and Capstone
Capital, LLC
*10.9 Guarantee, dated August 2, 1999, from John D. Castellucci to
Capstone Capital, LLC
**10.10 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 01860, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
32
<PAGE>
Exhibit No. Description
----------- -----------
**10.11 Agreement For Sale of Business to Contract Dealer for ARCO facility
01860, dated September 2, 1999, between LLO-Gas and ARCO
**10.12 am/pm Mini Market Agreement Part I for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82060 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.13 Contract Dealer Gasoline Agreement for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.14 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82060, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.15 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82060, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.16 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82060, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.17 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05212, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.18 Agreement For Sale of Business to Contract Dealer for ARCO facility
05212, dated September 2, 1999, between LLO-Gas and ARCO
**10.19 Contract Dealer Gasoline Agreement for ARCO facility 82061, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.20 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82061, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.21 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82061, dated September 2,
1999, between LLO-Gas and ARCO Products Company
33
<PAGE>
Exhibit No. Description
----------- -----------
**10.22 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05502, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.23 Agreement For Sale of Business to Contract Dealer for ARCO facility
05502, dated September 2, 1999, between LLO-Gas and ARCO
**10.24 am/pm Mini Market Agreement Part I for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82062 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.25 Contract Dealer Gasoline Agreement for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.26 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82062, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.27 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82062, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.28 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82062, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.29 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05513, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.30 Agreement For Sale of Business to Contract Dealer for ARCO facility
05513, dated September 2, 1999, between LLO-Gas and ARCO
**10.31 am/pm Mini Market Agreement Part I for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82063 and Statement Regarding Finances & Investors, dated
September 2, 1999
34
<PAGE>
Exhibit No. Description
----------- -----------
**10.32 Contract Dealer Gasoline Agreement for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.33 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82063, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.34 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82063, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.35 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82063, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.36 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05972, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.37 Agreement For Sale of Business to Contract Dealer for ARCO facility
05972, dated September 2, 1999, between LLO-Gas and ARCO
**10.38 am/pm Mini Market Agreement Part I for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82060 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.39 Contract Dealer Gasoline Agreement for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.40 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82064, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.41 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82064, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.42 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82064, dated September 2,
1999, between LLO-Gas and ARCO Products Company
35
<PAGE>
Exhibit No. Description
----------- -----------
**10.43 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 06202, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.44 Agreement For Sale of Business to Contract Dealer for ARCO facility
06202, dated September 2, 1999, between LLO-Gas and ARCO
**10.45 am/pm Mini Market Agreement Part I for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82065 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.46 Contract Dealer Gasoline Agreement for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.47 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82065, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.48 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82065, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.49 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82065, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.50 Intercreditor Agreement, dated October 25, 1999, between Capstone
Capital, LLC and Convenience Store Finance Company, LLC
**10.51 Loan and Security Agreement, dated October 26, 1999, made by LLO-Gas
in favor of Convenience Store Finance Company, LLC, together with
related Definitions Schedule, Information Schedule, Specified Market
Schedule, Schedule 2.3 Affiliates, Schedule 2.14 Filing Offices
(U.C.C.-1 Recordings), Schedule 2.23 Subsidiaries, Schedule 2.26
Credit Card Agreements, Schedule 2.31 Sale of Assets, Schedule 2.38
Listing of Local Banks, Exhibit A Secured Promissory Note
(Preliminary Statement), Exhibit B Schedule of Notes and Properties
(Preliminary Statement), Exhibit C Current Filings, Exhibit D
Principal Agreements, Exhibit E Compliance Certificate, Exhibit F
Local Bank Direction Letters and Exhibit H Financing Statements (on
Form UCC-1)
36
<PAGE>
Exhibit No. Description
----------- -----------
*10.52 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $300,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.53 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $585,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.54 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $1,230,000, dated
October 26, 1999, between LLO-Gas and Convenience Store Finance
Company, LLC
*10.55 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $975,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.56 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $2,500,000, dated
October 26, 1999, between LLO-Gas and Convenience Store Finance
Company, LLC
*10.57 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $750,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.58 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $760,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.59 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $700,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
**10.60 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Phoenix, AZ location, dated October 26, 1999,
with LLO-Gas as Trustor, Old Republic Title Company as Trustee and
Convenience Store Finance Company, LLC as Beneficiary
**10.61 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Mammoth Lakes, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
37
<PAGE>
Exhibit No. Description
----------- -----------
**10.62 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Bakersfield, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.63 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Bakersfield, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.64 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Los Angeles, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.65 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Fontana, CA (deed of trust) location, dated
October 26, 1999, with LLO-Gas as Trustor, Old Republic Title
Company as Trustee and Convenience Store Finance Company, LLC as
Beneficiary
**10.66 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for No. Palm Springs, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.67 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Rosemead, CA location, dated October 26, 1999,
with LLO-Gas as Trustor, Old Republic Title Company as Trustee and
Convenience Store Finance Company, LLC as Beneficiary
**10.68 Indemnity and Guaranty Agreement, dated as of October 26, 1999,
between John D. Castellucci and Convenience Store Finance Company,
LLC
*10.69 Note, for $300,00, dated October 28, 1999, between John Castellucci,
LLO-Gas and Time Out, LLC
*10.70 Note, for $300,000, dated October 28, 1999, between LLO-Gas and
Time Out, LLC
*10.71 Straight Note, for $200,000, dated November 23, 1999, between LLO-
Gas and Time Out, LLC
*10.72 Promissory Note, for $150,000, dated December 16, 1999, between LLO-
Gas and John D. Castellucci, on the one hand, and Mehdi Mostaedi, on
the other hand
38
<PAGE>
Exhibit No. Description
----------- -----------
**10.73 Option Agreement, for 979 East Paige Avenue, Tulare, California
93274, dated March 1, 2000, between Carl E. Lindros and John
Castellucci, Manager of LLO-Gas Truck Stop No. 1, LLC
*10.74 Memorandum of Understanding, for the $398,310.86 LLO-Gas obligation
to ARCO, dated March 23, 2000, between LLO-Gas and ARCO
*10.75 Promissory Note, for $398,310.86, dated March 23, 2000, between LLO-
Gas and ARCO
*10.76 Loan Agreement and Promissory Note For Line of Credit, for $300,000,
dated March 23, 2000, between LLO-Gas and ARCO
**10.77 Office Lease, Miramar Professional Park, for 23805 Stuart Ranch
Road, Suite 224, Malibu, California, commencing on October 1, 1999,
between Miramar Investment Co. and West Star Energy Group LLO-Gas,
Inc., a Delaware corporation
*10.78 Employment Contract For Senior Executive, for James Mandich, dated
September 15, 1999, between LLO-Gas and James Mandich
**10.79 Deed of Trust, dated August 2, 1999, made between LLO-Gas and
Capstone Capital, LLC
**10.80 Agreement between PSI and LLO-Gas for operation of the business at
the Fontana Facility
**10.81 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out,
LLC
**10.82 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out,
LLC
**10.83 Modification To Deed of Trust, dated November 23, 1999, between
LLO-Gas and Time Out, LLC
**10.84 Deed of Trust, dated November 23, 1999, between LLO-Gas and Time
Out, LLC
**10.85 Subordination Agreement (undated), between LLO-Gas and Time Out, LLC
*10.86 Note, dated July 19, 1999, between LLO-Gas and John Castellucci and
Interlochen Enterprises, Inc., for $150,000
16.1 Letter dated April 10, 2000 from Barry F. Friedman addressed to the
SEC regarding a change in accountant and confirming the disclosure
contained in the Company's current Report on Form 8-K (3)
*21 List of subsidiaries
*27 Financial Data Schedule
99.1 Lock-up Agreement dated May 3, 1999 by Kimberly Lynn Jack (2)
99.2 Lock-up Agreement dated May 3, 1999 by Scott A. Jack (2)
99.3 Lock-up Agreement dated May 3, 1999 by Debra S. Hackney (2)
___________________________
*Filed herewith
**To be filed by amendment
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on December 10, 1999.
(2) Filed as an exhibit to the Company's General Form for Registration of
Securities of Small Business Issuers on Form 10-SB filed, with the SEC on
June 24, 1999.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on April 11, 2000.
39
<PAGE>
(b) Reports on Form 8-K
On December 13, 1999, the Company filed a Current Report on Form 8-K with
SEC, with respect to the issuance by the Company of the Convertible Debentures
and the execution of the Plan of Reorganization.
On January 4, 2000, the Company filed a Current Report on Form 8-K with the
SEC, with respect to the change in control of the Company as a result of the
Reorganization, the closing of the transactions contemplated by the Plan of
Reorganization and the issuance of the Convertible Debentures. At the time of
filing said Current Report, the Company disclosed that it was impractical to
provide the required financial statements for the acquisition of the acquired
assets. ARCO has informed the Company that audited financial information is not
available for the assets acquired from ARCO and it is contrary to ARCO corporate
policy to allow the Company to audit ARCO's books in connection with the assets
acquired from ARCO. Accordingly, the Company was not able to comply with the
financial statement disclosure requirements of Form 8-K and Regulation S-X.
On April 11, 2000, the Company filed a Current Report on Form 8-K with the
SEC, with respect to the retention of new independent auditors.
40
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DISCOVERY INVESTMENTS, INC.
Date: April 14, 2000 By: /s/ John D. Castellucci
-------------------------------
John D.Castellucci, President
In accordance with the Exchange Act, this Report has been signed below by
the following persons on behalf of the Company and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Capacity Date
- - --------- -------- ----
<S> <C> <C>
/s/ John D. Castellucci President (Principal Executive April 14, 2000
- - ------------------------ Officer), Chief Financial
Officer, Secretary and Director
</TABLE>
41
<PAGE>
DISCOVERY INVESTMENTS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors F-1
Consolidated Balance Sheet at December 31, 1999 F-2
Consolidated Statement of Operations for the year ended December 31, 1999 F-3
Consolidated Statement of Cash Flows for the year ended December 31, 1999 F-4
Consolidated Statement of Shareholders' Deficiency
for the period ended December 31, 1999 F-5
Notes to Consolidated Financial Statements F-6
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Discovery Investments, Inc.
We have audited the accompanying consolidated balance sheet of Discovery
Investments, Inc., as of December 31, 1999, and the related statements of
operations, shareholders' deficiency, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurances about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Discovery Investments, Inc. as of December 31, 1999, and the consolidated
results of the operations, shareholders' deficiency and cash flows for the year
then ended, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, the Company's significant operating
losses and significant capital requirements raise substantial doubt about the
Company's ability to continue as a going concern. The consolidated financial
statements do not contain any adjustments that might result from these
uncertainties.
Hollander, Lumer & Co. LLP
Los Angeles, California
April 12, 2000
F-1
<PAGE>
DISCOVERY INVESTMENTS, INC.
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Accounts receivable $ 1,137
Related party receivable 332,938
Inventories 455,476
Prepaid expenses and other 57,569
Due from officer 63,000
------------
TOTAL CURRENT ASSETS 910,120
------------
PROPERTY AND EQUIPMENT - net 8,562,085
------------
OTHER ASSETS
Restricted cash 112,500
Financing fees 413,629
Franchise fees 443,409
Other Assets 156,845
------------
TOTAL OTHER ASSETS 1,126,383
------------
$ 10,598,588
============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Bank overdraft $ 19,559
Accounts payable 733,320
Notes payable
Cameron Farrer 250,000
Interlochen Enterprises 150,000
M. Mehdi Mostaedi 150,000
CSFC - current portion 223,486
------------
TOTAL NOTES PAYABLE 773,486
------------
TOTAL CURRENT LIABILITIES 1,526,365
------------
Notes payable
LONG-TERM LIABILITIES
Interlochen Enterprises 250,000
Meridian Enterprises 250,000
CRS Corp 1,000,000
CSFC - net of current portion 7,559,052
------------
TOTAL LONG-TERM LIABILITIES 9,059,052
------------
TOTAL LIABILITIES 10,585,417
------------
MINORITY INTEREST 44,230
------------
SHAREHOLDERS' DEFICIENCY
Common Stock, $.001 par value; authorized 25,000,000 shares;
issued and outstanding - 14,000,000 shares 14,000
Additional paid-in capital 438,100
Accumulated deficit (483,159)
------------
TOTAL STOCKHOLDERS' DEFICIENCY (31,059)
------------
$ 10,598,588
============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-2
<PAGE>
DISCOVERY INVESTMENTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
SALES $3,680,003
COST OF SALES 3,149,535
----------
GROSS PROFIT 530,468
----------
OPERATING EXPENSES
Direct operating expense 371,220
Royalties 20,724
Marketing 4,733
General and administrative 283,591
Acquisition cost 186,032
Depreciation and amortization 57,448
----------
TOTAL OPERATING EXPENSES 923,747
----------
INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE) (393,280)
----------
OTHER INCOME (EXPENSE)
Misc income (6,936)
Interest expense (80,912)
Interest income 68
----------
TOTAL OTHER INCOME (EXPENSE) (87,780)
----------
NET INCOME (LOSS) $ (481,059)
==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 3,091,666
==========
EARNINGS PER SHARE $ (0.16)
==========
See accompanying Notes to Consolidated Financial Statements
F-3
<PAGE>
DISCOVERY INVESTMENTS, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIENCY
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional Accumulated
-----------------------------
Shares Amount Paid in Capital Deficit Total
----------------------------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, April 1, 1999 2,100,000 $ 2,100 $ - $ (2,100) $ -
Issuance of stock regarding merger 11,900,000 11,900 (11,900) -
Investment in a subsidiary company 450,000 450,000
Net loss (481,059) (481,059)
------------ ---------- ----------- ------------- ------------
Balance, December 31, 1999 14,000,000 $ 14,000 $ 438,100 $ (483,159) $ (31,059)
============ ========== =========== ============= ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-4
<PAGE>
DISCOVERY INVESTMENTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net Loss $ (481,059)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 50,857
Amortization 6,591
Changes in operating assets and liabilities:
Receivables (1,137)
Inventories (455,476)
Prepaid expenses (57,569)
Restricted cash (112,500)
Franchise fees (443,409)
Other assets (156,845)
Accounts payable and accrued expense 733,320
----------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES (917,227)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to officer (63,000)
Advances to affiliate (332,938)
Acquisition of LLO-Gas, Inc. (420,219)
Property, plant, and equipment additions (8,612,943)
----------------
NET CASH USED IN INVESTING ACTIVITIES (9,429,100)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution from minority interest of consolidated subsidiary 44,230
Proceeds from notes payable 9,832,538
Proceed from sale of subsidiary's common stock 450,000
Net increase in cash overdraft 19,559
----------------
NET CASH PROVIDED FROM FINANCING ACTIVITIES $10,346,327
----------------
INCREASE (DECREASE) IN CASH -
----------------
CASH AND CASH EQUIVALENTS
Beginning of year -
End of year -
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-5
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
Discovery Investments, Inc. (the "Company") was organized September 10, 1996,
under the laws of the State of Nevada as Discovery Investments, Inc.
On December 10, 1999, the Company entered into a Plan and Agreement of
Reorganization with LLO-Gas, Inc., a Delaware Corporation and John Castellucci.
The Plan and Agreement of Reorganization contemplates that the Company will
acquire all of the issued and outstanding shares of stock of LLO-Gas, Inc. in
exchange for 11,900,000 shares of the Company.
On December 20, 1999 the Company issued to John Castellucci 11,900,00 shares of
the Company's common stock for all of the issued and outstanding shares owned of
record and beneficially of LLO-Gas, Inc.
For accounting purposes, the acquisition of LLO-Gas, Inc. by Discovery
Investments, Inc. has been treated as a reverse acquisition. LLO-Gas, Inc. is
considered as the acquirer. The financial statements are those of LLO-Gas, Inc.
and its operations since the acquisition date of October 26, 1999. All
information in the accompanying financial statements has been restated to
reflect this transaction. Discovery Investments has changed its fiscal year-end
to December 31 to conform to the fiscal year of LLO-Gas, Inc.
LLO-Gas, Inc. owns one (1) "card lock" gasoline and diesel dispensing facility
and owns seven (7) ARCO am/pm gas station/convenience stores. Six of the
franchised facilities were recently acquired directly from Atlantic Richfield
Company, a Delaware corporation, and one of the franchised facilities was
acquired from an independent owner operator. The acquisition of all eight (8)
facilities included the operating business, assets, and real estate. The total
purchase price paid by LLO-Gas, Inc. on or about October 26, 1999 was the
approximate sum of $9,500,000. Credit Suisse/CSFC provided secured financing in
the approximate sum of $7,800,000 to LLO-Gas, Inc. to complete the transaction.
(See Note 10) The facility acquired from the independent owner operator required
LLO-Gas, Inc. to deliver to the seller subordinated secured notes for $800,000.
(See Note 12) The purchase price paid to the independent owner operator,
included in the $9,500,000 referred to above was the total sum of $3,200,000.
The balance of the funds were provided by unsecured loans from third parties
(See Note 4) or from cash contributions or loans to LLO-Gas, Inc. by its
shareholder. The closing occurred on December 20, 1999.
NOTE 2 - GOING CONCERN
Limited Operating History - The Company is in the start-up phase of its business
- - -------------------------
operations, having only begun operations in October 1999. There can be no
assurance that it can operate its business profitably. Management has
significant experience owning and managing gas stations/convenience stores,
meaning that the Company is largely dependent upon senior management to provide
the expertise necessary to run its business. The Company does not currently have
key person insurance on its business, financial condition, nor results of
operations.
Limited Financial Resources - The Company does not have sufficient assets to
- - ---------------------------
expand its business operations at the present time beyond its current operations
or to exercise the Option on the real property in Tulare, California. Any
expansion of the number of gas station/convenience stores or card lock
facilities, or any diversification of its business, would require substantial
additional financial resources. The Company has no understandings or agreements
with any party to provide any such required financing. There can be no guarantee
that it would be able to negotiate any such financing in the future, or
negotiate any such financing on favorable terms.
LLO-Gas, Inc. has incurred significant operating losses since its inception,
resulting in an accumulated deficit of $483,159 at December 31, 1999.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The financial statements do not
include any adjustments relating to the recoverability of the recorded assets or
the classification of the liabilities that might be necessary should the Company
be unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
F-6
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
Principles of Consolidation - The consolidated financial statements include the
- - ---------------------------
accounts of the company and of its wholly owned subsidiary, LLO-Gas, Inc. All
significant inter-company transactions and balances have been eliminated in
consolidation.
Use of Estimates - The preparation of financial statements in conformity with
- - -----------------
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and Equipment - Property and equipment are stated at cost.
- - ----------------------
Depreciation is computed on the straight-line method over the estimated useful
lives of the assets, which range from five to seven years. Leasehold
improvements are amortized on the straight-line method over the term of the
lease or the useful life of the asset, whichever is shorter.
Property and equipment are reviewed for impairment whenever events or
circumstances indicate that the assets not discounted expected cash flows are
not sufficient to recover its carry amount. The Company measures an impairment
loss by comparing the fair value of the asset to its carrying amount. Fair value
of an asset is calculated as the present value of expected future cash flows.
Inventories - Inventories are stated at lower of cost (average) or market.
- - -----------
Stock-Based Compensation - The Company periodically issues common stock options
- - ------------------------
and common stock purchase warrants to employees and non-employees in non-capital
raising transactions for services rendered and to be rendered, and as financing
costs. Accounts for stock-based compensation plans utilizing the intrinsic value
method. Accordingly, compensation cost for stock options is measured as the
excess, if any, of the fair market price of the Company's common stock at the
date of grant above the amount an employee must pay to acquire the common stock.
Income taxes - The Company accounts for income taxes utilizing the assets and
- - ------------
liability approach, which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences or temporary differences
between the basis of assets and liabilities for financial reporting purposes and
tax purposes.
Net Loss Per Common Share - Basic earnings per share excludes the dilutive
- - -------------------------
effects of options and convertible securities, if any, and is computed by
dividing net income (loss) available to common stockholders by the weighed
average number of common shares outstanding during the period. Diluted earnings
per share is computed assuming the exercise or conversion of common equivalent
shares, if dilutive, consisting or unissued shares under stock options, warrants
and debt instruments.
Basic and diluted earnings per share are the same for all periods presented.
The Company operates in one business segment.
NOTE 4 - CONVERTIBLE DEBENTURES
On December 10, 1999, the Company, subject to the closing of the Plan and
Agreement of Reorganization, the Company issued six (6) three-year 10 Percent
Convertible Debentures to various parties in the aggregate amount of
$1,500,000, dated as of November 1, 1999 which closed on December 20, 1999. The
terms and conditions are summarized as follows:
F-7
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
(1) All debentures of this issue rank equally and ratably without priority over
one another.
(2) Provided that the Registrant becomes obligated, the holder or holders of
this Debenture may at any time prior to the maturity hereof (except that,
if the Registrant has called the debenture for redemption, the right to
convert shall terminate at the close of business on the second business day
prior to the day fixed as the date for such redemption), convert the
principal amount hereof into the Registrant's common stock at the
conversion ratio of $5 of debenture principal for one share of common
stock. To convert the debenture, the holder or holders hereof must
surrender the same at the office of the Registrant, together with a written
instrument of transfer in a form satisfactory to the Registrant, properly
completed and executed and with a written notice of conversion.
(3) If the Registrant at any time pays to the holders of its common stock a
dividend in common stock, the number of shares of common stock issuable
upon the conversion of the debenture shall be proportionally increased,
effective at the close of business on the recorded date for determination
of the holders of the common stock entitled to the dividend.
(4) If the Registrant at any time subdivides or combines in a larger or smaller
number of share its outstanding shares of common stock, then the number of
shares of common stock issuable upon the conversion of the debenture shall
be proportionally increased in the case of a subdivision and decrease in
the case of a combination, effective in either case at the close of
business on the date that the subdivision or combination becomes effective.
(5) If the Registrant is recapitalized, consolidate with or merged into any
other corporation, or sells or conveys to any other corporation all or
substantially all of its property as an entity, provision shall be made as
part of the terms of the recapitalization consolidation merger, sale, or
conveyance so that the holder or holders of the debenture may receive, in
lieu of the common stock otherwise issuable to them upon conversion hereof,
at the same conversion ratio, the same kind and amount of securities or
assets as may be distributable upon the recapitalization, consolidation,
merger, sale, or conveyance with respect to the common stock.
(6) In lieu of issuing any fraction of a share upon the conversion of the
debenture, the Registrant shall pay to the holder hereof for any fraction
of a share otherwise issuable upon the conversion cash equal to the same
fraction of the ten current per share market price of the common stock.
(7) In the event Registrant fails to make any payment of principal and
interest, said failure to pay shall constitute a default under the terms of
the debenture and, subject to the terms and conditions contained in the
debenture, the entire unpaid principal and interest shall be due an
payable. No debenture holder may institute any suit or proceeding for the
enforcement of the payment of principal or interest unless the holders of
more than 25 percent in amount of all outstanding debentures of the issue
join in the suit or proceeding. In the event the Registrant and the
shareholders of LLO-Gas, Inc. do not enter into a business combination
which closes on or before December 31, 1999, an individual debenture holder
may institute any suit or proceeding in the event of default.
(8) Registrant and LLO-Gas, Inc. may at any time prepay in whole or in part,
the principal amount, plus accrued interest lot he date of prepayment, of
all outstanding debentures of this issue, upon 30 days written notice by
certified or registered mail to the registered owners of all outstanding
debentures.
(9) Except for debenture number 1 and 2, for which John Castellucci is
obligated for an amount equal to $150,000, the debenture is the obligation
of Registrant and LLO-Gas, Inc. only, and no recourse shall be had for the
payment of any principal or interest thereof against any
F-8
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
shareholder, officer or director of Registrant and LLO-Gas, Inc., either
directly or through Registrant and LLO-Gas, Inc., by virtue of any
statute for the enforcement of any assessment or otherwise.
(a) Three Year 10 Percent Convertible Note Number 1 payable to
Interlochen Enterprises, Inc. dated as of November 1, 1999 in the
sum of $250,000.
(b) Three Year 10 Percent Convertible Note Number 2 payable to
Meridian Enterprises, Inc. dated as of November 1, 1999 in the sum
of $250,000.
(c) Three Year 10 Percent Convertible Note Number 3 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000.
(d) Three Year 10 Percent Convertible Note Number 4 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000.
(e) Three Year 10 Percent Convertible Note Number 5 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000
(f) Three Year 10 Percent Convertible Note Number 6 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000.
NOTE 5 - OTHER SHORT TERM NOTES
Cameron Farrer loaned the Company $250,000. The Company and John Castellucci
jointly executed a promissory note dated February 16, 1999 (the "Farrer Note")
in the amount of $250,000. The Farrer Note bears interest at the rate of 10% per
annum and was due and payable upon demand.
On July 19, 1999 The Company and John Castellucci borrowed from Interlochen
Enterprises, Inc. $150,000 evidenced by an unsecured Note due July 18, 2000.
All unpaid interest due January 1, 2000 and monthly thereafter
M. Mehdi Mostaedi loaned the Company $150,000. The Company and John Castellucci
jointly executed a promissory note dated December 16, 1999 (the "Mostaedi Note")
in the amount of $150,000. The Mostaedi Note bears interest at the rate of 9%
per annum and was due and payable as to principal and interest on February 16,
2000. The Mostaedi Note is secured with a pledge of 2,000,000 shares of the
Company's Common Stock owned by Mr. Castellucci pursuant to a Pledge Agreement
dated December 16, 1999 between Messrs. Castellucci and Mostaedi. Mr. Mostaedi
has orally extended the maturity date of the loan until the Company raises
additional capital.
NOTE 6 - ADVANCES FROM AFFILIATE/RELATED PARTY TRANSACTIONS
In October 1999, the Company received $450,000 in advances from its 90% owned
subsidiary, LLO-Gas Truck Stop No. 1, LLC, a California limited liability
company ("Truck Stop LLC") and paid $23,402 on its behalf. This is deemed to be
a demand loan with interest accruing at 10% per annum.
LLO-Gas acquired the Card Lock Facility from a wholly owned subsidiary of West
Star Energy Group, Inc. ("West Star") on October 26, 1999 for $450,000. The
purchase price was paid for by LLO-Gas with proceeds from the CSFC Loan in the
amount of $300,000 with the balance coming form third party loans to the
Company. LLO-Gas has leased the Card Lock Facility to the seller for one year at
a rent of $5,000 per month. John Castellucci is President, director, and the
majority shareholder of West Star.
NOTE 7 - LITIGATION
Except as set forth below, the Company is not a party to any material pending
legal proceedings other than ordinary routine litigation incidental to its
business.
On February 29, 2000, West Star sued John Castellucci, LLO-Gas, and DCIV, in the
Superior Court of the State of California, County of Los Angeles (Case No.
BC225568). Mr. Castellucci is President, Chief Financial Officer, Secretary,
director, and the principal shareholder of the Company. He is also the
President, director, and the principal shareholder of West Star. West Star,
through its Board of Directors (other than Mr. Castellucci), alleges that Mr.
Castellucci breached his fiduciary duty to West Star and engaged in a series of
unauthorized transactions for his personal benefit. The Plaintiff also alleges
that Mr.
F-9
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
Castellucci made certain fraudulent statements to the West Star's Board of
Directors, which induced them not to exercise a West Star business opportunity
to acquire the ARCO Facilities for itself and to consent to the acquisition of
the ARCO Facilities by LLO-Gas.
West Star seeks general and special damages of at least $3.5 million against Mr.
Castellucci. West Star seeks the imposition of a constructive trust on the ARCO
Facilities and an order compelling the Company to return the ARCO Facilities and
all proceeds therefrom, to West Star. West Star also seeks damages against Mr.
Castellucci and the Company of at least $3.5 million for unfair competition. In
addition, West Star seeks an accounting from the defendants. West Star also
seeks to recover the costs of the suit, prejudgment interest, attorneys' fees,
and such other relief as the court may deem just and proper.
The Company has not yet filed an answer to this complaint.
The parties have been engaged in meaningful settlement negotiations.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company operates am/pm Mini Markets under multi-agreements with ARCO on a
non-exclusive right and license to use the trade secrets and know-how regarding
operations of am/pm mini markets. These agreements are for a ten (10) year
period renewal at the option of the Company at the then prevailing initial
royalty fee and include finite requirements regarding all aspects of operations,
advertising and marketing, personnel and accounting. Under terms of the
agreement the Company pays an initial royalty fee and monthly royalty fee of 5%
and advertising and promotional fee of 4.5% of the monthly gross sales as
defined in the agreement.
In September the Company entered into a Memorandum of Contract Dealer Gasoline
Agreement with ARCO Products Company, a division of Atlantic Richfield Company
and an amendment to contract dealer gasoline agreement (this "Agreement"). This
in addition to other condition set forth in the Agreement contains the
following:
(1) Franchiser may terminate the franchise and franchise relationship only
in accordance with the Petroleum Marketing Practices Act, Public Law
95-297, U.S.C. 2801, et seq. (the "Act").
(2) Franchise may terminate the franchise at any time with cause if a
right to do so is provided in the agreement, subject to any minimum
notice requirements as contained in the Agreement.
(3) Franchiser may elect to renew or not renew the franchise and the
franchise relationship in accordance with the Act or the terms and
conditions in the Agreement. The franchisee and franchise relationship
may non-renewed at the discretion of the Franchisee.
(4) Franchisee is not required by Agreement or by other device or practice
to purchase from Franchiser or a designee of Franchiser any services,
supplies, products, fixtures or other goods relating to establishment
or operation of the franchise business, except for ARCO motor vehicle
fuels and other ARCO petroleum products.
(5) Franchisee receives no exclusive areas, territories or markets from
Franchiser.
Recent Developments - The Company has recently been advised by ARCO that it is
- - -------------------
ARCO's position that the Company breached the terms of the Supporting Agreements
and may have breached the First Refusal Agreements when the Company engaged in
Reorganization, in that the Company was required to obtain ARCO's written
permission to transfer the ARCO Facility franchises. The Company's position is
that since LLO-Gas remained the owner of all the ARCO Facilities after the
Reorganization and John Castellucci owns more than 75% of the equity in LLO-Gas'
parent, DCIV, none of the agreements with ARCO was breached. The Company and
ARCO are engaged in discussions to resolve the matter; however, the outcome of
those discussions cannot be predicted at present. If the Company and ARCO are
unable to resolve the matter, ARCO could seek to declare the ARCO Facility
franchises terminated. Such action would have an immediate and material adverse
affect on the Company's business, financial condition, results of operations,
and prospects.
F-10
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
The Company has been advised by Credit Suisse/CSFC that there may be a breach
under the Deeds, as a result of the Reorganization, which, based on cross-
default provisions, would cause a default under the CSFC Loan
Truck Stop Option - On March 1, 2000, Carl Lindros granted Truck Stop LLC
- - -----------------
a one-year option (the "Option") to purchase 38 acres of unimproved real estate
in Tulare, California (the "Tulare Property"), on which to build a truck stop,
for a purchase price of approximately $1,182,953. The Company owns 90% of Truck
Stop LLC and 10% is owned by an individual, who purchased his interest from
Truck Stop LLC for $500,000 in October 1999.
Office Lease - Commencing on October 1, 1999, the Company entered into
- - ------------
a three year lease for office space for $3,810 per month in the first year,
$4,326 per month in the second year, and $5,645 per month in the third year.
Employment Agreements - The Company has entered into an Employment Contract for
- - ---------------------
Senior Executive with James R. Mandich (the "Employment Agreement"). The
Employment Agreement is for a term of three years, commencing August 1, 1999.
Mr. Mandich is responsible for marketing and operations, personnel, product
pricing, sales promotion, and acquisitions. His responsibilities also include a
range of administrative duties and business planning. Mr. Mandich is prohibited
from pursuing competitive activities and from misappropriating or disclosing the
Company's trade secrets and confidential information. His compensation under
this agreement is $100,000 in the first year, $150,000 in the second year, and
$175,000 in the third year of the term. If Mr. Mandich exercises his option to
extend the term of his employment agreement with the Company, his annual salary
will be $175,000 plus the Consumer Price Index increases. Mr. Mandich is
eligible for a bonus in any employment year in which retail and wholesale sales
exceed certain percentages above the previous year's sales. Mr. Mandich is
entitled to 50% of his annual salary if he becomes a permanently disabled for
any reason. Mr. Mandich can elect to receive the Company's stock in lieu of
profit sharing. Mr. Mandich also receives three weeks vacation, ten sick days
per year, automobile allowance, and life, medical and dental insurance coverage.
Under the terms of the Employment agreement, Mr. Mandich can be terminated for
cause and without cause upon this death and three months after any disability
preventing performance of his duties.
NOTE 9 - RISK FACTORS
Fluctuations in Gasoline Supply, Prices, and Demand - Gasoline sales comprise,
- - ---------------------------------------------------
and are expected to continue to comprise a substantial portion of the Company's
revenues. Therefore, interruptions in the supply of gasoline and increases in
the cost of gasoline could adversely affect its business, financial condition,
or results of operations. Gasoline profit margins have a significant impact on
its earnings. Although the Company has a long-term product purchase and supply
agreement with ARCO, the following factors are beyond its control and could
affect the volume of gasoline it sells and the gasoline profit margins it
achieves:
. the worldwide supply and demand for gasoline;
. any volatility in the wholesale gasoline market; and
. the pricing policies of competitors in local markets
In addition, because gasoline sales generate customer traffic to the Company's
stores, decreases in gasoline sales could impact merchandise sales.
Supply Agreements - The Company makes purchases for all of its convenience
- - -----------------
stores through local distributors. None of such arrangements are pursuant to
written agreements. To date, the Company has not experienced any difficulties in
obtaining food and no-food items for its convenience stores.
F-11
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
Changes in Tobacco Legislation, Pricing, and Demand - Future tobacco legislation
- - ---------------------------------------------------
and increased pricing by cigarette manufacturers could have an impact on sales
and margins in the tobacco category. If the Company is unable to pass along
price increases of tobacco products to its customers, its business, financial
condition, and results of operations could be materially adversely affected
because tobacco sales comprise an important part of its revenues. National and
local campaigns to discourage smoking, as well as increases in taxes on
cigarettes and other tobacco products, may have a material impact on the
Company's sales of tobacco products. The consumer price index for 1999 on
tobacco products increased approximately 9%. In addition, major cigarette
manufacturers have increased the wholesale prices and then offered rebates to
offset the price increases. The Company cannot assure that major cigarette
manufacturers will continue to offer these rebates or that any resulting
increase in prices to customers will not have a material adverse effect on its
cigarette sales and gross profit dollars. A reduction in the amount of
cigarettes sold by the Company could have a material adverse affect on its
business, financial condition, and results of operations. In addition, federal
regulations now require retailers to have procedures in place to determine the
age of persons wanting to purchase tobacco products. We anticipate that in the
future there may be additional restrictions on the sale of tobacco products.
Seasonal Business - Unfavorable weather conditions could adversely affect the
- - -----------------
Company's business, financial condition, or results of operations. During the
spring and summer vacation season, customers are more likely to purchase higher
profit margin items at the Company's stores, such as fast foods, fountain drinks
and other beverages, and more gasoline at its gasoline locations. As a result,
the Company typically generates higher revenues and gross margins during warmer
weather months.
Extensive and Changing Environmental Regulation - The Company's operations are
- - -----------------------------------------------
subject to various federal, state and local laws and regulations relating to the
environment. Certain of the more significant federal laws are the Resource
Conservation and Recovery Act of 1976, the Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, and the Clean Air Act. The implementation of these
laws by the United States Environmental Protection Agency ("EPA") and the states
will continue to affect the Company's operations by imposing increased operating
and maintenance costs and capital expenditures required for compliance.
Additionally, the procedural provisions of these laws can result in increased
lead times and costs for new facilities.
Violation of any federal environmental statutes or regulations or orders issued
thereunder, as well as relevant state and local laws and regulations could
result in civil or criminal enforcement actions.
The EPA enacted regulations effective January 1, 1988, governing underground
storage tanks ("UST"). These regulations required the upgrade of every UST
location in the United States and included the replacement of tanks and piping
and the installation of lead detection, inventory monitoring and overfill
protection equipment. The upgrade timetable included a 10-year phase in schedule
with all work to be completed by December 28, 1998.
ARCO has guaranteed all EPA matters prior to the acquisition of the ARCO
Facilities. All ARCO Facilities have double wall tanks and pipes. The company
believes that all current EPA standards have been met at the ARCO Facilities.
A Phase One study was completed for the Card Lock Facility and concluded that no
remediation was required.
All owners and operators of USTs in California and Arizona are required to
participate in the California and Arizona UST Pollution Fund by paying a fee
based on gallons put through each tank to fund the State's $1,000,000 Pollution
Cleanup Program. The Excise Tax Board collects these monies and the California
Department of Water Resources administers the UST Program.
For each of the Locations, LLO-Gas has executed a Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions (the
"Declaration"). The Declaration is a recordable document,
F-12
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
which imposes certain restrictions on the real estate conveyed by ARCO to LLO-
Gas pursuant to the Agreements for Sale of Real Estate to Contract Dealer. Each
Declaration grants to ARCO an unrestricted right to enter onto the real estate
purchased and perform remediation activities concerning petroleum products
released into the soil or groundwater at the properties during gasoline station
operation conducted on the Locations by ARCO and its affiliates. Pursuant to
these Declarations, ARCO has the right, without limitation, to: (i) perform soil
and groundwater investigations; (ii) install, operate monitor, maintain, repair,
close and remove equipment, including, piping and wells; (iii) have service
trucks on the locations; and (iv) cut and remove portions of the asphalt and
concrete, subject to a requirement to patch any cut or removed aggregate. ARCO
is not required to pay any rent or other compensation to LLO-Gas for the right
to enter or occupy any of the properties. Furthermore, each Declaration contains
additional property disclosures such as a further statement regarding the "As-
Is" sale and purchase of the Locations, an affirmative statement regarding the
presence of pre-closing contamination, a hazardous materials waiver, a twenty-
five year excavation and environmental remediation restriction, as well as
general miscellaneous contract provisions.
The Company has been advised that all future environmental risks are insurable
from AAA-rated insurance companies at a rate of $1,000 per year per unit. The
Company has such insurance in place for each of its facilities.
Numerous Local Regulations - In certain areas where stores are located, state
- - --------------------------
and/or local laws limit the hours of operation or sale of certain products, most
significantly alcoholic beverages, tobacco products, possible inhalants and
lottery tickets. State and local regulatory agencies have the authority to
approve, revoke, suspend or deny applications for and renewals of permits and
licenses relating to the sale of these products or to seek other remedies.
Typically, such agencies have the discretion to determine if a licensee is
qualified to be licensed, and denials may be based on past noncompliance with
applicable statutes and regulations, as well as on the involvement of the
licensee in criminal proceedings or activities which in such agencies'
discretion are determined to adversely reflect on the licensee's qualifications.
Such regulation is subject to legislative and administrative change from time to
time.
NOTE 10 - SECURED PROMISSORY NOTE
In connection with the purchase of the am/pm Mini Markets the Company entered
into the Loan and Security Agreement (the "Loan Agreement") with Convenience
Store Finance Company, LLC dated October 26, 1999.
The Secured Notes consist of eight (8) notes secured by various commercial real
estate as described the Loan Agreement with interest at 10.75% over 180 months
due November 11, 2014 and aggregate monthly payments including interest and
principal of $88,194.02
The following describes such loan agreement:
LOAN AND SECURITY AGREEMENT (the "Loan Agreement") made by LLO-GAS, INC., as
borrower ("Borrower") in favor of CONVENIENCE STORE FINANCING COMPANY, LLC
("CSFC"), as secured party, together with its successors and assigns ("Secured
Party").
The Company requested that CSFC make eight (8) loans to The Company in the
aggregate principal amount of SEVEN MILLION EIGHT HUNDRED THOUSAND DOLLARS
($7,800,000.00) (collectively, the "Loan") and the Company has agreed to
evidence such Loan by executing and delivering to CSFC one or more Secured
Promissory Notes, and in the original principal amounts set forth in an Exhibit
to (each "Note", and collectively, the "Notes") made payable to CSFC in said
original principal amounts and for the term and on the terms and conditions set
forth therein. The Notes shall be secured by one or more deeds of trust,
mortgages and/or deeds to secure debt on the commercial properties (each a
"Property" and collectively the "Properties") with the addresses and in the
counties and states set forth in an Exhibit. In
F-13
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
addition, and as a condition to the making of the Loan, CSFC has requested, and
the Company has agreed among other things, to grant to CSFC a security interest
in the collateral.
Pursuant to that certain Security Agreement (the "Subordinate Loan Agreement")
dated as of August 1, 1999 by and between LLO-Gas, Inc. and Capstone
Capital, LLC ("Capstone"), Capstone has or may provide certain loans to LLO in
the principal amount of $450,000 (See Note 12).
Pursuant to that certain Intercreditor Agreement (the "Intercreditor Agreement")
dated as of October 25, 1999 by and between Capstone and CSFC, CSFC will
allow Capstone to take a senior security interest only in the Petroleum
Inventory (See Note 13).
In consideration for the forgoing LLC made certain representation and warrants
and granted the following grant:
GRANT - To secure the Obligations, the Company hereby pledges,
assigns, transfers and grants to Secured Party a continuing
security interest in and Lien on and right of set off with
respect to the following property and assets, whether now owned
and existing or hereafter acquired or arising (collectively
"Collateral"): all Goods (including Inventory and Equipment),
General Intangibles (except as provided below), Accounts,
certificates of title, fixtures, money, instruments, securities,
investment property, documents, chattel paper, credit balances,
deposits, deposit accounts, letters of credit, bankers'
acceptances, guaranties, credits, claims, chooses in action,
demands, and all present and future Liens, security interests,
rights, insurance, remedies, title and interest in, to and in
respect of Accounts and other property of every kind and
description and all other personal property, now or hereafter
owned, acquired, existing, arising, held, used, sold or consumed
in connection with Borrower's Business or Property and any other
property, rights and interests of 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 Secured party or any of its agents or representatives,
for any purpose (including, without limitation, any Replacement
Collateral): all additions and accessions thereto, substitutions
therefor and replacements and improvements of or to any or all of
the foregoing, all interest, income, dividends, distributions and
earnings thereon or other monies or revenues derived therefrom,
and all moneys which may become payable under any policy insuring
any of the foregoing or otherwise required to be maintained
hereunder (including the return or unearned premiums)
("Collateral Revenues"); and all products and proceeds of the
foregoing. In the event and to the extent that at the request of
the Secured Party under Section 2.13 of the agreement LLO hereof
LLO shall pledge and grant a security interest in its right,
title and interest in and to the Principal Agreements (as
hereinafter defined), then LLO shall be deemed to hereby grant a
security interest in all of its right, title and interest in and
to the Principal Agreements, and all proceeds thereof. Without
limiting the generality of the foregoing, this Loan Agreement
also secures the payment of all amounts which constitute part of
the Obligations and would be owed by LLO 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 LLO.
The current and long term portion of the loan at December 31, 1999 are $213,389
and $7,559,052, respectively.
NOTE 11 - LETTER OF CREDIT
Capstone Capital, LLC ("Capstone") has issued to LLO-Gas a revolving line of
credit pursuant to a Promissory Note and Security Agreement, both dated August
2, 1999 (the "Capstone Credit Facility"). (See Note 13) Under the terms of the
Capstone Credit Facility, Capstone will extend up to $900,000 to LLO-Gas for its
business operations. There is a variable interest rate on the Capstone Credit
Facility at Chase. As of December 31, 1999 there is $100,000 of unapplied
credit facility.
F-14
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
Manhattan Bank Prime Rate, plus four percent. The default rate of interest on
the Capstone Credit Facility is twenty-four percent. Draws against the Capstone
Credit Facility are due on their maturity date that is three days from the date
of each cash advance or draw under any letter of credit issued by Capstone on
behalf of LLO-Gas.
LLO-Gas has three outstanding draws against the Capstone Credit Facility. There
is (i) a $450,000 draw for the letter of credit securing the ARCO Note (See Note
14), (ii) a $150,000 draw for the Second Capstone Letter of Credit securing the
Second ARCO Note; and (iii) a $200,000 draw for the letter of credit securing
the $800,000 obligation to Time Out, LLC in connection with the acquisition of
the ARCO am/pm mini-mart/service station in Fontana, California, (See Note 12).
Approximately $100,000 of the Capstone Credit Facility is available for use by
LLO-Gas .
John Castellucci has executed a personal guarantee in connection with the
Capstone Credit Facility.
NOTE 12 - SUBORDINATED SECURED NOTES PURCHASE OF FACILITY
The ARCO Facility in Fontana, California was acquired from Time Out, LLC, the
independent owner operator, for approximately $3,200,000. Of this amount
$2,400,000 was for the real property and equipment, $800,000 was for the
business, franchise, and inventory of the am/pm mini-mart. The $2,400,000 came
from CSFC Loan and the $800,000 was paid in the form of a debenture payable to
the seller. The closing of the sale of the real property and equipment occurred
on October 26, 1999 and the closing of the sale of the business and franchise
occurred on January 12, 2000.
In connection with the acquisition of the Fontana Facility, the Company issued
three promissory notes payable to Time Out, the seller. One note, dated November
23, 1999, executed on January 12, 2000, is in the principal amount of $200,000,
bears interest at 8% per annum and is payable as to interest only in monthly
installments of $10,000 over a six-month period, at the end of which the entire
unpaid principal balance, plus any accrued and unpaid interest, is due and
payable. This note matures on May 23, 2000. This note is secured by a second
deed of trust in favor of Capstone, which issued a letter of credit to Time Out
to guarantee monthly interest installments and the balloon payment of principal
upon maturity of the note.
There are also two additional promissory notes, executed on January 12, 2000,
each in the principal amount of $300,000, with substantially similar terms to
each other. These notes bear interest at 8% per period and are payable as to
interest only in monthly installments of $2,000 over a 60-month period, at the
end of which the entire unpaid principal balance, plus any accrued and unpaid
interest is due and payable. The first of these two notes has also been executed
by John Castellucci, and is secured by a third deed of trust on the Fontana
Facility. The second of these two notes is an obligation of the Company only,
and is secured by a fourth deed of trust on the Fontana Facility.
NOTE 13 - INTERCREDITOR AGREEMENT/CAPSTONE CREDIT FACILITY
On October 25, 1999 the Company entered into a financing arrangement with
Capstone Capital, LLC ("Capstone") whereby Capstone will provide a letter of
credit in the amount of $450,000 to ARCO for the payable of the company for its
purchases from ARCO. The petroleum delivered to the Company's facilities secured
the Letter of Credit. These security arrangements were defined in the following
INTERCREDITOR AGREEMENT:
This INTERCREDITOR AGREEMENT (this "Agreement") is made as of the 25th day
of October, 1999, by and between CAPSTONE CAPITAL, LLC, ("Subordinate
Lender"), and CONVENIENCE STORE FINANCE COMPANY, LLC, ("Senior Lender").
RECITALS:
A. Pursuant to that certain Loan and Security Agreement dated October 25,
1999 by and between LLO-Gas, Inc., a Delaware corporation ("Borrower")
and Senior Lender (the "Senior Loan
F-15
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
Agreement"), Senior Lender is about to make a loan to Borrower in the
amount of SEVEN MILLION EIGHT HUNDRED THOUSAND DOLLARS ($7,800,000)
(the "Senior Loan"). The Senior Loan is secured by, among other
things, the "Collateral" (as defined in the Senior Loan Agreement, and
as described on Exhibit A attached and located at each of the
properties listed on Exhibit B attached hereto (each a "Property").
The Collateral given by Borrower as security for the Senior Loan
includes, without limitation, all inventories of refined petroleum
products and the proceeds thereof of Borrower located at each Property
(the "Petroleum Inventory").
B. Pursuant to that certain Security Agreement dated October 20, 1999 by
and between the Borrower and Subordinate Lender (the "Subordinate Loan
Agreement"). Subordinate Lender has or may provide certain loans to
Borrower in the principal amount of $450,000 (the "Subordinate Loan").
C. Subject to the terms and conditions of this Agreement, Senior Lender
will allow Subordinate Lender to take a senior security interest only
in the Petroleum Inventory.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Senior Lender and Subordinate
Lender agree as follows:
(1) Priority of Interests in Petroleum Inventory - Subject to the terms
--------------------------------------------
and conditions of this Agreement, Subordinate Lender and Senior Lender
agree that the interest of Senior Lender in and to the Petroleum
Inventory only shall be subordinate to the security interest of
Subordinate Lender in and to such Petroleum Inventory pursuant to
Subordinate Loan Agreement, in an amount not to exceed $450,000.00,
plus any accrued and unpaid interest (including at the default
interest rate set forth in the Subordinate Loan Agreement) and
reasonable costs and fees by Subordinate Lender incurred reasonably in
collection of such amounts. Notwithstanding the foregoing or anything
contained herein to the contrary, Subordinate Lender acknowledges and
agrees that except as expressly provided above, any security or other
interest of Subordinate Lender in and to any Collateral other than the
Petroleum Inventory shall be subject and subordinate in all respects
to the rights and interests of Senior Lender, including, without
limitation, Senior Lender's rights and remedies with respect to the
Collateral upon any default under the Senior Loan. Subordinate Lender
further acknowledges and agrees that notwithstanding anything
contained in the Subordinate Loan Agreement or any documents and
financing statements executed in connection therewith (including,
without limitation, those certain UCC-1 Financing Statement executed
by Borrower in favor Subordinate Lender filed with the California
Secretary of State on August 26, 1999 as File Nos. 9924360720,
9924360732, 9924360711 and 9924360717) or in this Agreement to the
contrary, Subordinate Lender shall be deemed to possess a security
interest in the Petroleum Inventory only, notwithstanding any broader
definition of the "collateral" pledged as security by Borrower under
the Subordinate Loan Agreement and/or such other documents and
financing statements. Subordinate Lender further agrees to release or
modify any financing statements, which may exist within five (5)
business days after the date of this Agreement to effectuate the
foregoing sentence.
(2) Subordination Continuing - This is a continuing agreement of
------------------------
subordination, and Senior Lender may continue, without notice to holders of
the Subordinated Debt, to extend credit or other accommodations or benefits
and loan money to or for the account of Borrower on the faith hereof until
the Senior Lender's Debt has been paid in full. It is future understood and
agreed that Senior Lender may at any time, in Senior Lender's discretion,
amend or otherwise modify any of the terms or provisions of the Senior Loan
Agreement and any other documents evidencing, securing and/or guarantying
the Senior Loan, renew or extend the time of payment of all or any portion
of the Senior Lender's Debt, waive or release any collateral
F-16
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
which may be held therefor or release the party directly or indirectly
liable for payment of any portion of Senior Lender's Debt at any time,
and in furtherance thereof make and enter into any agreements Senior
Lender deems proper or desirable, without notice to or further assent
from the Subordinate Lender, without in any manner impairing or
affecting this Agreement or Senior Lender's rights hereunder.
NOTE 14 - ARCO CREDIT AGREEMENT
Line of Credit - ARCO has extended to LLO-Gas a $300,000 line of credit under a
- - --------------
Loan Agreement and Promissory Note for Line of Credit, dated March 23, 2000 (the
"ARCO Line"). The purpose of the ARCO Line is to facilitate LLO-Gas's purchase
of gasoline and other products from ARCO and for payment of royalties by LLO-Gas
to ARCO. The ARCO Line cannot be used for any other purposes.
Under the terms of the ARCO Line, LLO-Gas is required to secure the ARCO Line
with a $150,000 letter of credit. LLO-Gas has obtained a $150,000 letter of
credit from Capstone for this purpose (See Note 11). The letter of credit from
Capstone was drawn against the $900,000 revolving line of credit issued to LLO-
Gas by Capstone.
Promissory Note - In addition to the ARCO Line, LLO-Gas has executed a
- - ---------------
Promissory Note with ARCO for a face amount of $398,310.86, dated March 23, 2000
(the "ARCO Note"). The ARCO note represents the conversion into a note of a
$450,000 line of credit previously extended by ARCO to LLO-Gas. The terms of
the ARCO Note provide for weekly payments of principal and interest in the
amount of $4,000 payable to ARCO, commencing on March 29, 2000, and continuing
through the maturity date, May 8, 2002. (The ARCO Note remains secured by a
$450,000 letter of credit issued by Capstone, drawn against LLO-Gas's $900,000
revolving line of credit with Capstone.)
NOTE 15 - PROPERTY AND EQUIPMENT
Property and equipment is comprised of the following at December 31, 1999:
Land $2,564,998
Building 3,388,168
Equipment 71,037
Office equipment 44,539
Real estate in escrow 2,544,200
----------------
8,612,942
Accumulated Depreciation (50,857)
----------------
$8,562,085
================
NOTE 16 - INVENTORIES
Inventories are comprised of the following at December 31, 1999:
Gasoline $101,544
Beer 36,695
Tobacco 82,881
Food and beverage 202,010
Non food products 32,346
===============
$455,476
===============
NOTE 17 - INCOME TAXES
Income taxes are determined using the liability method, where deferred tax
assets and liabilities are recognized for temporary differences between the tax
basis of assets and liabilities and their reported
F-17
<PAGE>
DISCOVERY INVESTMENTS, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1999
amounts in the financial statements. Deferred tax assets include tax
carryforwards and are reduced by a valuation allowance if, based on available
evidence, it is more likely than not that some portion or all the deferred tax
assets will not be realized. At December 31, 1999, the Company had net operating
loss carryforwards for federal tax purposes approximately $479,000, which will
be expired in 2012. The Company had provided a valuation allowance of 100% of
all of its deferred income tax benefits. This deferred tax benefit and valuation
allowance is approximately $167,000.
F-18
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
2.1 Plan and Agreement of Reorganization dated December 10, 1999 by and
between the Company, LLO-Gas, and John Castellucci (1)
3.1 Articles of Incorporation (2)
3.2 Bylaws (2)
*4.1 Form of Common Stock certificate
10.1 3-Year 10 Percent Convertible Note, Number 1 payable to Interlochen
Enterprises, Inc. dated as of November 1, 1999 in the sum of
$250,000 (1)
10.2 3-Year 10 Percent Convertible Note, Number 2 payable to Meridian
Enterprises, Inc. dated as of November 1, 1999 in the sum of
$250,000 (1)
10.3 3-Year 10 Percent Convertible Note, Number 3 payable to CRS
Financial Corp., Ltd, dated as of November 1, 1999 in the sum of
$250,000 (1)
10.4 3-Year 10 Percent Convertible Note, Number 4 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000 (1)
10.5 3-Year 10 Percent Convertible Note, Number 5 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000 (1)
10.6 3-Year 10 Percent Convertible Note, Number 6 payable to CRS
Financial Corp., Ltd. dated as of November 1, 1999 in the sum of
$250,000 (1)
**10.7 Loan and Security Agreement, dated August 2, 1999, between West Star
Energy Group, LLO-Gas, a California corporation and LLO-Gas, and
Capstone Capital, LLC
**10.8 Promissory Note, dated August 2, 1999, between West Star Energy
Group, LLO-Gas, a California corporation and LLO-Gas, and Capstone
Capital, LLC
*10.9 Guarantee, dated August 2, 1999, from John D. Castellucci to
Capstone Capital, LLC
**10.10 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 01860, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
<PAGE>
Exhibit No. Description
----------- -----------
**10.11 Agreement For Sale of Business to Contract Dealer for ARCO facility
01860, dated September 2, 1999, between LLO-Gas and ARCO
**10.12 am/pm Mini Market Agreement Part I for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82060 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.13 Contract Dealer Gasoline Agreement for ARCO facility 82060, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.14 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82060, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.15 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82060, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.16 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82060, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.17 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05212, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.18 Agreement For Sale of Business to Contract Dealer for ARCO facility
05212, dated September 2, 1999, between LLO-Gas and ARCO
**10.19 Contract Dealer Gasoline Agreement for ARCO facility 82061, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.20 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82061, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.21 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82061, dated September 2,
1999, between LLO-Gas and ARCO Products Company
<PAGE>
Exhibit No. Description
----------- -----------
**10.22 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05502, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.23 Agreement For Sale of Business to Contract Dealer for ARCO facility
05502, dated September 2, 1999, between LLO-Gas and ARCO
**10.24 am/pm Mini Market Agreement Part I for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82062 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.25 Contract Dealer Gasoline Agreement for ARCO facility 82062, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.26 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82062, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.27 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82062, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.28 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82062, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.29 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05513, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.30 Agreement For Sale of Business to Contract Dealer for ARCO facility
05513, dated September 2, 1999, between LLO-Gas and ARCO
<PAGE>
Exhibit No. Description
----------- -----------
**10.31 am/pm Mini Market Agreement Part I for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82063 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.32 Contract Dealer Gasoline Agreement for ARCO facility 82063, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.33 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82063, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.34 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82063, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.35 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82063, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.36 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 05972, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.37 Agreement For Sale of Business to Contract Dealer for ARCO facility
05972, dated September 2, 1999, between LLO-Gas and ARCO
**10.38 am/pm Mini Market Agreement Part I for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82060 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.39 Contract Dealer Gasoline Agreement for ARCO facility 82064, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.40 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82064, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
<PAGE>
Exhibit No. Description
----------- -----------
**10.41 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82064, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.42 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82064, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.43 Agreement For Sale of Real Estate to Contract Dealer for ARCO
facility 06202, dated September 2, 1999, between LLO-Gas and ARCO,
together with related Legal Description of the Real Estate, Location
of the Companion Real Estate, Declaration of Environmental
Restriction and Other Environmental Covenants and Conditions, dated
September 2, 1999, between LLO-Gas and ARCO, and Right of First
Refusal Agreement, dated September 2, 1999, between LLO-Gas and ARCO
**10.44 Agreement For Sale of Business to Contract Dealer for ARCO facility
06202, dated September 2, 1999, between LLO-Gas and ARCO
**10.45 am/pm Mini Market Agreement Part I for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company,
together with related am/pm Mini Market Agreement Part II for ARCO
facility 82065 and Statement Regarding Finances & Investors, dated
September 2, 1999
**10.46 Contract Dealer Gasoline Agreement for ARCO facility 82065, dated
September 2, 1999, between LLO-Gas and ARCO Products Company
**10.47 Amendment to Contract Dealer Gasoline Agreement for ARCO facility
82065, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.48 Memorandum of Contract Dealer Gasoline Agreement for ARCO facility
82065, dated September 2, 1999, between LLO-Gas and ARCO Products
Company
**10.49 Addendum to Contract Dealer Gasoline Agreement (PayPoint Network
Non-Lessee Retailer) for ARCO facility 82065, dated September 2,
1999, between LLO-Gas and ARCO Products Company
**10.50 Intercreditor Agreement, dated October 25, 1999, between Capstone
Capital, LLC and Convenience Store Finance Company, LLC
<PAGE>
Exhibit No. Description
----------- -----------
**10.51 Loan and Security Agreement, dated October 26, 1999, made by LLO-Gas
in favor of Convenience Store Finance Company, LLC, together with
related Definitions Schedule, Information Schedule, Specified Market
Schedule, Schedule 2.3 Affiliates, Schedule 2.14 Filing Offices
(U.C.C.-1 Recordings), Schedule 2.23 Subsidiaries, Schedule 2.26
Credit Card Agreements, Schedule 2.31 Sale of Assets, Schedule 2.38
Listing of Local Banks, Exhibit A Secured Promissory Note
(Preliminary Statement), Exhibit B Schedule of Notes and Properties
(Preliminary Statement), Exhibit C Current Filings, Exhibit D
Principal Agreements, Exhibit E Compliance Certificate, Exhibit F
Local Bank Direction Letters and Exhibit H Financing Statements (on
Form UCC-1)
*10.52 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $300,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.53 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $585,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.54 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $1,230,000, dated
October 26, 1999, between LLO-Gas and Convenience Store Finance
Company, LLC
*10.55 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $975,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.56 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $2,500,000, dated
October 26, 1999, between LLO-Gas and Convenience Store Finance
Company, LLC
*10.57 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $750,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
<PAGE>
Exhibit No. Description
----------- -----------
*10.58 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $760,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
*10.59 Convenience Store Finance Company, LLC, CSFC 1999 Loan Program,
Secured Promissory Note, CSFC Loan #250, for $700,000, dated October
26, 1999, between LLO-Gas and Convenience Store Finance Company, LLC
**10.60 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Phoenix, AZ location, dated October 26, 1999,
with LLO-Gas as Trustor, Old Republic Title Company as Trustee and
Convenience Store Finance Company, LLC as Beneficiary
**10.61 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Mammoth Lakes, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.62 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Bakersfield, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.63 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Bakersfield, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.64 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Los Angeles, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
**10.65 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Fontana, CA (deed of trust) location, dated
October 26, 1999, with LLO-Gas as Trustor, Old Republic Title
Company as Trustee and Convenience Store Finance Company, LLC as
Beneficiary
**10.66 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for No. Palm Springs, CA location, dated October 26,
1999, with LLO-Gas as Trustor, Old Republic Title Company as Trustee
and Convenience Store Finance Company, LLC as Beneficiary
<PAGE>
Exhibit No. Description
----------- -----------
**10.67 Deed of Trust and Absolute Assignment of Rents and Leases and
Fixture Filing, for Rosemead, CA location, dated October 26, 1999,
with LLO-Gas as Trustor, Old Republic Title Company as Trustee and
Convenience Store Finance Company, LLC as Beneficiary
**10.68 Indemnity and Guaranty Agreement, dated as of October 26, 1999,
between John D. Castellucci and Convenience Store Finance Company,
LLC
*10.69 Note, for $300,00, dated October 28, 1999, between John Castellucci,
LLO-Gas and Time Out, LLC
*10.70 Note, for $300,000, dated October 28, 1999, between LLO-Gas and Time
Out, LLC
*10.71 Straight Note, for $200,000, dated November 23, 1999, between LLO-
Gas and Time Out, LLC
*10.72 Promissory Note, for $150,000, dated December 16, 1999, between LLO-
Gas and John D. Castellucci, on the one hand, and Mehdi Mostaedi, on
the other hand
**10.73 Option Agreement, for 979 East Paige Avenue, Tulare, California
93274, dated March 1, 2000, between Carl E. Lindros and John
Castellucci, Manager of LLO-Gas Truck Stop No. 1, LLC
*10.74 Memorandum of Understanding, for the $398,310.86 LLO-Gas obligation
to ARCO, dated March 23, 2000, between LLO-Gas and ARCO
*10.75 Promissory Note, for $398,310.86, dated March 23, 2000, between LLO-
Gas and ARCO
*10.76 Loan Agreement and Promissory Note For Line of Credit, for $300,000,
dated March 23, 2000, between LLO-Gas and ARCO
**10.77 Office Lease, Miramar Professional Park, for 23805 Stuart Ranch
Road, Suite 224, Malibu, California, commencing on October 1, 1999,
between Miramar Investment Co. and West Star Energy Group LLO-Gas,
Inc., a Delaware corporation
*10.78 Employment Contract For Senior Executive, for James Mandich, dated
September 15, 1999, between LLO-Gas and James Mandich
**10.79 Deed of Trust, dated August 2, 1999, made between LLO-Gas and
Capstone Capital, LLC
**10.80 Agreement between PSI and LLO-Gas for operation of the business at
the Fontana Facility
**10.81 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out,
LLC
**10.82 Deed of Trust, dated October 29, 1999, between LLO-Gas and Time Out,
LLC
**10.83 Modification To Deed of Trust, dated November 23, 1999, between
LLO-Gas and Time Out, LLC
**10.84 Deed of Trust, dated November 23, 1999, between LLO-Gas and Time
Out, LLC
**10.85 Subordination Agreement (undated), between LLO-Gas and Time Out, LLC
*10.86 Note, dated July 19, 1999, between LLO-Gas and John Castellucci and
Interlochen Enterprises, Inc., for $150,000
16.1 Letter dated April 10, 2000 from Barry F. Friedman addressed to the
SEC regarding a change in accountant and confirming the disclosure
contained in the Company's current Report on Form 8-K (3)
*21 List of subsidiaries
*27 Financial Data Schedule
99.1 Lock-up Agreement dated May 3, 1999 by Kimberly Lynn Jack (2)
99.2 Lock-up Agreement dated May 3, 1999 by Scott A. Jack (2)
99.3 Lock-up Agreement dated May 3, 1999 by Debra S. Hackney (2)
_____________
* Filed herewith
** To be filed by amendment
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on December 10, 1999.
(2) Filed as an exhibit to the Company's General Form for Registration of
Securities of Small Business Issuers on Form 10-SB filed, with the SEC on
June 24, 1999.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K, filed with
the SEC on April 11, 2000.
<PAGE>
EXHIBIT 4.1
[DECORATIVE FRAME]
<TABLE>
<CAPTION>
[NUMBER] Discovery Investments, Inc. [SHARES]
in framed box in framed box
<S> <C> <C> <C>
This INCORPORATED UNDER THE LAWS OF THE STATE NEVADA
25,000,000 SHARES COMMON STOCK AUTHORIZED, $.001 PAR VALUE
certifies
that
CUSIP 25466E 10 3
SEE REVERSE FOR CERTAIN
DEFINITIONS
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF [TEXT PERPENDICULAR]
COUNTERSIGNED
PACIFIC STOCK TRANSFER
COMPANY
P.O. BOX 93385
LAS VEGAS, NV 89193
BY:______________________
AUTHORIZED SIGNATURE
Discovery Investments, Inc.
transferable on the books of the corporation in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are subject to the laws of the State of
Nevada, and to the Certificate of Incorporation and Bylaws of the Corporation,
as now or hereafter amended. This certificate is not valid unless countersigned
by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the signature of its duly authorized officers.
DATED
/s/ Kimberly L. Jack [SEAL] /s/ Scott A. Jack
--------------------- -------------------
President Secretary
</TABLE>
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT ______Custodian______
(Cust) (Minor)
TEN ENT - as tenants by the entireties Act ___________________________
(State)
JT TEN - as joint tenants with the
right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, ___________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________, Attorney to
transfer the said stock on the books of the within named Corporation with full
power of substitution in the premises.
Dated __________________________
X_______________________________________________________________________________
THIS SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERNATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan
Associations and Credit Unions).
SIGNATURE GUARANTEED:
TRANSFER FEE WILL APPLY
<PAGE>
Exhibit 10.9
[Promissory Note]
-----------------
GUARANTEE
---------
1. The undersigned (each, a "Guarantor"), jointly and severally, for good
---------
and valuable consideration and to induce Capstone Capital, LLC, a Delaware
Limited Liability Company, to lend $900,000 to West Star Energy Group, formerly
known as Mid-State Fuels, Inc., a California corporation and LLO-Gas, Inc., a
California corporation, and LLC-Gas, Inc. a Delaware corporation ("Lender"), in
consideration of the issuance to Lender of Borrower's Promissory Note of even
date herewith in such principal amount which Note is secured by certain
collateral in accordance with a Security Agreement of even date herewith (the
"Security Agreement") hereby (a) makes and affirms to Lender that each of the
representations and warranties made by Borrower in the Note and the Security
Agreement are and shall be true and correct at all times, and (b) irrevocably
and unconditionally guarantees to Lender the faithful and timely performance and
satisfaction of all of the indebtedness, obligations, covenants and conditions
required to be performed or satisfied by Borrower under the Note and the
Security Agreement, including without limitation the payment of all amounts when
due under such agreements, (all of which are herein collectively referred to as
the "Obligations"), and irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against Borrower under
Title 11, United States Code, including, without limitation, obligations or
indebtedness of Borrower for post-petition interest, fees, cost, and charges
that would have accrued or been added to Borrower's Obligations to Agent and the
Lenders but for the commencement of such case if Borrower fails at any time
promptly and fully to perform or satisfy any of such Obligations, covenants or
conditions, Guarantors shall perform or satisfy the same as provided therein.
Lender may at any time require Guarantors to perform or satisfy any such
obligation, covenant or condition that Borrower has not performed or satisfied
by giving notice to such effect to Guarantors in any manner prescribed for the
giving of notices to Borrower under the Note and the Security Agreement,
addressed to Guarantors at the address below.
The obligations of Guarantors hereunder are primary and direct, and are in
addition to, and independent of, the obligations, covenants and conditions
required to be performed or satisfied by Borrower under the Note and the
Security Agreement and the Supply Agreement. This is a guaranty of payment and
not of collection. Guarantors hereby waive all rights that they might otherwise
have to require Lender to commence any proceeding against Borrowers or the
Collateral (as defined in the Security Agreement) or to exhaust Lender's
remedies against Borrower before seeking to enforce this Guarantee.
The validity of this Guarantee and the obligations of Guarantors hereunder shall
in no manner be terminated, impaired, or in any way modified or affected by
reason of
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<PAGE>
(a) the enforcement by Lender against Borrower of any of Lender's rights
or remedies under the Note or the Security Agreement;
(b) the granting to Lender, under the Security Agreement or otherwise, of
any collateral security for the performance or satisfaction of any of Borrower's
obligations, covenant or conditions under the Note, any action or inaction on
the part of Lender to proceed against or realize upon such collateral security,
or an impaired impairment or release of any such collateral security;
(c) commencement by or against Borrower of any bankruptcy or other
insolvency proceeding or any stay, discharge or other relief granted or issued
thereunder;
(d) any extension of time or other indulgence or forbearance by Lender, or
an amendment, modification, renewal or extension of the Note or Security
Agreement or waiver of any of the Obligations, covenants or conditions of the
Borrower under the Note or Security Agreement, increase or decrease in the
interest rate thereunder
(e) any other defense, set-off, counterclaim or discharge that might
otherwise be available to Borrower or any Guarantor including but not limited to
failure of consideration, breach of warranty, fraud, payment (other than cash
payment in full of the Obligations), statute of frauds, bankruptcy, infancy,
statute of limitations, accord and satisfaction, and usury.
(f) any release (full or partial) of Borrower's obligations under the
Note, Security Agreement or Supply Agreement or any release of collateral
securing the Obligations
2. Each Guarantor hereby represents and warrants to Lender that:
(a) Each Guarantor has full legal power and authority to make this
Guarantee and to assume and perform his Obligations hereunder. This Guarantee
has been duly executed and delivered by each Guarantor, and is a legally valid
and binding obligation of each Guarantor, enforceable against each Guarantor in
accordance with its terms, except to the extent such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
equitable principles limiting the availability of certain remedies.
(b) Each Guarantor either (i) owns outstanding Capital Stock of the
Borrower, or (ii) is an affiliate of the Borrower and will directly benefit from
the loans and other extensions of credit made by Lender to Borrower.
3. If Lender prevails in any action, suit or other proceeding against any
Guarantor to enforce this Guarantee, (Guarantors jointly and severally) shall
pay to Lender and indemnify Lender for Lender's reasonable attorneys' fees and
disbursements so incurred. All rights of Lender hereunder shall inure to the
benefit of Lender and its successors and assigns, and shall be
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<PAGE>
binding upon Guarantors and their heirs, distributees, legal representatives,
successors and assigns. This Guarantee shall be governed by, and interpreted and
enforced in accordance with, the laws of the State of New York without regard to
principles of choice of law or conflicts of laws. Guarantors hereby irrevocably
consent and submit to the same provisions relating to arbitration and remedies,
and the jurisdiction of the same courts, the same venue and the same manner of
service of process, to which Borrowers consent and submit in Section 10 of the
Security Agreement. All such provisions shall be deemed to be incorporated
herein.
4. The undersigned further consents and agrees that lender shall be under
NO obligation to marshal any assets in favor of the undersigned, or against or
in payment of any or all of the Obligations.
5. The undersigned further waives (i) notice of the acceptance of this
Guaranty, of the making of any such loans or extensions of credit, and of all
notices and demands of any kind to which the undersigned may be entitled,
including without limitation, notice of adverse change in Borrower's financial
condition or of any other fact which might materially increase the risk of the
undersigned; and (ii) presentment to or demand of payment from anyone whomsoever
liable upon any of the Obligations, protest, notices of presentment, non-payment
or protest and notice of any sale of collateral security or any default of any
sort. Notwithstanding any payment or payments made by the undersigned hereunder,
or any setoff or application of funds of the undersigned by Lender, the
undersigned shall not be entitled to be subrogated to any of the rights of
Lender against borrower or against any collateral or guarantee or right of
offset held by any Lender for the payment of the Obligations, nor shall the
undersigned seek or be entitled to seek any contribution or reimbursement from
Borrower in respect of payments made by the undersigned hereunder, until all
amounts owing to Lender by Borrower on account of the Obligations are paid in
full and the Note, the Security Agreement and the Supply Agreement shall not
have been terminated, such amount shall be held by the undersigned in trust for
Lender, segregated from other funds of the undersigned, and shall forthwith
upon, and in any event within two (2) business days of, receipt by the
undersigned, be turned over to Lender in the exact form received by the
undersigned (duly endorsed by the undersigned to Lender, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
Lender may determine, subject to the provisions of the Note. Any and all present
and future debts and obligations of Borrower to any of the undersigned are
hereby waived and postponed in favor of, and subordinated to the foil payment
and performance of, all present and future debts and obligations of Borrower to
Lender.
6. Anything in this Guarantee to the contrary notwithstanding, if Lender
receives any payment or payments on account of the liabilities guaranteed
hereby, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaired to a trustee, receiver, or any other party under any
bankruptcy law, common law or equitable doctrine, then to the extent of any sum
not finally retained by Lender, the undersigned's obligations to Lender shall be
reinstated and this guarantee shall remain in full force and effect (or be
reinstated) until payment shall have been
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<PAGE>
made to Lender, which payment shall be due on demand.
7. Lender may, from time to time, without notice to the undersigned,
sell, assign, transfer or otherwise dispose of all or any part of the
Obligations and/or rights under this Guarantee. Without limiting the generality
of the foregoing, Lender may assign, or grant participations to, one or more
banks, financial institutions or other entities all of any part of any of the
Obligations. In each such event, Lender, its Affiliates and each and every
immediate and successive purchaser, assignee, transferee or holder were herein
by name specifically given such right. Lender shall have au unimpaired right to
enforce this Guarantee for its benefit with respect to that portion of the
Obligations which Lender has not disposed of, sold, assigned, or otherwise
transferred.
IN WITNESS WHEREOF, the undersigned has duly executed this Guarantee on August
2, 1999.
/s/ John D. Castellucci
/s/ [Illegible] ------------------------------------------
- - -------------------
Witness John D. Castellucci, President
West Star Energy Group
/s/ John D. Castellucci
/s/ [Illegible] ------------------------------------------
- - -------------------
Witness John D. Castellucci, President
LLO-Gas, Inc., a Delaware corporation
/s/ John D. Castellucci
/s/ [Illegible] ------------------------------------------
- - -------------------
Witness John D. Castellucci, President
LLO-Gas, Inc., a California corporation
/s/ John D. Castelluci
/s/ Illegible] ------------------------------------------
- - -------------------
Witness John D. Castellucci, Individually
as Guarantor
Address For Notices:
West Star Energy
Atwater
695 Atwater Blvd.
Atwater, CA 95301
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<PAGE>
LLO-Gas, Inc.
Laws Bulk Plant
108 Dehy-Laws
Bishop, CA 93514
LLO-Gas, Inc.
23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265
LLO-Gas, Inc.
1013 Centre Road
Wilmington, DE 19805
John D. Castellucci
5740 Kanan Dume
Malibu, CA 90265
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<PAGE>
Exhibit 10.52
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with the
Loan and Security Agreement, dated as of the date hereof (the "Loan Agreement"),
by and between LLO-GAS, INC., a Delaware corporation (the "Borrower"), and
CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited liability company
(together with its successors and assigns, "CSFC"). All terms used herein and
not otherwise defined herein shall have the meaning accorded to such terms in
the table set forth below and in the Loan Agreement. This Note is entitled to
the benefits of and is secured by the pledge, liens, security, title, rights and
security interests granted under the Loan Agreement, the Mortgages and the other
Loan Documents, as the same may be amended, supplemented or renewed, from time
to time and evidences a loan (the "Loan") made to Borrower by CSFC in accordance
with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $300,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $1,433.33
- - --------------------------------------------------------------------------------
Stated Payment Amount: $3,392.08
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
-----------------------------
Name: John D. Castelluccui
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Delellis Castellucci, known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
-------------------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<CAPTION>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 999 Rate 10.750%
Loan Amount $ 300,000 Daily interest 0.02986111% Annual Debt Svc $ 40,704.97
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 1,433.33
0 11/11/99 300,000.00
1 12/11/99 3,392.08 300,000.00 2,667.50 704.58 3,392.08 299,295.42
2 01/11/00 3,392.08 299,925.42 2,770.56 621.52 3,392.08 298,673.90
3 02/11/00 3,392.08 298,673.90 2,764.81 627.27 3,392.08 298,046.63
4 03/11/00 3,392.08 298,046.63 2,581.00 811.06 3,392.08 297,235.55
5 04/11/00 3,392.08 297,235.55 2,751.49 840.59 3,392.08 296,594.96
6 05/11/00 3,392.08 296.594.96 2,657.00 735.08 3,392.08 295,859.88
7 06/11/00 3,392.08 295,858.88 2,738.76 853.32 3,392.08 295,206.58
8 07/11/00 3,392.08 295,206.58 2,644.56 747.52 3,392.08 294,458.04
9 08/11/00 3,392.08 294,459.04 2,725.79 666.29 3,392.08 293,782.75
10 09/11/00 3,392.08 293,792.75 2,719.62 672.46 3,392.08 293,120.29
11 10/11/00 3,392.08 293,120.29 2,625.87 766.21 3,392.08 292,354.08
12 11/11/00 3,392.08 282,354.08 2,706.31 685.77 3,392.08 291,668.31
13 12/11/00 3,392.08 291,668.31 2,612.85 779.22 3,392.08 290,889.09
14 01/11/01 3,392.08 289,889.09 2,682.74 699.34 3,392.08 290,189.75
15 02/11/01 3,392.08 290,189.75 2,666.27 705.81 3,392.08 289,483.94
16 03/11/01 3,392.08 289,483.94 2,420.41 971.67 3,392.08 288,512.27
17 04/11/01 3,392.08 288,512.27 2,670.74 721.34 3,392.08 287,790.93
18 05/11/01 3,392.08 287,790.93 2,578.13 813.95 3,392.08 286,975.98
19 06/11/01 3,392.08 286,976.98 2,858.53 735.55 3,392.08 286,241.43
20 07/11/01 3,392.08 286,241.43 2,584.25 827.63 3,392.08 285,413.59
21 08/11/01 3,392.08 285,413.59 2,642.06 750.02 3,392.08 284,663.57
22 09/11/01 3,392.08 284,663.57 2,635.11 756.97 3,392.08 283,906.61
23 10/11/01 3,392.08 283,905.61 2,543.33 848.75 3,392.08 283,057.88
24 11/11/01 3,392.08 283,057.88 2,620.25 771.83 3,392.08 282,286.03
25 12/11/01 3,392.08 282,286.03 2,528.81 863.27 3,392.08 281,422.78
26 01/11/02 3,392.08 281,422.78 2,605.11 786.97 3,392.08 280,635.80
27 02/11/02 3,392.08 280,635.80 2,597.83 794.25 3,392.08 279,841.55
28 03/11/02 3,392.08 279,841.55 2,339.79 1,052.29 3,392.08 278,789.25
29 04/11/02 3,392.08 278,789.25 2,580.74 811.34 3,392.08 277,977.91
30 05/11/02 3,392.08 277,977.91 2,490.22 901.86 3,392.08 277,076.05
31 06/11/02 3,392.08 277,078.05 2,564.88 827.20 3,392.08 276,248.84
32 07/11/02 3,392.08 276,248.84 2,474.73 917.35 3,392.08 275,331.49
33 08/11/02 3,392.08 275,331.48 2,548.73 843.35 3,392.08 274,488.14
34 09/11/02 3,392.08 274,488.14 2,540.92 851.16 3,392.08 273,636.95
35 10/11/02 3,392.08 273,636.98 2,451.33 940.75 3,392.08 272,696.23
36 11/11/02 3,392.08 272,595.23 2,524.33 357.75 3,392.08 271,828.40
37 12/11/02 3,392.08 271,828.49 2,435.13 958.95 3,392.08 270,871.54
38 01/11/03 3,392.08 270,871.54 2,507.44 884.64 3,392.08 269,986.90
39 02/11/03 3,392.08 269,988.90 2,499.25 1,142.15 3,392.08 269,094.08
40 03/11/03 3,392.08 259,094.06 2,249.93 911.86 3,392.08 267,951.22
41 04/11/03 3,392.08 267,851.82 2,480.42 999.84 3,392.08 267,040.25
42 05/11/03 3,392.08 267,040.26 2,392.24 929.36 3,392.08 266,040.41
43 06/11/03 3,392.08 288.040.41 2,462.72 1,017.13 3,392.08 265,111.05
44 07/11/03 3,392.08 265,111.05 2,374.95 947.38 3,392.08 264,093.93
</TABLE>
Unit #999
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 3,392.08 284,083.83 2,444.70 956.15 3,392.08 263,146.55
46 09/11/03 3,392.08 263,145.55 2,435.93 1,017.13 3,392.08 262,190.40
47 10/11/03 3,392.08 282,190.40 2,348.79 947.38 3,392.08 261,147.11
48 11/11/03 3,392.08 261,147.11 2,417.42 956.15 3,392.08 260,172.48
49 12/11/03 3,392.08 260,172.48 2,330.71 1,081.37 3,392.08 259,111.09
50 01/11/04 3,392.08 259,111.09 2,398.58 993.50 3,392.08 258,117.58
51 02/11/04 3,392.08 258,117.58 2,389.38 1,002.70 3,392.08 257,114.88
52 03/11/04 3,392.08 257,114.88 2,226.54 1,165.54 3,392.08 255,949.36
53 04/11/04 3,392.08 255,948.35 2,369.31 1,022.77 3,392.08 254,926.58
54 05/11/04 3,392.08 254,826.58 2,283.72 1,108.38 3,392.08 253,818.21
55 06/11/04 3,392.08 253,818.21 2,349.58 1,042.50 3,392.08 252,775.72
56 07/11/04 3,392.08 252,775.72 2,264.45 1,127.63 3,392.08 251,648.08
57 08/11/04 3,392.08 251,648.08 2,329.49 1,062.59 3,392.08 250,585.50
58 09/11/04 3,392.08 250,585.50 2,319.66 1,072.42 3,392.08 249,513.07
59 10/11/04 3,392.08 249,513.07 2,235.22 1,156.86 3,392.08 248,356.21
60 11/11/04 3,392.08 248,355.21 2,299.02 1,093.06 3,392.08 247,263.15
61 12/11/04 3,392.08 247,283.15 2,215.07 1,177.01 3,392.08 246,086.14
62 01/11/05 3,392.08 246.086.14 2,278.01 1,114.07 3,392.08 244,972.07
63 02/11/05 3,392.08 244,972.07 2,267.59 1,124.39 3,392.08 243,847.68
64 03/11/05 3,392.08 243,847.68 2,038.84 1,353.24 3,392.08 242,494.44
65 04/11/05 3,392.08 242,494.44 2,244.76 1,147.32 3,392.08 241,347.11
66 05/11/05 3,392.08 241,347.11 2,162.07 1,230.01 3,392.08 240,117.10
67 06/11/05 3,392.08 240,117.10 2,222.75 1,169.33 3,392.08 238,947.77
68 07/11/05 3,392.08 238,947.77 2,140.57 1,251.51 3,392.08 237,696.27
69 08/11/05 3,392.08 237,696.27 2,200.34 1,191.74 3,392.08 236,504.53
70 09/11/05 3,392.08 238,504.53 2,189.31 1,202.77 3,392.08 235,301.76
71 10/11/05 3,392.08 235,301.76 2,107.91 1,284.17 3,392.08 234,017.59
72 11/11/05 3,392.08 234,017.59 2,166.29 1,225.79 3,392.08 232,791.80
73 12/11/05 3,392.08 232,791.80 2,085.43 1,306.65 3,392.08 231,485.15
74 01/11/06 3,392.08 231.485.14 2,142.85 1,249.23 3,392.08 230,235.91
75 02/11/06 3,392.08 230,235.91 2,131.26 1,280.80 3,392.08 228,975.11
76 03/11/06 3,392.08 228.975.11 1,914.49 1,477,59 3,392.08 227,497.51
77 04/11/06 3,392.08 227,487.51 2,105.93 1,286.15 3,392.08 226,211.37
78 05/11/06 3,392.08 226,211.37 2,028.48 1,365.60 3,392.08 224,845.76
79 06/11/06 3,392.08 224,545.76 2,081.38 1,310.70 3,392.08 223,535.07
80 07/11/06 3,392.08 223,535.07 2,002.50 1,389.58 3,392.08 222,145.49
81 08/11/06 3,392.08 222,145.49 2,056.39 1,335.69 3,392.08 220,809.80
82 09/11/06 3,392.08 220,809.80 2,044.02 1,348.05 3,392.08 219,461.74
83 10/11/06 3,392.08 219,481.74 1,966.01 1,426.07 3,392.08 218,035.67
84 11/11/06 3,392.08 218,035.57 2,018.34 1,373.74 3,392.08 216,681.94
85 12/11/06 3,392.08 218,681.94 1,940.93 1,451.15 3,392.08 215,210.79
86 01/11/07 3,392.08 215,210.79 1,992.19 1,399.89 3,392.08 213,810.90
87 02/11/07 3,392.08 213,810.90 1,979.24 1,412.84 3,392.08 212,398.06
88 03/11/07 3,392.08 212,398.06 1,775.88 1,616.20 3,392.08 210,781.88
89 04/11/07 3,392.08 210,781.85 1,951.20 1,440.88 3,392.08 209,340.98
90 05/11/07 3,392.08 210,340.96 1,875.35 1,516.73 3,392.08 207,824.24
91 06/11/07 3,392.08 207,824.24 1,923.82 1,488.26 3,392.08 206,355.98
92 07/11/07 3,392.08 205,355.98 1,848.81 1,543.47 3,392.08 204,812.51
93 08/11/07 3,392.08 204,812.51 1,895.94 1,496.14 3,392.08 203,316.36
94 09/11/07 3,392.08 203,316.36 1,882.09 1,509.99 3,392.08 201,806.36
95 10/11/07 3,392.08 201,806.37 1,807.35 1,584.23 3,392.08 200,222.14
96 11/11/07 3,392.08 200,222.14 1,853.45 1,538.63 3,392.08 198,683.51
97 12/11/07 3,392.08 198,683.51 1,779.87 1,612.21 3,392.08 197,071.30
98 01/11/08 3,392.08 197,071.30 1,824.28 1,567.80 3,392.08 195,603.50
99 02/11/08 3,392.08 195,503.50 1,809.77 1,582.31 3,392.08 193,921.18
100 03/11/08 3,392.08 193,921.18 1,679.30 1,712.78 3,392.08 192,208.41
101 04/11/08 3,392.08 192,208.41 1,779.26 1,612.82 3,392.08 190,585.59
</TABLE>
Unit #999
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 3,392.08 190,585.58 1,707.42 1,684.66 3,392.08 188,910.93
103 06/11/08 3,392.08 188,910.93 1,748.74 1,643.34 3,392.08 187,267.59
104 07/11/08 3,392.08 187.287.59 1,677.61 1,714.47 3,392.08 185,553.11
105 08/11/08 3,392.08 185,553.11 1,717.65 1,674.43 3,392.08 183,878.69
106 09/11/08 3,392.08 183,878.69 1,702.15 1,689.93 3,392.08 182,188.75
107 10/11/08 3,392.08 182,188.76 1,632.11 1,759.97 3,392.08 180,428.79
108 11/11/08 3,392.08 180,428.79 1,670.22 1,721.88 3,392.08 178,706.93
109 12/11/08 3,392.08 175,705.93 1,600.92 1,791.16 3,392.08 176,915.76
110 01/11/09 3,392.08 176,915.78 1,637.70 1,754.38 3,392.08 175,181.38
111 02/11/09 3,392.08 175,181.38 1,621.46 1,770.62 3,392.08 173,390.76
112 03/11/09 3,392.08 173,390.76 1,449.74 1,942.34 3,392.08 171,448.42
113 04/11/09 3,392.08 171,448.42 1,587.09 1,804.99 3,392.08 169,643.43
114 05/11/09 3,392.08 169,643.43 1,519.72 1,872.38 3,392.08 167,771.07
115 06/11/09 3,392.08 167,771.07 1,553.05 1,839.03 3,392.08 165,932.04
116 07/11/09 3,392.08 165,832.04 1,486.47 1,905.61 3,392.08 164,026.43
117 08/11/09 3,392.08 164,125.43 1,518.38 1,873.70 3,392.08 162,152.74
118 09/11/09 3,392.08 162,162.74 1,501.04 1,891.04 3,392.08 160,261.70
119 10/11/09 3,392.08 160,281.70 1,435.68 1,958.40 3,392.08 158,305.29
120 11/11/09 3,392.08 158,305.29 1,485.42 1,926.66 3,392.08 156,378.64
121 12/11/09 3,392.08 156,378.64 1,400.89 1,991.19 3,392.08 154,387.45
122 01/11/10 3,392.08 154,387.45 1,429.16 1,962.92 3,392.08 152,424.53
123 02/11/10 3,392.08 152,424.53 1,410.89 1,981.09 3,392.08 150,443.43
124 03/11/10 3,392.08 150,443.43 1,257.87 2,134.21 3,392.08 148,309.23
125 04/11/10 3,392.08 148,309.23 1,372.89 2,019.19 3,392.08 145,290.04
126 05/11/10 3,392.08 148,290.04 1,310.51 2,081.57 3,392.08 144,206.47
127 06/11/10 3,392.08 144,208.47 1,334.93 2,057.15 3,392.08 142,151.32
128 07/11/10 3,392.08 142,151.32 1,273.44 2,118.64 3,392.08 140,032.68
129 08/11/10 3,392.08 140,032.58 1,296.27 2,095.81 3,392.08 137,936.87
130 09/11/10 3,392.08 137,936.87 1,276.87 2,115.21 3,392.08 135,821.67
131 10/11/10 3,392.08 135,821.87 1,216.74 2,175.34 3,392.08 133,646.32
132 11/11/10 3,392.08 133,645.32 1,237.16 2,154.92 3,392.08 131,491.40
133 12/11/10 3,392.08 131,491.40 1,177.94 2,214.14 3,392.08 129,277.28
134 01/11/11 3,392.08 129,277.26 1,196.71 2,195.37 3,392.08 127,081.90
135 02/11/11 3,392.08 127,081.90 1,176.39 2,215.89 3,392.08 124,866.21
136 03/11/11 3,392.08 124,866.21 1,044.02 2,348.06 3,392.08 122,518.15
137 04/11/11 3,392.08 122,518.15 1,134.14 2,257.94 3,392.08 120,250.21
138 05/11/11 3,392.08 120,260.21 1,077.33 2,314.75 3,392.08 117,945.46
139 06/11/11 3,392.08 117,945.45 1,091.81 2,300.27 3,392.08 115,645.20
140 07/11/11 3,392.08 115,645.20 1,035.99 2,358.09 3,392.08 113,289.11
141 08/11/11 3,392.08 113,289.11 1,048.71 2,543.37 3,392.08 110,945.74
142 09/11/11 3,392.08 110,945.74 1,027.02 2,365.06 3,392.08 106,580.67
143 10/11/11 3,392.08 108,580.67 972.70 2,419.38 3,392.08 106,161.30
144 11/11/11 3,392.08 108.161.30 962.73 2,409.35 3,392.08 103,751.95
145 12/11/11 3,392.08 103,751.95 929.44 2,462.64 3,392.08 101,289.31
146 01/11/12 3,392.08 101,289.31 937.83 2,454.45 3,392.08 98,834.86
147 02/11/12 3,392.08 98,834.85 914.91 2,477.17 3,392.08 96,357.69
148 03/11/12 3,392.08 96,357.89 834.43 2,557.85 3,392.08 93,800.04
149 04/11/12 3,392.08 93,800.04 868.30 2,523.78 3,392.08 91,276.25
150 05/11/12 3,392.08 91,276,09 817.68 2,574.40 3.392.08 88,701.66
151 06/11/12 3,392.08 88,701.04 821.11 2,570.97 3,392.08 86,130.89
152 07/11/12 3,392.08 88,730.26 771.59 2,620.49 3,392.08 83,510.40
153 08/11/12 3,392.08 83,510.85 773.05 2,619.03 3,392.08 80,891.37
154 09/11/12 3,392.08 80,891.59 748.81 2,643.27 3,392.08 78,248.10
155 10/11/12 3,392.08 78,248.40 700.97 2,691.11 3,392.08 75,558.99
156 11/11/12 3,392.08 75,558.73 699.43 2,692.85 3,392.08 72,864.34
157 12/11/12 3,392.08 72,864.10 652.74 2,739.34 3,392.08 70,125.00
158 01/11/13 3,392.08 70,125.99 649.14 2,742.94 3,392.08 67,382.07
</TABLE>
Unit #999
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
159 02/11/13 3,392.08 67,382.34 623.75 2,768.33 3,392.08 64,613.74
160 03/11/13 3,392.08 64,813.00 540.24 2,851.84 3,392.08 61,751.90
161 04/11/13 3,392.08 61,781.07 571.73 2,820.35 3,392.08 58,941.55
162 05/11/13 3,392.08 58,941.74 528.02 2,864.06 3,392.08 58,077.48
163 06/11/13 3,392.08 56,077.90 519.11 2,872.97 3,392.08 53,204.51
164 07/11/13 3,392.08 53,204.55 476.62 2,915.46 3,392.08 50,289.05
165 08/11/13 3,392.08 50,289.48 465.52 2,926.56 3,392.08 47,362.50
166 09/11/13 3,392.08 47,352.51 438.43 2,953.85 3,392.08 44,408.85
167 10/11/13 3,392.08 44,408.05 397.83 2,994.25 3,392.08 41,414.60
168 11/11/13 3,392.08 41,414.60 383.37 3,008.71 3,392.08 38,405.89
169 12/11/13 3,392.08 38,405.85 344.05 3,048.03 3,392.08 35,357.86
170 01/11/14 3,392.08 35,357.50 327.31 3,064.77 3,392.08 32,293.09
171 02/11/14 3,392.08 32,293.89 298.94 3,093.14 3,392.08 29,199.95
172 03/11/14 3,392.08 29,199.86 244.14 3,147.94 3,392.08 26,052.01
173 04/11/14 3,392.08 26,052.09 241.16 3,150.92 3,392.08 22,901.09
174 05/11/14 3,392.08 22,901.95 205.16 3,188.92 3,392.08 19,714.17
175 06/11/14 3,392.08 19,714.01 182.49 3,209.59 3,392.08 16,504.58
176 07/11/14 3,392.08 16,504.09 147.85 3,244.23 3,392.08 13,280.35
177 08/11/14 3,392.08 13,250.35 122.75 3,269.33 3,392.08 9,991.02
178 09/11/14 3,392.08 9,991.02 92.49 3,299.59 3,392.08 6,691.43
179 10/11/14 3,392.08 6,591.43 59.94 3,332.14 3,392.08 3,359.29
180 11/11/14 3,392.08 3,359.29 31.10 3,380.98 3,392.08 0.00
</TABLE>
Unit #999
<PAGE>
Exhibit 10.53
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with the
Loan and Security Agreement, dated as of the date hereof (the "Loan Agreement"),
by and between LLO-GAS, INC., a Delaware corporation (the "Borrower"), and
CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited liability company
(together with its successors and assigns, "CSFC"). All terms used herein and
not otherwise defined herein shall have the meaning accorded to such terms in
the table set forth below and in the Loan Agreement. This Note is entitled to
the benefits of and is secured by the pledge, liens, security, title, rights and
security interests granted under the Loan Agreement, the Mortgages and the other
Loan Documents, as the same may be amended, supplemented or renewed, from time
to time and evidences a loan (the "Loan") made to Borrower by CSFC in accordance
with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $585,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $2,795.00
- - --------------------------------------------------------------------------------
Stated Payment Amount: $6,614.55
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
--------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
--------------------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<CAPTION>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 5.250% Actual/380 Y
Unit Number 5234 Rate 10.750%
Loan Amount $ 585,000 Daily interest 0.02986111% Annual Debt Svc $ 79,374.55
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 2,795.00
0 11/11/99 585,000.00
1 12/11/99 6,614.55 585,000.00 5,240.63 1,373.93 6,614.55 583,626.08
2 01/11/00 6,614.55 583,626.08 5,402.59 1,211.98 6,614.55 582,414.12
3 02/11/00 6,614.55 582,414.12 5,391.38 1,223.17 6,614.55 581,190.94
4 03/11/00 6,614.55 581,190.94 5,032.95 1,581.60 6,614.55 579,609.35
5 04/11/00 6,614.55 579,609.35 5,365.41 1,249.14 6,614.55 578,360.21
6 05/11/00 6,614.55 578,360.21 5,181.14 1,433.41 6,614.55 576,926.80
7 06/11/00 6,614.55 576,926.80 5,340.58 1,273.97 6,614.55 575,852.83
8 07/11/00 6,614.55 575,652.83 5,156.89 1,457.66 6,614.55 574,195.17
9 08/11/00 6,614.55 574,195.17 5,315.29 1,299.26 6,614.55 572,895.91
10 09/11/00 6,614.55 572,895.91 5,303.27 1,311.28 6,614.55 571,584.63
11 10/11/00 6,614.55 571,584.63 5,120.45 1,494.10 6,614.55 570,090.52
12 11/11/00 6,614.55 570,090.52 5,277.30 1,337.25 6,614.55 568,753.27
13 12/11/00 6,614.55 568,753.27 5,095.08 1,519.47 6,614.55 567,233.80
14 01/11/01 6,614.55 567,233.80 5,250.85 1,363.70 6,614.55 585,870.10
15 02/11/01 6,614.55 585,870.10 5,238.23 1,378.32 6,614.55 584,493.76
16 03/11/01 6,614.55 584,493.78 4,719.80 1,894.75 6,614.55 562,599.03
17 04/11/01 6,614.55 562,599.03 5,207.95 1,406.60 6,614.55 561,192.43
18 05/11/01 6,614.55 561,192.43 5,207.35 1,587.20 6,614.55 559,605.22
19 06/11/01 6,614.55 559,605.22 5,180.23 1,434.32 6,614.55 558,170.91
20 07/11/01 6,614.55 558,170.91 5,000.28 1,614.27 6,614.55 556,556.84
21 08/11/01 6,614.55 556,556.64 5,152.01 1,462.54 6,614.55 555,094.10
22 09/11/01 6,614.55 555,094.10 5,138.48 1,476.07 6,614.55 553,618.03
23 10/11/01 6,614.55 553,618.03 4,959.49 1,655.06 6,614.55 551,962.97
24 11/11/01 6,614.55 551,962.97 5,109.49 1,505.06 6,614.55 540,457.91
25 12/11/01 6,614.55 550,457.91 4,831.18 1,683.36 6,614.55 548,774.55
26 01/11/02 6,614.55 548,774.55 5,079.96 1,534.57 6,614.55 547,239.98
27 02/11/02 6,614.55 547,239.98 5,085.77 1,548.78 6,614.55 545,691.20
28 03/11/02 6,614.55 545,691.20 4,562.58 2,051.97 6,614.55 543,839.23
29 04/11/02 6,614.55 543,639.23 5,032.44 1,582.11 6,614.55 542,057.12
30 05/11/02 6,614.55 542,057.12 4,855.93 1,758.62 6,614.55 540,298.50
31 06/11/02 6,614.55 540,298.50 5,001.51 1,613.04 6,614.55 538,685.48
32 07/11/02 6,614.55 538,685.46 4,825.72 1,788.83 6,614.55 536,895.63
33 08/11/02 6,614.55 536,896.63 4,970.02 1,644.53 6,614.55 535,262.11
34 09/11/02 6,614.55 535,252.11 4,954.80 1,659.75 6,614.55 533,592.36
35 10/11/02 6,614.55 533,592.36 4,780.10 1,834.45 6,614.55 531,757.90
36 11/11/02 6,614.55 531,757.90 4,922.45 1,692.10 6,614.55 530,065.81
37 12/11/02 6,614.55 530,065.81 4,748.51 1,866.04 6,614.55 528,189.76
38 01/11/03 6,614.55 528,199.75 4,889.52 1,725.03 6,614.55 526,474.73
39 02/11/03 6,614.55 528,474.73 4,873.55 1,741.00 6,614.55 524,733.73
40 03/11/03 6,614.55 524,733.73 4,387.36 2,227.19 6,614.55 522,508.53
41 04/11/03 6,614.55 522,506.53 4,836.81 1,777.74 6,614.55 520,728.80
42 05/11/03 6,614.55 520,728.80 4,664.86 1,949.69 6,614.55 518,779.11
43 06/11/03 6,614.55 518,779.11 4,802.31 1,812.24 6,614.55 516,966.67
44 07/11/03 6,614.55 516,966.87 4,631.16 1,963.39 6,614.55 514,983.48
</TABLE>
Unit #5234
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 6,614.55 514,983.48 4,757.17 1,847.38 6,614.55 513,136.10
46 09/11/03 6,614.55 513,136.10 4,750.07 1,864.48 6,614.55 511,271.83
47 10/11/03 6,614.55 511,271.63 4,580.14 2,034.41 6,614.55 509,237.22
48 11/11/03 6,614.55 509,272.22 4,713.96 1,900.57 6,614.55 507,336.85
49 12/11/03 6,614.55 507,336.65 4,544.89 2,069.66 6,614.55 505,266.99
50 01/11/04 6,614.55 505,256.99 4,677.23 1,937.32 6,614.55 503,329.67
51 02/11/04 6,614.55 503,329.67 4,858.29 1,965.26 6,614.55 501,374.41
52 03/11/04 6,614.55 501,374.41 4,341.76 2,272.79 6,614.55 499,101.63
53 04/11/04 6,614.55 499,101.83 4,620.16 1,994.39 6,614.55 497,107.23
54 05/11/04 6,614.55 497,107.23 4,453.25 2,161.30 6,614.55 494,945.83
55 06/11/04 6,614.55 494,945.93 4,581.69 2,032.86 6,614.55 492,813.07
56 07/11/04 6,614.55 492,913.07 4,415.68 2,198.87 6,614.55 490,714.20
57 08/11/04 6,614.55 490,714.20 4,542.51 2,072.04 6,614.55 488,642.16
58 09/11/04 6,614.55 488,842.15 4,523.33 2,091.22 6,614.55 488,550.95
59 10/11/04 6,614.55 486,550.95 4,358.89 2,255.86 6,614.55 484,295.00
60 11/11/04 6,614.55 484,295.06 4,483.09 2,131.46 6,614.55 482,163.83
61 12/11/04 6,614.55 482,163.63 4,319.36 2,295.17 6,614.55 479,858.45
62 01/11/05 6,614.55 479,858.46 4,442.12 2,172.43 6,614.55 477,696.02
63 02/11/05 6,614.55 477,696.02 4,422.01 2,192.54 6,614.55 475,503.48
64 03/11/05 6,614.55 475,503.48 3,975.74 2,638.81 6,614.55 472,864.67
65 04/11/05 6,614.55 472,864.67 4,377.26 2,237.27 6,614.55 470,627.40
66 05/11/05 6,614.55 470,627.40 4,216.04 2,398.51 6,614.55 488,228.89
67 06/11/05 6,614.55 468,228.89 4,334.37 2,280.18 6,614.55 485,948.71
68 07/11/05 6,614.55 465,948.71 4,174.12 2,440.43 6,614.55 463,508.28
69 08/11/05 6,614.55 463,508.28 4,290.57 2,323.88 6,614.55 461,184.40
70 09/11/05 6,614.55 461,184.40 4,269.16 2,345.39 6,614.55 458,839.01
71 10/11/05 6,614.55 458,639.01 4,110.43 2,504.12 6,614.55 456,334.89
72 11/11/05 6,614.55 456,334.89 4,224.27 2,390.28 6,614.55 453,944.61
73 12/11/05 6,614.55 453,944.51 4,055.59 2,547.96 6,614.55 451,395.64
74 01/11/06 6,614.55 431,396.64 4,178.55 2,436.00 6,614.55 448,980.65
75 02/11/06 6,614.55 448,980.85 4,158.00 2,458.55 6,614.55 445,502.10
76 03/11/06 6,614.55 446,502.10 3,733.25 2,881.30 6,614.55 443,620.81
77 04/11/06 6,614.55 443,620.81 4,106.57 2,507.98 6,614.55 441,112.83
78 05/11/06 6,614.55 441,112.83 3,951.64 2,662.91 6,614.55 436,449.91
79 06/11/06 6,614.55 438,449.91 4,058.71 2,555.84 6,614.55 435,894.07
80 07/11/06 6,614.55 435,894.07 3,904.88 2,709.67 6,614.55 433,184.41
81 08/11/06 6,614.55 433,184.41 4,009.96 2,604.59 6,614.55 430,579.82
82 09/11/06 6,614.55 430,579.82 3,985.85 2,628.70 6,614.55 427,951.12
83 10/11/06 6,614.55 427,951.12 3,833.73 2,780.82 6,614.55 425,170.30
84 [ILLEGIBLE]
130 09/11/10 6,614.55 266,978.37 2,489.92 4,124.83 6,614.55 264,853.73
131 10/11/10 6,614.55 264,853.73 2,372.65 4,241.90 6,614.55 280,611.83
132 11/11/10 6,614.55 280,611.83 2,412.47 4,202.08 6,614.55 256,409.75
133 12/11/10 6,614.55 256,409.75 2,297.00 4,317.65 6,614.55 252,092.21
134 01/11/10 6,614.55 252,092.21 2,333.60 4,280.95 6,614.55 247,811.26
135 02/11/11 6,614.55 247,811.26 2,293.98 4,320.57 6,614.55 243,490.68
136 03/11/11 6,614.55 243,490.68 2,035.85 4,578.70 6,614.55 238,911.99
137 04/11/11 6,614.55 238,911.99 2,211.59 4,402.96 6,614.55 234,509.03
138 05/11/11 6,614.55 234,509.03 2,100.81 4,513.74 6,614.55 229,995.29
139 06/11/11 6,614.55 229,995.29 2,129.05 4,485.50 6,614.55 225,509.80
140 07/11/11 6,614.55 225,509.80 2,020.19 4,594.36 6,614.55 220,915.44
141 08/11/11 6,614.55 220,915.44 2,045.00 4,589.55 6,614.55 216,345.89
142 09/11/11 6,614.55 216,345.89 2,002.70 4,611.85 6,614.55 211,734.04
143 10/11/11 6,614.55 211,734.04 1,896.78 4,717.77 6,614.55 207,016.27
144 11/11/11 6,614.55 207,016.27 1,916.34 4,698.21 6,614.55 202,218.06
145 12/11/11 6,614.55 202,218.06 1,812.43 4,802.12 6,614.55 197,515.95
146 01/11/12 6,614.55 197,515.95 1,828.39 4,786.16 6,614.55 192,729.79
</TABLE>
Unit #5234
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
147 02/11/12 6,614.55 192,729.79 1,784.09 4,830.46 6,614.55 187,899.33
148 03/11/12 6,614.55 187,899.33 1,627.16 4,987.39 6,614.55 182,911.83
149 04/11/12 6,614.55 182,911.83 1,603.21 4,921.34 6,614.55 177,990.59
150 05/11/12 6,614.55 177,990.59 1,594.50 5,020.05 6,614.55 172,970.54
151 06/11/12 6,614.55 172,970.54 1,601.18 5,013.37 6,614.55 167,957.17
152 07/11/12 6,614.55 167,957.17 1,504.82 5,109.83 6,614.55 162,847.23
153 08/11/12 6,614.55 162,847.23 1,507.47 5,107.06 6,614.55 157,740.15
154 09/11/12 6,614.55 157,740.15 1,460.19 5,154.36 6,614.55 152,585.79
155 10/11/12 6,614.55 152,585.79 1,366.91 5,247.64 6,614.55 147,338.16
156 11/11/12 6,614.55 147,338.16 1,363.90 5,250.65 6,614.55 142,087.51
157 12/11/12 6,614.55 142,087.51 1,272.87 5,341.68 6,614.55 136,745.83
158 01/11/13 6,614.55 136,745.83 1,265.85 5,348.70 6,614.55 131,397.13
159 02/11/13 6,614.55 131,397.13 1,218.34 5,398.21 6,614.55 125,996.91
160 03/11/13 6,614.55 125,996.91 1,053.49 5,561.06 6,614.55 120,437.85
161 04/11/13 6,614.55 120,437.85 1,114.89 5,499.66 6,614.55 114,938.19
162 05/11/13 6,614.55 114,938.19 1,029.65 5,584.90 6,614.55 109,353.29
163 06/11/13 6,614.55 109,353.29 1,012.28 5,602.27 6,614.55 103,751.02
164 07/11/13 6,614.55 103,751.02 929.33 5,885.11 6,614.55 98,065.91
165 08/11/13 6,614.55 98,065.91 907.79 5,706.76 6,614.55 92,359.15
166 09/11/13 6,614.55 92,359.15 854.96 5,759.59 6,614.55 88,599.56
167 10/11/13 6,614.55 88,599.56 775.79 5,838.78 6,614.55 80,760.80
168 11/11/13 6,614.55 80,760.80 747.60 5,866.95 6,614.55 74,893.85
169 12/11/13 6,614.55 74,893.85 670.92 5,943.83 6,614.55 68,950.22
170 01/11/14 6,614.55 68,950.22 838.27 5,976.28 6,614.55 62,973.94
171 02/11/14 6,614.55 62,973.94 582.95 6,031.60 6,614.55 56,942.34
172 03/11/14 6,614.55 56,942.34 478.10 6,138.45 6,614.55 50,803.89
173 04/11/14 6,614.55 50,803.89 470.29 6,144.26 6,614.55 44,659.63
174 05/11/14 6,614.55 44,659.63 400.08 6,214.47 6,614.55 38,445.15
175 06/11/14 6,614.55 38,445.15 355.88 6,258.87 6,614.55 32,186.49
176 07/11/14 6,614.55 32,186.49 288.34 6,326.21 6,614.55 25,860.27
177 08/11/14 6,614.55 25,860.27 239.39 6,375.18 6,614.55 19,485.11
178 09/11/14 6,614.55 19,485.11 180.37 6,434.18 6,614.55 13,050.93
179 10/11/14 6,614.55 13,050.93 116.91 6,497.64 6,614.55 6,553.30
180 11/11/14 6,614.55 6,553.30 60.88 8,553.89 6,614.55 0.00
</TABLE>
Unit #5234
<PAGE>
Exhibit 10.54
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with
the Loan and Security Agreement, dated as of the date hereof (the "Loan
Agreement"), by and between LLO-GAS, INC., a Delaware corporation (the
"Borrower"), and CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company (together with its successors and assigns, "CSFC"). All terms
used herein and not otherwise defined herein shall have the meaning accorded to
such terms in the table set forth below and in the Loan Agreement. This Note is
entitled to the benefits of and is secured by the pledge, liens, security,
title, rights and security interests granted under the Loan Agreement, the
Mortgages and the other Loan Documents, as the same may be amended, supplemented
or renewed, from time to time and evidences a loan (the "Loan") made to Borrower
by CSFC in accordance with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $1,230,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $5,876.67
- - --------------------------------------------------------------------------------
Stated Payment Amount: $13,907.52
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Delellis Castellucci, known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
---------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
---------------------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<CAPTION>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 5045 Rate 10.750%
Loan Amount $1,230,000 Daily interest 0.02986111% Annual Debt Svc $ 155,890.22
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 5,876.67
0 11/11/99 1,230,000.00
1 12/11/99 13.907.52 1,230,000.00 11,018.75 2,888.77 13.907.52 1,227,111.23
2 01/11/00 13.907.52 1,227,111.23 11,359.30 2,548.22 13.907.52 1,224,563.01
3 02/11/00 13.907.52 1,224,563.01 11,335.71 2,571.81 13.907.52 1,221,991.20
4 03/11/00 13.907.52 1,221,991.20 10,582.10 8,325.42 13.907.52 1,218,665.79
5 04/11/00 13.907.52 1,218,665.79 11,281.12 2,626.40 13.907.52 1,216,039.39
6 05/11/00 13.907.52 1,216,039.39 10,893.69 3,013.83 13.907.52 1,213,025.55
7 06/11/00 13.907.52 1,213,025.55 11,228.91 2,678.81 13.907.52 1,210,348.94
8 07/11/00 13.907.52 1,210,348.94 10,842.69 3,084.83 13.907.52 1,207,282.12
9 08/11/00 13.907.52 1,207,282.12 11,175.74 2,731.78 13.907.52 1,204,550.34
10 09/11/00 13.907.52 1,204,550.34 11,150.46 2,757.05 13.907.52 1,201,793.27
11 10/11/00 13.907.52 1,201,793.27 10,766.06 3,141.48 13.907.52 1,198,851.82
12 11/11/00 13.907.52 1,198,851.82 11,095.85 2,811.87 13.907.52 1,195,840.15
13 12/11/00 13.907.52 1,195,840.15 10,712.79 3,194.79 13.907.52 1,192,645.37
14 01/11/01 13.907.52 1,192,645.37 11,040.25 2,887.27 13.907.52 1,189,778.10
15 02/11/01 13.907.52 1,189,778.10 11,013.71 2,893.81 13.907.52 1,186,884.29
16 03/11/01 13.907.52 1,186,884.29 9,823.67 3,983.85 13.907.52 1,182,900.44
17 04/11/01 13.907.52 1,182,900.44 10,950.04 2,957.48 13.907.52 1,179,942.96
18 05/11/01 13.907.52 1,179,942.96 10,570.32 3,337.20 13.907.52 1,176,605.77
19 06/11/01 13.907.52 1,176,605.77 10,891.77 3,015.79 13.907.52 1,173,590.02
20 07/11/01 13.907.52 1,173,590.02 10,513.41 3,394.11 13.907.52 1,170,195.91
21 08/11/01 13.907.52 1,170,195.91 10,832.44 3,075.08 13.907.52 1,167,120.83
22 09/11/01 13.907.52 1,167,120.83 10,803.97 3,103.55 13.907.52 1,164,017.28
23 10/11/01 13.907.52 1,164,017.28 10,427.65 3,479.87 13.907.52 1,160,537.42
24 11/11/01 13.907.52 1,160,537.42 10,743.03 3,164.49 13.907.52 1,157,372.93
25 12/11/01 13.907.52 1,157,372.93 10,368.13 3,539.39 13.907.52 1,153,833.54
26 01/11/02 13.907.52 1,153,833.54 10,680.97 3,226.55 13.907.52 1,150,806.99
27 02/11/02 13.907.52 1,150,806.99 10,851.11 3,258.41 13.907.52 1,147,350.58
28 03/11/02 13.907.52 1,147,350.58 9,593.13 4,314.39 13.907.52 1,143,036.18
29 04/11/02 13.907.52 1,143,036.18 10,581.02 3,326.50 13.907.52 1,139,709.69
30 05/11/02 13.907.52 1,139,709.69 10,209.90 3,697.62 13.907.52 1,136,012.07
31 06/11/02 13.907.52 1,136,012.07 10,518.00 3,391.52 13.907.52 1,132,620.55
32 07/11/02 13.907.52 1,132,620.55 10,148.39 3,761.13 13.907.52 1,128,859.42
33 08/11/02 13.907.52 1,128,859.42 10,449.79 3,457.73 13.907.52 1,125,401.69
34 09/11/02 13.907.52 1,125,401.69 10,417.78 3,489.74 13.907.52 1,121,911.95
35 10/11/02 13.907.52 1,121,911.95 10,050.46 3,857.06 13.907.52 1,118,054.89
36 11/11/02 13.907.52 1,118,054.89 10,349.77 3,557.75 13.907.52 1,114,497.14
37 12/11/02 13.907.52 1,114,497.14 9,984.04 3,923.48 13.907.52 1,110,573.66
38 01/11/03 13.907.52 1,110,573.66 10,280.52 3,627.00 13.907.52 1,106,946.66
39 02/11/03 13.907.52 1,106,946.66 10,246.94 3,660.58 13.907.52 1,103,286.08
40 03/11/03 13.907.52 1,103,286.08 9,224.70 4,682.82 13.907.52 1,098,603.28
41 04/11/03 13.907.52 1,098,603.28 10,169.71 3,737.81 13.907.52 1,094,565.45
42 05/11/03 13.907.52 1,094,565.45 9,808.17 4,099.35 13.907.52 1,090,766.10
43 06/11/03 13.907.52 1,090,766.10 10,097.15 3,810.36 13.907.52 1,086,955.74
44 07/11/03 13.907.52 1,086,955.74 9,737.31 4,170.21 13.907.52 1,082,785.53
</TABLE>
Unit #5045
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 13.907.52 1,082,785.53 10,023.29 3,884.23 13.907.52 1,078,901.30
46 09/11/03 13.907.52 1,078,901.30 9,987.33 3,920.19 13.907.52 1,074,981.11
47 10/11/03 13.907.52 1,074,981.11 9,630.04 4,227.48 13.907.52 1,070,703.62
48 11/11/03 13.907.52 1,070,703.62 9,911.44 3,996.08 13.907.52 1,055,707.55
49 12/11/03 13.907.52 1,055,707.55 9,555.92 4,351.80 13.907.52 1,062,355.95
50 01/11/04 13.907.52 1,062,355.95 9,534.17 4,073.35 13.907.52 1,058,282.60
51 02/11/04 13.907.52 1,058,282.60 9,796.46 4,111.06 13.907.52 1,054,171.54
52 03/11/04 13.907.52 1,054,171.54 9,128.83 4,778.69 13.907.52 1,048,392.86
53 04/11/04 13.907.52 1,048,392.86 9,714.17 4,183.35 13.907.52 1,045,199.51
54 05/11/04 13.907.52 1,045,199.51 9,363.25 4,554.27 13.907.52 1,040,855.23
55 06/11/04 13.907.52 1,040,855.23 9,633.20 4,274.23 13.907.52 1,036,381.00
56 07/11/04 13.907.52 1,036,381.00 9,284.25 4,623.27 13.907.52 1,031,757.73
57 08/11/04 13.907.52 1,031,757.73 9,550.92 4,356.60 13.907.52 1,027,401.13
58 09/11/04 13.907.52 1,027,401.13 9,510.80 4,396.92 13.907.52 1,023,004.21
59 10/11/04 13.907.52 1,023,004.21 9,164.41 4,743.11 13.907.52 1,019,261.10
60 11/11/04 13.907.52 1,019,261.10 8,425.99 4,481.53 13.907.52 1,013,779.57
61 12/11/04 13.907.52 1,013,779.57 9,081.78 4,825.74 13.907.52 1,008,853.82
62 01/11/05 13.907.52 1,008,853.82 9,339.83 4,587.69 13.907.52 1,004,386.13
63 02/11/05 13.907.52 1,004,386.13 9,297.55 4,609.97 13.907.52 999,776.16
64 03/11/05 13.907.52 999,776.16 8,359.24 5,548.28 13.907.52 994,227.88
65 04/11/05 13.907.52 994,227.88 9,203.51 4,704.01 13.907.52 989,523.87
66 05/11/05 13.907.52 989,523.87 5,854.48 5,043.04 13.907.52 984,480.83
67 06/11/05 13.907.52 984,480.83 9,113.28 4,794.24 13.907.52 979,888.80
68 07/11/05 13.907.52 979,888.80 8,776.36 5,131.16 13.907.52 974,555.44
69 08/11/05 13.907.52 974,555.44 9,021.41 4,888.11 13.907.52 969,669.32
70 09/11/05 13.907.52 969,669.32 8,976.18 4,931.34 13.907.52 964,737.98
71 10/11/05 13.907.52 964,737.98 8,642.44 5,265.08 13.907.52 859,472.90
72 11/11/05 13.907.52 859,472.90 8,881.79 5,025.73 13.907.52 954,447.17
73 12/11/05 13.907.52 954,447.17 8,550.26 5,357.26 13.907.52 949,089.91
74 01/11/06 13.907.52 949,089.91 8,785.87 5,121.85 13.907.52 943,058.06
75 02/11/06 13.907.52 943,058.06 8,738.26 5,169.26 13.907.52 838,798.80
76 03/11/06 13.907.52 838,798.80 7,849.40 6,058.12 13.907.52 932,740.68
77 04/11/06 13.907.52 932,740.68 8,634.33 5,273.19 13.907.52 927,467.49
78 05/11/06 13.907.52 927,467.49 8,308.58 5,598.96 13.907.52 921,868.53
79 06/11/06 13.907.52 921,868.53 8,533.69 5,373.83 13.907.52 916,494.70
80 07/11/06 13.907.52 916,494.70 8,210.26 5,697.26 13.907.52 910,797.44
81 08/11/06 13.907.52 910,797.44 8,431.20 5,476.32 13.907.52 905,321.12
82 09/11/06 13.907.52 905,321.12 8,380.51 5,527.01 13.907.52 899,794.11
83 10/11/06 13.907.52 899,794.11 8,060.66 5,848.86 13.907.52 893,947.25
84 11/11/06 13.907.52 893,947.25 8,275.22 5,632.30 13.907.52 888,314.95
85 12/11/06 13.907.52 888,314.95 7,957.82 5,949.70 13.907.52 882,365.25
86 01/11/07 13.907.52 882,365.25 8,168.01 5,739.51 13.907.52 876,625.73
87 02/11/07 13.907.52 876,625.73 8,114.88 5,792.84 13.907.52 870,833.09
88 03/11/07 13.907.52 870,833.09 7,281.13 6,626.39 13.907.52 864,206.70
89 04/11/07 13.907.52 864,206.70 7,999.91 5,907.61 13.907.52 858,299.09
90 05/11/07 13.907.52 858,299.09 7,688.83 6,218.59 13.907.52 852,080.50
91 06/11/07 13.907.52 852,080.50 7,887.66 6,019.86 13.907.52 848,060.65
92 07/11/07 13.907.52 848,060.65 7,578.29 5,328.23 13.907.52 839,732.42
93 08/11/07 13.907.52 839,732.42 7,773.36 6,134.16 13.907.52 833,598.25
94 09/11/07 13.907.52 833,598.25 7,716.57 6,190.85 13.907.52 827,407.31
95 10/11/07 13.907.52 827,407.31 7,412.19 6,495.33 13.907.52 820,911.96
96 11/11/07 13.907.52 820,911.96 7,599.14 6,308.38 13.907.52 814,603.59
97 12/11/07 13.907.52 814,603.59 7,297.49 6,610.03 13.907.52 807,993.57
98 01/11/08 13.907.52 807,993.57 7,479.55 6,427.97 13.907.52 801,565.60
99 02/11/08 13.907.52 801,565.60 7,420.05 6,487.47 13.907.52 795,078.12
100 03/11/08 13.907.52 795,078.12 6,885.18 7,022.36 13.907.52 788,055.78
101 04/11/08 13.907.52 788,055.78 7,294.99 6,612.53 13.907.52 781,443.23
</TABLE>
Unit #5045
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 13.907.52 781,443.23 7,000.43 6,907.09 13.907.52 774,538.14
103 06/11/08 13.907.52 774,538.14 7,169.84 6,737.66 13.907.52 767,796.46
104 07/11/08 13.907.52 767,796.46 6,878.19 7,028.33 13.907.52 760,769.13
105 08/11/08 13.907.52 760,769.13 7,042.40 6,865.12 13.907.52 753,904.01
106 09/11/08 13.907.52 753,904.01 6,978.85 6,928.67 13.907.52 748,975.34
107 10/11/08 13.907.52 748,975.34 6,691.65 6,691.65 13.907.52 738,759.47
108 11/11/08 13.907.52 738,759.47 6,847.91 6,847.91 13.907.52 732,699.86
109 12/11/08 13.907.52 732,699.86 6,563.77 6,563.77 13.907.52 725,356.11
110 01/11/09 13.907.52 725,356.11 6,714.58 7,192.94 13.907.52 718,183.17
111 02/11/09 13.907.52 718,183.17 6,648.00 7,259.52 13.907.52 710,903.65
112 03/11/09 13.907.52 710,903.65 5,943.94 7,963.58 13.907.52 702,940.07
113 04/11/09 13.907.52 702,940.07 6,507.08 7,400.44 13.907.52 695,539.63
114 05/11/09 13.907.52 695,539.63 6,230.88 7,676.64 13.907.52 687,882.99
115 06/11/09 13.907.52 687,882.99 6,367.51 7,540.01 13.907.52 680,322.98
116 07/11/09 13.907.52 680,322.98 6,094.58 7,812.96 13.907.52 672,510.02
117 08/11/09 13.907.52 672,510.02 6,225.39 7,882.13 13.907.52 664,827.88
118 09/11/09 13.907.52 664,827.88 6,154.27 7,753.25 13.907.52 857,074.64
119 10/11/09 13.907.52 857,074.64 5,886.29 8,021.23 13.907.52 649,053.41
120 11/11/09 13.907.52 649,053.41 6,008.25 7,899.27 13.907.52 641,154.14
121 12/11/09 13.907.52 641,154.14 5,743.67 8,163.85 13.907.52 632,990.30
122 01/11/10 13.907.52 632,990.30 5,859.58 8,047.96 13.907.52 624,942.38
123 02/11/10 13.907.52 624,942.38 5,785.06 8,122.46 13.907.52 616,819.87
124 03/11/10 13.907.52 616,819.87 5,157.30 8,750.22 13.907.52 608,069.85
125 04/11/10 13.907.52 608,069.85 5,628.87 8,278.85 13.907.52 599,791.00
126 05/11/10 13.907.52 599,791.00 5,373.13 8,534.30 13.907.52 591,258.60
127 06/11/10 13.907.52 591,258.60 5,473.23 8,434.29 13.907.52 582,822.31
128 07/11/10 13.907.52 582,822.31 5,221.12 8,686.40 13.907.52 574,135.81
129 08/11/10 13.907.52 574,135.81 5,314.74 8,592.78 13.907.52 585,543.13
130 09/11/10 13.907.52 585,543.13 5,235.20 8,872.32 13.907.52 556,670.81
131 10/11/10 13.907.52 556,670.81 4,988.63 8,918.89 13.907.52 547,951.83
132 11/11/10 13.907.52 547,951.83 5,072.36 8,635.16 13.907.52 539,116.77
133 12/11/10 13.907.52 539,116.77 4,829.59 9,077.83 13.907.52 530,038.84
134 01/11/11 13.907.52 530,038.84 4,906.54 9,000.98 13.907.52 521,037.86
135 02/11/11 13.907.52 521,037.86 4,823.22 9,084.30 13.907.52 511,953.58
136 03/11/11 13.907.52 511,953.58 4,280.50 9,627.02 13.907.52 502,326.54
137 04/11/11 13.907.52 502,326.54 4,650.01 8,257.51 13.907.52 493,069.03
138 05/11/11 13.907.52 493,069.03 4,417.08 9,490.44 13.907.52 483,578.58
139 06/11/11 13.907.52 483,578.58 4,476.48 9,431.08 13.907.52 474,147.52
140 07/11/11 13.907.52 474,147.52 4,247.57 9,659.85 13.907.52 484,487,57
141 08/11/11 13.907.52 484,487,57 4,299.74 9,607.78 13.907.52 454,879.79
142 09/11/11 13.907.52 454,879.79 4,210.80 9,696.72 13.907.52 445,183.07
143 10/11/11 13.907.52 445,183.07 3,988.10 9,919.42 13.907.52 435,263.64
144 11/11/11 13.907.52 435,263.64 4,029.21 9,878.31 13.907.52 425,385.34
145 12/11/11 13.907.52 425,385.34 3,810.74 10,096.78 13.907.52 415,288.56
146 01/11/12 13.907.52 415,288.56 3,844.30 10,063.22 13.907.52 405,225.34
147 02/11/12 13.907.52 405,225.34 3,751.15 10,158.37 13.907.52 395,068.97
148 03/11/12 13.907.52 395,068.97 3,421.19 10,486.33 13.907.52 384,582.64
149 04/11/12 13.907.52 384,582.64 3,560.06 10,347.45 13.907.52 374,235.18
150 05/11/12 13.907.52 374,235.18 3,352.52 10,555.00 13.907.52 363,680.18
151 06/11/12 13.907.52 363,680.18 3,366.57 10,540.95 13.907.52 353,139.23
152 07/11/12 13.907.52 353,139.23 3,163.54 10,743.98 13.907.52 342,395.25
153 08/11/12 13.907.52 342,395.25 3,169.53 10,737.99 13.907.52 331,657.28
154 09/11/12 13.907.52 331,657.28 3,070.13 10,837.39 13.907.52 320,819.88
155 10/11/12 13.907.52 320,819.88 2,874.01 11,033.51 13.907.52 309,766.37
156 11/12/11 13.907.52 309,766.37 2,867.68 11,039.84 13.907.52 285,745.52
157 12/11/12 13.907.52 285,745.52 2,676.27 11,231.25 13.907.52 287,515.27
158 01/11/13 13.907.52 287,515.27 2,661.51 11,248.01 13.907.52 276,269.27
</TABLE>
Unit #5045
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
159 02/11/13 13.907.52 276,269.27 2,557.41 11,250.11 13.907.52 264,919.15
160 03/11/13 13.907.52 264,919.15 2,215.02 11,692.50 13.907.52 253,226.65
161 04/11/13 13.907.52 253,226.65 2,344.11 11,563.41 13.907.52 241,663.24
162 05/11/13 13.907.52 241,663.24 2,164.90 11,742.62 13.907.52 229,920.62
163 06/11/13 13.907.52 229,920.62 2,128.36 11,779.18 13.907.52 218,441.45
164 07/11/13 13.907.52 218,441.45 1,954.18 11,953.34 13.907.52 206,186.12
165 08/11/13 13.907.52 206,186.12 1,908.67 11,998.85 13.907.52 194,189.28
166 09/11/13 13.907.52 194,189.28 1,797.60 12,109.92 13.907.52 182,079.36
167 10/11/13 13.907.52 182,079.36 1,631.13 12,276.39 13.907.52 169,802.95
168 11/11/13 13.907.52 169,802.95 1,571.86 12,335.66 13.907.52 157,467.30
169 12/11/13 13.907.52 157,467.30 1,410.64 12,498.88 13.907.52 144,970.42
170 01/11/14 13.907.52 144,970.42 1,341.98 12,565.54 13.907.52 132,404.89
171 02/11/14 13.907.52 132,404.89 1,225.86 12,881.86 13.907.52 119,723.03
172 03/11/14 13.907.52 119,723.03 1,001.02 12,905.50 13.907.52 106,816.53
173 04/11/14 13.907.52 106,816.53 988.79 12,918.73 13.907.52 93,897.80
174 05/11/14 13.907.52 93,897.80 841.17 13,068.35 13.907.52 80,831.45
175 06/11/14 13.907.52 80,831.45 748.25 13,159.27 13.907.52 67,672.18
176 07/11/14 13.907.52 67,672.18 606.23 13,301.29 13.907.52 54,370.89
177 08/11/14 13.907.52 54,370.89 503.31 13,404.21 13.907.52 40,966.68
178 09/11/14 13.907.52 40,966.68 379.23 13,528.29 13.907.52 27,438.39
179 10/11/14 13.907.52 27,438.39 245.80 13,681.72 13.907.52 13,778.67
180 11/11/14 13.907.52 13,778.67 127.53 13,779.99 13.907.52 0.00
</TABLE>
Unit #5045
<PAGE>
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
EXHIBIT 10.55
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with the
Loan and Security Agreement, dated as of the date hereof (the "Loan Agreement"),
by and between LLO-GAS, INC., a Delaware corporation (the "Borrower"), and
CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited liability company
(together with its successors and assigns, "CSFC"). All terms used herein and
not otherwise defined herein shall have the meaning accorded to such terms in
the table set forth below and in the Loan Agreement. This Note is entitled to
the benefits of and is secured by the pledge, liens, security, title, rights and
security interests granted under the Loan Agreement, the Mortgages and the other
Loan Documents, as the same may be amended, supplemented or renewed, from time
to time and evidences a loan (the "Loan") made to Borrower by CSFC in accordance
with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $975,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $4,658.33
- - --------------------------------------------------------------------------------
Stated Payment Amount: $11.024.25
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
------------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared John
Delellis Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellucci
------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
------------------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<CAPTION>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 609 Rate 10.750%
Loan Amount $ 975,000 Daily interest 0.02985111% Annual Debt Svc $132,291.00
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 4,658.33
0 11/11/99 975,000.00
1 12/11/99 11,024.55 975,000.00 8,734.38 2,289.88 11,024.55 972,710.13
2 01/11/00 11,024.55 972,710.13 9,004.32 2,019.93 11,024.55 970,690.20
3 02/11/00 11,024.55 970,690.20 8,985.63 2,038.62 11,024.55 968,651.57
4 03/11/00 11,024.55 968,651.57 8,388.25 2,636.00 11,024.55 968,015.58
5 04/11/00 11,024.55 968,015.58 8,942.35 2,081.90 11,024.55 983,933.88
6 05/11/00 11,024.55 983,933.88 8,635.24 2,369.01 11,024.55 961,544.87
7 06/11/00 11,024.55 961,544.87 8,900.97 2,123.28 11,024.55 959,421.38
8 07/11/00 11,024.55 959,421.38 8,594.82 2,429.43 11,024.55 956,991.95
9 08/11/00 11,024.55 956,991.95 8,858.82 2,165.43 11,024.55 954,826.52
10 09/11/00 11,024.55 954,826.52 8,636.78 2,185.47 11,024.55 952,651.05
11 10/11/00 11,024.55 952,651.05 8,534.08 2,490.17 11,024.55 950,150.87
12 11/11/00 11,024.55 950,150.87 8,796.49 2,228.78 11,024.55 947,922.12
13 12/11/00 11,024.55 947,922.12 8,491.80 2,532.45 11,024.55 945,389.67
14 01/11/01 11,024.55 945,389.67 8,751.42 2,272.83 11,024.55 943,116.84
15 02/11/01 11,024.55 943,116.84 8,730.38 2,293.87 11,024.55 940,822.97
16 03/11/01 11,024.55 940,822.97 7,866.33 3,157.92 11,024.55 937,665.05
17 04/11/01 11,024.55 937,665.05 8,679.91 2,344.34 11,024.55 935,320.71
18 05/11/01 11,024.55 935,320.71 8,378.91 2,645.34 11,024.55 932,675.37
19 06/11/01 11,024.55 932,675.37 8,633.72 2,390.53 11,024.55 930,284.85
20 07/11/01 11,024.55 930,284.85 8,333.80 2,690.45 11,024.55 927,594.40
21 08/11/01 11,024.55 927,594.40 8,585.69 2,437.56 11,024.55 925,156.84
22 09/11/01 11,024.55 925,156.84 8,584.13 2,460.12 11,024.55 922,698.72
23 10/11/01 11,024.55 922,698.72 8,255.82 2,758.43 11,024.55 919,938.29
24 11/11/01 11,024.55 919,938.29 8,515.82 2,508.43 11,024.55 917,429.86
25 12/11/01 11,024.55 917,429.86 8,218.64 2,805.61 11,024.55 914,524.25
26 01/11/02 11,024.55 914,524.25 8,466.63 2,557.62 11,024.55 912,066.63
27 02/11/02 11,024.55 912,066.63 8,442.95 2,581.30 11,024.55 909,485.33
28 03/11/02 11,024.55 909,485.33 7,604.31 3,419.94 11,024.55 906,065.38
29 04/11/02 11,024.55 906,065.38 6,387.40 2,636.85 11,024.55 903,428.53
30 05/11/02 11,024.55 903,428.53 8,093.21 2,931.04 11,024.55 900,497.49
31 06/11/02 11,024.55 900,497.49 8,335.86 2,688.39 11,024.55 897,809.10
32 07/11/02 11,024.55 897,809.10 8,042.87 2,981.38 11,024.55 894,827.72
33 08/11/02 11,024.55 894,827.72 8,283.37 2,740.88 11,024.55 892,088.84
34 09/11/02 11,024.55 892,088.84 8,258.00 2,766.25 11,024.55 889,320.59
35 10/11/02 11,024.55 889,320.59 7,966.83 3,057.42 11,024.55 886,263.17
36 11/11/02 11,024.55 886,263.17 8,204.09 2,820.16 11,024.55 883,443.01
37 12/11/02 11,024.55 883,443.01 7,914.18 3,110.07 11,024.55 880,332.94
38 01/11/03 11,024.55 880,332.94 8,149.19 2,875.06 11,024.55 877,457.88
39 02/11/03 11,024.55 877,457.88 8,122.58 2,091.87 11,024.55 874,556.21
40 03/11/03 11,024.55 874,556.21 7,312.26 3,711.99 11,024.55 870,844.22
41 04/11/03 11,024.55 870,844.22 8,061.35 2,962.89 11,024.55 867,881.33
42 05/11/03 11,024.55 867,881.33 7,774.77 3,249.48 11,024.55 864,631.85
43 06/11/03 11,024.55 864,631.85 8,003.85 3,020.40 11,024.55 861,611.45
44 07/11/03 11,024.55 861,611.45 7,718.60 3,305.85 11,024.55 858,305.80
</TABLE>
Unit #609
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 11,024.55 858,305.80 7,945.29 3,078.95 11,024.55 855,226.84
46 09/11/03 11,024.55 855,226.84 7,916.79 3,107.45 11,024.55 852,119.38
47 10/11/03 11,024.55 852,119.38 7,633.57 3,390.68 11,024.55 848,728.70
48 11/11/03 11,024.55 848,728.70 7,858.63 3,167.82 11,024.55 845,581.08
49 12/11/03 11,024.55 845,581.08 7,574.82 3,449.43 11,024.55 842,111.85
50 01/11/04 11,024.55 842,111.85 7,795.38 3,228.87 11,024.55 838,882.78
51 02/11/04 11,024.55 838,882.78 7,765.49 3,258.76 11,024.55 835,624.02
52 03/11/04 11,024.55 835,624.02 7,236.27 3,787.98 11,024.55 831,836.04
53 04/11/04 11,024.55 831,836.04 7,700.26 3,323.99 11,024.55 828,512.05
54 05/11/04 11,024.55 828,512.05 7,422.09 3,602.18 11,024.55 824,808.89
55 06/11/04 11,024.55 824,808.89 7,085.15 3,388.10 11,024.55 821,521.78
56 07/11/04 11,024.55 821,521.78 7,359.47 3,664.78 11,024.55 817,857.00
57 08/11/04 11,024.55 817,857.00 7,570.85 3,453.39 11,024.55 814,403.81
58 09/11/04 11,024.55 814,403.81 7,538.89 3,485.36 11,024.55 810,918.25
59 10/11/04 11,024.55 810,918.25 7,264.48 3,759.77 11,024.55 807,158.47
60 11/11/04 11,024.55 807,158.47 7,471.82 3,552.43 11,024.55 803,606.04
61 12/11/04 11,024.55 803,606.04 7,198.97 3,825.28 11,024.55 799,780.75
62 01/11/05 11,024.55 799,780.75 7,403.53 3,620.72 11,024.55 796,180.04
63 02/11/05 11,024.55 796,180.04 7,370.01 3,854.24 11,024.55 792,505.80
64 03/11/05 11,024.55 792,505.80 6,626.23 4,398.02 11,024.55 788,107.78
65 04/11/05 11,024.55 788,107.78 7,295.47 3,726.78 11,024.55 764,379.00
66 05/11/05 11,024.55 764,379.00 7,026.73 3,997.52 11,024.55 780,381.48
67 06/11/05 11,024.55 780,381.48 7,223.95 3,800.30 11,024.55 776,581.18
68 07/11/05 11,024.55 776,581.18 6,956.87 4,067.38 11,024.55 772,513.80
69 08/11/05 11,024.55 772,513.80 7,151.12 3,873.13 11,024.55 768,640.57
70 09/11/05 11,024.55 768,640.57 7,115.26 3,908.99 11,024.55 764,731.66
71 10/11/05 11,024.55 764,731.66 6,850.72 4,173.53 11,024.55 760,558.15
72 11/11/05 11,024.55 760,558.15 7,040.44 3,983.81 11,024.55 756,574.35
73 12/11/05 11,024.55 756,574.35 6,777.65 4,246.60 11,024.55 752,327.74
74 01/11/06 11,024.55 752,327.74 6,964.28 4,059.99 11,024.55 748,267.75
75 02/11/06 11,024.55 748,267.75 6,926.67 4,097.58 11,024.55 744,170.17
76 03/11/06 11,024.55 744,170.17 6,222.09 4,802.16 11,024.55 739,368.01
77 04/11/06 11,024.55 739,368.01 6,844.29 4,179.98 11,024.55 735,188.05
78 05/11/06 11,024.55 735,188.05 6,586.06 4,438.18 11,024.55 730,749.86
79 06/11/06 11,024.55 730,749.86 6,764.51 4,259.74 11,024.55 728,490.12
80 07/11/06 11,024.55 728,490.12 5,508.14 4,515.11 11,024.55 721,974.01
81 08/11/06 11,024.55 721,974.01 6,683.27 4,340.98 11,024.55 717,633.03
82 09/11/06 11,024.55 717,633.03 6,643.09 4,381.15 11,024.55 713,251.87
83 10/11/06 11,024.55 713,251.87 6,389.55 4,634.70 11,024.55 706,617.17
84 11/11/06 11,024.55 706,617.17 6,559.83 4,464.82 11,024.55 704,152.55
85 12/11/06 11,024.55 704,152.55 6,308.03 4,716.22 11,024.55 699,436.33
86 01/11/07 11,024.55 699,436.33 6,474.64 4,549.61 11,024.55 694,886.73
87 02/11/07 11,024.55 694,886.73 6,432.53 4,591.72 11,024.55 690,295.00
88 03/11/07 11,024.55 690,295.00 5,771.63 5,252.62 11,024.55 685,042.39
89 04/11/07 11,024.55 685,042.39 6,341.40 4,682.85 11,024.55 680,359.54
90 05/11/07 11,024.55 680,359.54 6,094.89 4,929.36 11,024.55 675,430.17
91 06/11/07 11,024.55 675,430.17 6,252.42 4,771.83 11,024.55 670,658.34
92 07/11/07 11,024.55 670,658.34 6,007.98 6,015.27 11,024.55 665,642.07
93 08/11/07 11,024.55 665,642.07 6,161.81 4,882.44 11,024.55 660,779.64
94 09/11/07 11,024.55 660,779.64 6,116.80 4,097.45 11,024.55 655,872.19
95 10/11/07 11,024.55 655,872.19 5,875.52 5.148.73 11,024.55 650,723.46
96 11/11/07 11,024.55 650,723.46 6,023.71 5,000.54 11,024.55 645,722.92
97 12/11/07 11,024.55 645,722.92 5,784.60 5,239.65 11,024.55 640,483.27
98 01/11/08 11,024.55 640,483.27 5,928.92 5,095.33 11,024.55 635,387.94
99 02/11/08 11,024.55 635,387.94 5,881.75 5,142.50 11,024.55 630,245.44
100 03/11/08 11,024.55 630,245.44 5,457.75 5,688.50 11,024.55 625,678.94
101 04/11/08 11,024.55 625,678.94 5,782.62 5,241.63 11,024.55 619,437.31
</TABLE>
Unit #609
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 11,024.55 619,437.31 5,549.13 5,475.12 11,024.55 613,982.18
103 06/11/08 11,024.55 613,982.18 5,683.41 5,340.84 11,024.55 606,621.35
104 07/11/08 11,024.55 606,621.35 5,452.23 5,572.02 11,024.55 603,049.33
105 08/11/08 11,024.55 603,049.33 5,582.39 5,441.86 11,024.55 597,607.47
106 09/11/08 11,024.55 597,607.47 5,532.02 5,482.23 11,024.55 592,115.24
107 10/11/08 11,024.55 592,115.24 5,504.37 5,719.88 11,024.55 586,395.36
108 11/11/08 11,024.55 586,395.36 5,428.23 5,598.02 11,024.55 580,799.34
109 12/11/08 11,024.55 580,799.34 5,202.99 5,821.26 11,024.55 574,978.08
110 01/11/09 11,024.55 574,978.08 5,322.54 5,701.71 11,024.55 589,276.37
111 02/11/09 11,024.55 589,276.37 5,289.76 5,754.49 11,024.55 583,521.88
112 03/11/09 11,024.55 583,521.88 4,711.67 6,312.58 11,024.55 557,209.30
113 04/11/09 11,024.55 557,209.30 5,158.08 5,886.19 11,024.55 551,343.11
114 05/11/09 11,024.55 551,343.11 4,939.12 6,085.13 11,024.55 545,257.97
115 06/11/09 11,024.55 545,257.97 5,047.42 5,976.83 11,024.55 539,281.14
116 07/11/09 11,024.55 539,281.14 4,831.06 6,193.19 11,024.55 533,087.96
117 08/11/09 11,024.55 533,087.96 4,934.77 6,089.48 11,024.55 526,998.47
118 09/11/09 11,024.55 526,998.47 4,878.40 6,145.86 11,024.55 520,852.62
119 10/11/09 11,024.55 520,852.62 4,665.97 6,358.28 11,024.55 514,494.34
120 11/11/09 11,024.55 514,494.34 4,782.85 6,251.50 11,024.55 508,232.73
121 12/11/09 11,024.55 508,232.73 4,552.92 6,471.33 11,024.55 501,761.40
122 01/11/10 11,024.55 501,761.40 4,644.78 6,379.47 11,024.55 495,381.93
123 02/11/10 11,024.55 495,381.93 4,585.72 6,438.53 11,024.55 488,943.40
124 03/11/10 11,024.55 488,943.40 4,088.11 6,936.14 11,024.55 482,007.28
125 04/11/10 11,024.55 482,007.28 4,461.91 6,562.34 11,024.55 475,444.93
126 05/11/10 11,024.55 475,444.93 4,259.19 6,765.09 11,024.55 468,679.87
127 06/11/10 11,024.55 468,679.87 4,338.54 6,665.71 11,024.55 481,994.16
128 07/11/10 11,024.55 481,994.16 4,138.70 6,885.55 11,024.55 455,108.81
129 08/11/10 11,024.55 455,108.81 4,212.92 6,811.33 11,024.55 448,297.28
130 09/11/10 11,024.55 448,297.28 4,149.85 6,874.39 11,024.55 441,422.89
131 10/11/10 11,024.55 441,422.89 3,954.41 7,089.84 11,024.55 434,353.05
132 11/11/10 11,024.55 434,353.05 4,020.78 7,003.47 11,024.55 427,349.69
133 12/11/10 11,024.55 427,349.69 3,828.34 7,195.91 11,024.55 420,153.68
134 01/11/11 11,024.55 420,153.68 3,889.34 7,194.91 11,024.55 413,016.76
135 02/11/11 11,024.55 413,016.76 3,823.29 7,200.98 11,024.55 405,817.81
136 03/11/11 11,024.55 405,817.81 3,393.09 7,631.16 11,024.55 398,186.64
137 04/11/11 11,024.55 398,186.64 3,585.99 7,338.26 11,024.55 390,848.39
138 05/11/11 11,024.55 390,848.39 3,501.35 7,522.90 11,024.55 383,325.49
139 06/11/11 11,024.55 383,325.49 3,548.42 7,475.83 11,024.55 375,649.66
140 07/11/11 11,024.55 375,649.66 3,388.99 7,857.28 11,024.55 368,192.40
141 08/11/11 11,024.55 368,192.40 3,408.34 7,615.91 11,024.55 360,578.48
142 09/11/11 11,024.55 360,578.48 3,337.84 7,666.41 11,024.55 352,890.07
143 10/11/11 11,024.55 352,890.07 3,161.31 7,662.94 11,024.55 345,027.12
144 11/11/11 11,024.55 345,027.12 3,193.90 7,830.35 11,024.55 337,195.77
145 12/11/11 11,024.55 337,195.77 3,020.72 8,003.53 11,024.55 329,193.24
146 01/11/12 11,024.55 329,193.24 3,047.32 7,976.93 11,024.55 321,216.32
147 02/11/12 11,024.55 321,216.32 2,973.48 8,050.77 11,024.55 313,185.55
148 03/11/12 11,024.55 313,185.55 2,711.93 8,312.32 11,024.55 304,853.22
149 04/11/12 11,024.55 304,853.22 2,822.01 8,202.24 11,024.55 296,650.98
150 05/11/12 11,024.55 296,650.98 2,857.50 8,388.75 11,024.55 288,284.23
151 06/11/12 11,024.55 288,284.23 2,668.63 8,355.62 11,024.55 279,928.61
152 07/11/12 11,024.55 279,928.61 2,507.69 8,516.56 11,024.55 271,412.06
153 08/11/12 11,024.55 271,412.06 2,512.45 8,511.80 11,024.55 262,900.25
154 09/11/12 11,024.55 262,900.25 2,433.65 8,590.60 11,024.55 254,309.88
155 10/11/12 11,024.55 254,309.88 2,278.19 8,746.08 11,024.55 245,583.80
156 11/12/11 11,024.55 245,583.80 2,273.17 8,751.08 11,024.55 236,812.52
157 12/11/12 11,024.55 236,812.52 2,121.45 8,902.80 11,024.55 227,909.71
158 01/11/13 11,024.55 227,909.71 2,109.75 8,914.50 11,024.55 218,995.21
</TABLE>
Unit #609
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
159 02/11/13 11,024.55 218,995.21 2,027.23 8,997.02 11,024.55 209,998.19
160 03/11/13 11,024.55 209,998.19 1,755.82 9,268.43 11,024.55 200,729.75
161 04/11/13 11,024.55 200,729.75 1,858.14 9,166.11 11,024.55 191,563.85
162 05/11/13 11,024.55 191,563.85 1,716.00 9,308.16 11,024.55 182,255.40
163 06/11/13 11,024.55 182,255.40 1,687.13 9,337.12 11,024.55 172,918.37
164 07/11/13 11,024.55 172,918.37 1,549.05 9,475.19 11,024.55 153,443.18
165 08/11/13 11,024.55 153,443.18 1,512.98 9,511.27 11,024.55 153,931.91
166 09/11/13 11,024.55 153,931.91 1,424.94 9,599.31 11,024.55 144,332.80
167 10/11/13 11,024.55 144,332.80 1,292.98 9,731.27 11,024.55 134,601.33
168 11/11/13 11,024.55 134,601.33 1,248.00 9,778.25 11,024.55 124,823.08
169 12/11/13 11,024.55 124,823.08 1,118.21 9,908.04 11,024.55 114,917.04
170 01/11/14 11,024.55 114,917.04 1,053.78 9,960.47 11,024.55 104,956.57
171 02/11/14 11,024.55 104,956.57 971.58 10,052.87 11,024.55 94,903.89
172 03/11/14 11,024.55 94,903.89 793.50 10,230.75 11,024.55 84,573.14
173 04/11/14 11,024.55 84,573.14 783.81 10,240.44 11,024.55 74,432.71
174 05/11/14 11,024.55 74,432.71 688.79 10,357.46 11,024.55 64,075.25
175 06/11/14 11,024.55 64,075.25 593.14 10,491.11 11,024.55 53,644.15
176 07/11/14 11,024.55 53,644.15 480.58 10,543.69 11,024.55 43,100.48
177 08/11/14 11,024.55 43,100.48 398.98 10,625.27 11,024.55 32,475.18
178 09/11/14 11,024.55 32,475.18 300.82 10,723.63 11,024.55 21,751.56
179 10/11/14 11,024.55 21,751.56 194.86 10,829.39 11,024.55 10,822.16
180 11/11/14 11,024.55 10,822.16 101.11 10,823.14 11,024.55 0.00
</TABLE>
Unit #609
<PAGE>
EXHIBIT 10.56
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with
the Loan and Security Agreement, dated as of the date hereof (the "Loan
Agreement"), by and between LLO-GAS, INC., a Delaware corporation (the
"Borrower"), and CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company (together with its successors and assigns, "CSFC"). All terms
used herein and not otherwise defined herein shall have the meaning accorded to
such terms in the table set forth below and in the Loan Agreement. This Note is
entitled to the benefits of and is secured by the pledge, liens, security,
title, rights and security interests granted under the Loan Agreement, the
Mortgages and the other Loan Documents, as the same may be amended, supplemented
or renewed, from time to time and evidences a loan (the "Loan") made to Borrower
by CSFC in accordance with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $2,500,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $11,944.44
- - --------------------------------------------------------------------------------
Stated Payment Amount: $28,267.31
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
--------------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
-------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<CAPTION>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 81633 Rate 10.750%
Loan Amount $2,500,000 Daily interest 0.02986111% Annual Debt Svc 339,207.71
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 11,944.44
0 11/11/99 2,500,000.00
1 12/11/99 28,267.31 2,500,000.00 22,395.83 5,871.48 28,267.31 2,494,128.52
2 01/11/00 28,267.31 2,494,128.52 23,088.01 5,179.30 28,267.31 2,488,949.22
3 02/11/00 28,267.31 2,488,949.22 23,040.06 5,227.25 28,267.31 2,483,721.98
4 03/11/00 28,267.31 2,483,721.98 21,508.34 6,758.97 28,267.31 2,476,963.01
5 04/11/00 28,267.31 2,476,963.01 22,929.11 5,338.20 28,267.31 2,471,624.81
6 05/11/00 28,267.31 2,471,624.81 22,141.64 6,125.67 28,267.31 2,465,499.14
7 06/11/00 28,267.31 2,465,499.14 22,822.99 5,444.32 28,267.31 2,460,054.82
8 07/11/00 28,267.31 2,460,054.82 22,037.99 6,229.32 28,267.31 2,453,825.50
9 08/11/00 28,267.31 2,453,825.50 22,714.93 5,552.38 28,267.31 2,448,273.11
10 09/11/00 28,267.31 2,448,273.11 22,663,53 5,603.78 28,267.31 2,442,889.33
11 10/11/00 28,267.31 2,442,889.33 21,552.25 6,385.06 28,267.31 2,436,284.27
12 11/11/00 28,267.31 2,436,284.27 22,552.55 5,714.76 28,267.31 2,430,569.51
13 12/11/00 28,267.31 2,430,569.51 21,773.85 6,493.46 28,267.31 2,424,076.05
14 01/11/01 28,267.31 2,424,076.05 22,439.54 5,827.77 28,267.31 2,418,248.27
15 02/11/01 28,267.31 2,418,248.27 22,385.59 5,881.72 28,267.31 2,412,365.55
16 03/11/01 28,267.31 2,412,365.55 20,170.06 8,097.26 28,267.31 2,404,269.31
17 04/11/01 28,267.31 2,404,269.31 22,256.19 6,011.12 28,267.31 2,398,258.19
18 05/11/01 28,267.31 2,398,258.19 21,484.40 6,782.91 28,267.31 2,391,475.27
19 06/11/01 28,267.31 2,391,475.27 22,137.75 6,129.56 28,267.31 2,385,345.72
20 07/11/01 28,267.31 2,385,345.72 21,368.72 6,898.59 28,267.31 2,378,447.13
21 08/11/01 28,267.31 2,378,447.13 22,017.15 6,250.16 28,267.31 2,372,196.97
22 09/11/01 28,267.31 2,372,196.97 21,959.30 6,308.01 28,267.31 2,365,888.96
23 10/11/01 28,267.31 2,365,888.96 21,194.42 7,072.89 28,267.31 2,358,818.07
24 11/11/01 28,267.31 2,358,818.07 21,835.43 6,431.88 28,267.31 2,352,384.19
25 12/11/01 28,267.31 2,352,384.19 21,073.44 7,193.87 28,267.31 2,345,190.32
26 01/11/02 28,267.31 2,345,190.32 21,709.30 6,558.01 28,267.31 2,338,632.31
27 02/11/02 28,267.31 2,338,632.31 21,648.59 6,618.72 28,267.31 2,332,013.59
28 03/11/02 28,267.31 2,332,013.59 19,498.22 8,769.09 28,267.31 2,323,244.50
29 04/11/02 28,267.31 2,323,244.50 21,506.15 6,761.16 28,267.31 2,316,483.34
30 05/11/02 28,267.31 2,316,483.34 20,751.83 7,515.48 28,267.31 2,308,967.88
31 06/11/02 28,267.31 2,308,967.88 21,373.99 6,893.32 28,267.31 2,302,074.53
32 07/11/02 28,267.31 2,302,074.53 20,622.75 7,844.58 28,267.31 2,294,429.97
33 08/11/02 28,267.31 2,294,429.97 21,239.41 7,027.90 28,267.31 2,287,402.08
34 09/11/02 28,267.31 2,287,402.08 21,174.35 7,092.96 28,267.31 2,280,309.12
35 10/11/02 28,267.31 2,280,309.12 20,427.77 7,839.54 28,267.31 2,272,469.58
36 11/11/02 28,267.31 2,272,469.58 21,036.12 7,231.19 28,267.31 2,285,238.39
37 12/11/02 28,267.31 2,285,238.39 20,292.76 7,974.55 28,267.31 2,257,263.84
38 01/11/03 28,267.31 2,257,263.84 20,895.37 7,371.94 28,267.31 2,249,891.90
39 02/11/03 28,267.31 2,249,891.90 20,827.12 7,440.19 28,267.31 2,242.451.71
40 03/11/03 28,267.31 2,242.451.71 18,749.39 9,517.92 28,267.31 2,323,933.79
41 04/11/03 28,267.31 2,323,933.79 20,670.14 7,597.17 28,267.31 2,225,336.63
42 05/11/03 28,267.31 2,225,336.63 19,935.31 6,322.00 28,267.31 2,217,004.62
43 06/11/03 28,267.31 2,217,004.62 20,522.69 7,744.62 28,267.31 2,209,260.00
44 07/11/03 28,267.31 2,209,260.00 19,791.29 8,476.02 28,267.31 2,200,783.98
</TABLE>
Unit #81633
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 28,267.31 2,200,783.98 20,372.54 7,894.77 28,267.31 2,192,888.20
46 09/11/03 28,267.31 2,192,888.20 20,299.45 7,967.86 28,267.31 2,184,921.35
47 10/11/03 28,267.31 2,184,921.35 19,573.25 8,694.06 28,267.31 2,176,227.29
48 11/11/03 28,267.31 2,176,227.29 20,145.22 8,122.09 28,267.31 2,188,105.20
49 12/11/03 28,267.31 2,188,105.20 19,422.61 8,844.70 28,267.31 2,159,260.50
50 01/11/04 28,267.31 2,159,260.50 19,988.15 8,279.16 28,267.31 2,150,981.34
51 02/11/04 28,267.31 2,150,981.34 19,911.51 8,355.80 28,267.31 2,142,825.55
52 03/11/04 28,267.31 2,142,825.55 18,554.54 9,712.77 28,267.31 2,132,912.76
53 04/11/04 28,267.31 2,132,912.76 19,744.26 8,523.05 28,267.31 2,124,389.72
54 05/11/04 28,267.31 2,124,389.72 19,030.99 9,238.32 28,267.31 2,115,163.40
55 06/11/04 28,267.31 2,115,163.40 19,579.88 8,687.45 28,267.31 2,106,465.96
56 07/11/04 28,267.31 2,106,465.96 18,870.42 9,396.89 28,267.31 2,097,069.07
57 08/11/04 28,267.31 2,097,069.07 19,412.45 8,854.86 28,267.31 2,088,214.21
58 09/11/04 28,267.31 2,088,214.21 19,330.48 8,936.83 28,267.31 2,079,277.38
59 10/11/04 28,267.31 2,079,277.38 18,626.86 9,640.45 28,267.31 2,069,636.83
60 11/11/04 28,267.31 2,069,636.83 19,158.51 9,108.80 28,267.31 2,080,528.13
61 12/11/04 28,267.31 2,080,528.13 18,458.90 9,808.41 28,267.31 2,050,719.72
62 01/11/05 28,267.31 2,050,719.72 18,963.40 9,283.91 28,267.31 2,041,435.81
63 02/11/05 28,267.31 2,041,435.81 18,897.46 9,369.85 28,267.31 2,032,065.96
64 03/11/05 28,267.31 2,032,065.96 16,990.33 11,276.98 28,267.31 2,020,788.98
65 04/11/05 28,267.31 2,020,788.98 18,705.33 9,550.98 28,267.31 2,011,228.00
66 05/11/05 28,267.31 2,011,228.00 18,017.25 10,250.06 28,267.31 2,000,977.94
67 06/11/05 28,267.31 2,000,977.94 18,522.94 8,744.37 28,267.31 1,991,233.57
68 07/11/05 28,267.31 1,991,233.57 17,838.13 10,429.18 28,267.31 1,980,804.40
69 08/11/05 28,267.31 1,980,804.40 18,335.20 9,931.11 28,267.31 1,970,873.28
70 09/11/05 28,267.31 1,970,873.28 18,244.26 10,023.05 28,267.31 1,960,850.24
71 10/11/05 28,267.31 1,960,850.24 17,565.95 10,701.38 28,267.31 1,950,148.88
72 11/11/05 28,267.31 1,950,148.88 18,052.42 10,214.89 28,267.31 1,939,933.99
73 12/11/05 28,267.31 1,939,933.99 17,378.58 10,888.73 28,267.31 1,929,045.25
74 01/11/06 28,267.31 1,929,045.25 17,857.06 10,410.25 28,267.31 1,918,635.01
75 02/11/06 28,267.31 1,918,635.01 17,760.70 10,506.61 28,267.31 1,908,128.39
76 03/11/06 28,267.31 1,908,128.39 15,954.07 12,313.24 28,267.31 1,895,815.16
77 04/11/06 28,267.31 1,895,815.16 17,549.46 10,717.85 28,267.31 1,885,097.30
78 05/11/06 28,267.31 1,885,097.30 16,887.33 11,379.98 28,267.31 1,873,717.32
79 06/11/06 28,267.31 1,873,717.32 17,344.90 10,922.41 28,267.31 1,862,794.91
80 07/11/06 28,267.31 1,862,794.91 16,887.54 11,579.77 28,267.31 1,851,215.14
81 08/11/06 28,267.31 1,851,215.14 17,136.60 11,130.71 28,267.31 1,840,084.42
82 09/11/06 28,267.31 1,840,084.42 17,033.56 11,233.75 28,267.31 1,828,850.87
83 10/11/06 28,267.31 1,828,850.87 16,383.45 11,883.86 28,267.31 1,816,966.82
84 11/11/06 28,267.31 1,816,966.82 16,819.56 11,447.75 28,267.31 1,805,519.07
85 12/11/06 28,267.31 1,805,519.07 16,174.44 12,092.87 28,267.31 1,793,426.20
86 01/11/07 28,267.31 1,793,426.20 16,501.65 11,665.66 28,267.31 1,781,760.54
87 02/11/07 28,267.31 1,781,760.54 16,493.66 11,773.65 28,267.31 1,769,988.88
88 03/11/07 28,267.31 1,769,988.88 14,799.05 13,468.25 28,267.31 1,758,518.63
89 04/11/07 28,267.31 1,758,518.63 16,260.00 12,007.31 28,267.31 1,744,511.32
90 05/11/07 28,267.31 1,744,511.32 15,627.91 12,639.40 28,267.31 1.731,871.92
91 06/11/07 28,267.31 1.731,871.92 16,031.84 12,235.57 28,267.31 1,719,838.45
92 07/11/07 28,267.31 1,719,838.45 15,405.08 12,882.23 28,267.31 1,706,774.22
93 08/11/07 28,267.31 1,706,774.22 15,799.51 12,457.80 28,267.31 1,694,306.42
94 09/11/07 28,267.31 1,694,306.42 15,684.10 12,583.21 28,267.31 1,681,723.21
95 10/11/07 28,267.31 1,681,723.21 15,085.44 13,201.87 28,267.31 1,668,521.34
96 11/11/07 28,267.31 1,668,521.34 15,445.41 12,821.90 28,267.31 1,655,599.44
97 12/11/07 28,267.31 1,655,599.44 14,832.31 13,435.00 28,267.31 1,842,284.44
98 01/11/08 28,267.31 1,842,284.44 15,202.35 13,064.96 28,267.31 1,629,199.48
99 02/11/08 28,267.31 1,629,199.48 15,081.41 13,185.90 28,267.31 1,616,013.58
100 03/11/08 28,267.31 1,616,013.58 13,994.23 14,273.08 28,267.31 1,601,740.50
101 04/11/08 28,267.31 1,601,740.50 14,827.22 13,440.09 28,267.31 1,588,300.41
</TABLE>
Unit #81633
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 28,267.31 1,588,300.41 14,228.52 14,038.79 28,267.31 1,574,261.62
103 06/11/08 28,267.31 1,574,261.62 14,572.85 13,694.45 28,267.31 1,560,567.17
104 07/11/08 28,267.31 1,560,567.17 13,980.06 14,287.23 28,267.31 1,545,279.94
105 08/11/08 28,267.31 1,545,279.94 14,313.83 13,953.48 28,267.31 1,532,326.45
106 09/11/08 28,267.31 1,532,326.45 14,184.66 14,082.65 28,267.31 1,519,243.80
107 10/11/08 28,267.31 1,519,243.80 13,600.93 14,666.38 28,267.31 1,503,577.43
108 11/11/08 28,267.31 1,503,577.43 13,918.53 14,348.78 28,267.31 1,489,228.65
109 12/11/08 28,267.31 1,489,228.65 13,341.01 14,926.30 28,267.31 1,474,302.35
110 01/11/09 28,267.31 1,474,302.35 13,647.53 14,619.78 28,267.31 1,459,882.57
111 02/11/09 28,267.31 1,459,882.57 13,512.20 14,755.11 28,267.31 1,444,927.46
112 03/11/09 28,267.31 1,444,927.46 12,081.20 16,186.11 28,267.31 1,428,741.35
113 04/11/09 28,267.31 1,428,741.35 13,225.75 15,041.69 28,267.31 1,413,699.82
114 05/11/09 28,267.31 1,413,699.82 12,664.39 15,602.92 28,267.31 1,298,096.91
115 06/11/09 28,267.31 1,298,096.91 12,942.11 15,325.20 28,267.31 1,382,771.70
116 07/11/09 28,267.31 1,382,771.70 12,387.33 15,879.98 28,267.31 1,366,891.72
117 08/11/09 28,267.31 1,366,891.72 12,653.23 15,614.07 28,267.31 1,351,277.65
118 09/11/09 28,267.31 1,351,277.65 12,508.70 15,758.61 28,267.31 1,335,519.04
119 10/11/09 28,267.31 1,335,519.04 11,964.02 16,303.29 28,267.31 1,319,215.76
120 11/11/09 28,267.31 1,319,215.76 12,211.91 16,055.40 28,267.31 1,303,160.36
121 12/11/09 28,267.31 1,303,160.36 11,674.14 16,593.17 28,267.31 1,286,567.79
122 01/11/10 28,267.31 1,286,567.79 11,909.68 16,357.63 28,267.31 1,270,209.56
123 02/11/10 28,267.31 1,270,209.56 11,758.26 16,509.05 28,267.31 1,253,700.51
124 03/11/10 28,267.31 1,253,700.51 10,482.33 17,784.98 28,267.31 1,235,915.53
125 04/11/10 28,267.31 1,235,915.53 11,440.80 18,626.51 28,267.31 1,219,089.02
126 05/11/10 28,267.31 1,219,089.02 10,921.01 17,346.30 28,267.31 1,201,742.72
127 06/11/10 28,267.31 1,201,742.72 11,124.47 17,142.84 28,267.31 1,184,599.87
128 07/11/10 28,267.31 1,184,599.87 10,612.04 17,655.27 28,267.31 1,166,944.60
129 08/11/10 28,267.31 1,166,944.60 10,802.34 17,484.97 28,267.31 1,149,479.64
130 09/11/10 28,267.31 1,149,479.64 10,640.87 17,626.64 28,267.31 1,131,852.99
131 10/11/10 28,267.31 1,131,852.99 10,139.52 18,127.79 28,267.31 1,113,725.20
132 11/11/10 28,267.31 1,113,725.20 10,309.69 17,957.62 28,267.31 1,095,767.58
133 12/11/10 28,267.31 1,095,767.58 9,816.25 18,451.06 28,267.31 1,077,316.52
134 01/11/11 28,267.31 1,077,316.52 9,972.68 18,294.65 28,267.31 1,059,021.87
135 02/11/11 28,267.31 1,059,021.87 9,803.31 18,484.00 28,267.31 1,040,567.87
136 03/11/11 28,267.31 1,040,567.87 8,700.22 19,567.09 28,267.31 1,020,990.78
137 04/11/11 28,267.31 1,020,990.78 9,451.25 18,818.06 28,267.31 1,002,174.72
138 05/11/11 28,267.31 1,002,174.72 8,977.82 19,289.49 28,267.31 982,885.23
139 06/11/11 28,267.31 982,885.23 9,098.51 19,188.80 28,267.31 963,716.43
140 07/11/11 28,267.31 963,716.43 8,633.29 19,634.02 28,267.31 944,082.42
141 08/11/11 28,267.31 944,082.42 8,739.32 19,527.99 28,267.31 824,554.43
142 09/11/11 28,267.31 824,554.43 8,558.55 19,708.76 28,267.31 904,845.66
143 10/11/11 28,267.31 904,845.66 8,105.91 20,161.40 28,267.31 884,684.26
144 11/11/11 28,267.31 884,684.26 8,189.47 20,077.84 28,267.31 864,606.43
145 12/11/11 28,267.31 864,606.43 7,745.43 20,521.88 28,267.31 844,084.55
146 01/11/12 28,267.31 844,084.55 7,813.64 20,453.67 28,267.31 823,630.88
147 02/11/12 28,267.31 823,630.88 7,824.31 20,643.00 28,267.31 802,987.88
148 03/11/12 28,267.31 802,987.88 6,953.85 21,313.68 28,267.31 781,674.22
149 04/11/12 28,267.31 781,674.22 7,235.91 21,031.40 28,267.31 760,642.83
150 05/11/12 28,267.31 760,642.83 6,814.09 21,453.22 28,267.31 739,189.61
151 06/11/12 28,267.31 739,189.61 6,842.64 21,424.67 28,267.31 717,764.83
152 07/11/12 28,267.31 717,764.83 6,429.98 21,837.33 28,267.31 695,927.69
153 08/11/12 28,267.31 695,927.69 6,442.16 21,825.15 28,267.31 674,102.48
154 09/11/12 28,267.31 674,102.48 6,240.13 22,027.18 28,267.31 652,075.27
155 10/11/12 28,267.31 652,075.27 5,841.51 22,425.80 28,267.31 629,649.47
156 11/12/11 28,267.31 629,649.47 5,828.63 22,438.88 28,267.31 607,210.79
157 12/11/12 28,267.31 607,210.79 5,439.60 22,827.71 28,267.31 584,383.08
158 01/11/13 28,267.31 584,383.08 5,409.60 22,857.71 28,267.31 561,525.37
</TABLE>
Unit #81633
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
159 02/11/13 28,267.31 561,525.37 5,198.01 23,069.30 28,267.31 538,456.07
160 03/11/13 28,267.31 538,456.07 4,502.09 23,785.22 28,267.31 514,690.85
161 04/11/13 28,267.31 514,690.85 4,764.45 23,602.85 28,267.31 491,188.01
162 05/11/13 28,267.31 491,188.01 4,400.23 23,857.08 28,267.31 467,320.92
163 06/11/13 28,267.31 467,320.92 4,325.96 23,941.35 28,267.31 443,379.57
164 07/11/13 28,267.31 443,379.57 3,971.94 24,295.37 28,267.31 419,064.21
165 08/11/13 28,267.31 419,064.21 3,879.44 24,387.87 28,267.31 394,696.34
166 09/11/13 28,267.31 394,696.34 3,653.68 24,613.63 28,267.31 370,082.71
167 10/11/13 28,267.31 370,082.71 3,315.32 24,951.99 28,267.31 345,130.72
168 11/11/13 28,267.31 345,130.72 3,194.86 25,072.45 28,267.31 320,058.27
169 12/11/13 28,267.31 320,058.27 2,867.19 25,400.12 28,267.31 294,638.15
170 01/11/14 28,267.31 294,638.15 2,727.63 25,539.68 28,267.31 269,118.47
171 02/11/14 28,267.31 269,118.47 2,491.21 25,776.10 28,267.31 243,342.38
172 03/11/14 28,267.31 243,342.38 2,034.81 26,232.70 28,267.31 217,109.68
173 04/11/14 28,267.31 217,109.68 2,009.77 26,257.54 28,267.31 190,852.14
174 05/11/14 28,267.31 190,852.14 1,709.72 26,557.59 28,267.31 164,294.55
175 06/11/14 28,267.31 164,294.55 1,520.87 26,746.44 28,267.31 137,548.10
176 07/11/14 28,267.31 137,548.10 1,232.20 27,035.11 28,267.31 110,513.00
177 08/11/14 28,267.31 110,513.00 1,023.01 27,244.30 28,267.31 83,268.70
178 09/11/14 28,267.31 83,268.70 770.81 27,496.50 28,267.31 55,772.20
179 10/11/14 28,267.31 55,772.20 499.63 27,767.68 28,267.31 28,004.52
180 11/11/14 28,267.31 28,004.52 259.24 28,008.07 28,267.31 0.00
</TABLE>
Unit #81633
<PAGE>
Exhibit 10.57
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with
the Loan and Security Agreement, dated as of the date hereof (the "Loan
Agreement"), by and between LLO-GAS, INC., a Delaware corporation (the
"Borrower"), and CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company (together with its successors and assigns, "CSFC"). All terms
used herein and not otherwise defined herein shall have the meaning accorded to
such terms in the table set forth below and in the Loan Agreement. This Note is
entitled to the benefits of and is secured by the pledge, liens, security,
title, rights and security interests granted under the Loan Agreement, the
Mortgages and the other Loan Documents, as the same may be amended, supplemented
or renewed, from time to time and evidences a loan (the "Loan") made to Borrower
by CSFC in accordance with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $750,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $3,583.33
- - --------------------------------------------------------------------------------
Stated Payment Amount: $8,480.20
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
--------------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-----------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
----------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<S> <C> <C> <C> <C> <C>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 5972 Rate 10.750%
Loan Amount $ 750,000 Daily interest 0.02986111% Annual Debt Svc $101,762.35
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
Stub Interest Period (10/26/99 - 11/10/99) 3,583.33
0 11/11/99 750,000.00
1 12/11/99 8,480.20 750,000.00 6,718.75 1,761.45 8,480.20 748,238.55
2 01/11/00 8,480.20 748,238.55 6,926.40 1,553.80 8,480.20 746,664.75
3 02/11/00 8,480.20 746,664.75 6,912.02 1,568.18 8,480.20 745,116.57
4 03/11/00 8,480.20 745,116.57 6,452.50 2,027.70 8,480.20 743,088.57
5 04/11/00 8,480.20 743,088.57 6,878.73 1,601.47 8,480.20 741,487.41
6 05/11/00 8,480.20 741,487.41 6,642.49 1,837.71 8,480.20 739,649.70
7 06/11/00 8,480.20 739,649.70 6,846.90 1,633.30 8,480.20 738,016.39
8 07/11/00 8,480.20 738,016.39 6,611.40 1,888.80 8,480.20 736,147.59
9 08/11/00 8,480.20 736,147.59 6,814.48 1,665.72 8,480.20 734,481.87
10 09/11/00 8,480.20 734,481.87 6,799.06 1,681.42 8,480.20 732,800.73
11 10/11/00 8,480.20 732,800.73 6,564.67 1,915.53 8,480.20 730,885.20
12 11/11/00 8,480.20 730,885.20 6,785.78 1,714.44 8,480.20 729,170.76
13 12/11/00 8,480.20 729,170.76 6,532.15 1,948.05 8,480.20 727,222.72
14 01/11/01 8,480.20 727,222.72 6,731.86 1,748.34 8,480.20 725,474.38
15 02/11/01 8,480.20 725,474.38 6,715.68 1,764.52 8,480.20 723,709.85
16 03/11/01 8,480.20 723,709.85 6,051.02 2,429.18 8,480.20 721,280.57
17 04/11/01 8,480.20 721,280.57 6,876.88 1,803.34 8,480.20 719,477.33
18 05/11/01 8,480.20 719,477.33 6,445.32 2,034.88 8,480.20 717,442.45
19 06/11/01 8,480.20 717,442.45 6,641.32 1,838.88 8,480.20 715,603.57
20 07/11/01 8,480.20 715,603.57 6,410.62 2,069.58 8,480.20 713,533.99
21 08/11/01 8,480.20 713,533.99 6,605.14 1,875.06 8,480.20 711,658.93
22 09/11/01 8,480.20 711,658.93 6,587.79 1,892.41 8,480.20 709,788.52
23 10/11/01 8,480.20 709,788.52 6,358.22 2,121.87 8,480.20 707,644.64
24 11/11/01 8,480.20 707,644.64 6,550.63 1,929.57 8,480.20 705,715.07
25 12/11/01 8,480.20 705,715.07 6,322.03 2,158.17 8,480.20 703,556.90
26 01/11/02 8,480.20 703,556.90 6,512.79 1,967.41 8,480.20 701,589.49
27 02/11/02 8,480.20 701,589.49 6,494.57 1,985.63 8,480.20 699,803.86
28 03/11/02 8,480.20 699,803.86 5,849.47 2,630.73 8,480.20 696,973.13
29 04/11/02 8,480.20 696,973.13 6,451.84 2,028.36 8,480.20 694,944.77
30 05/11/02 8,480.20 694,944.77 6,225.55 2,254.65 8,480.20 692,690.12
31 06/11/02 8,480.20 692,690.12 6,412.19 2,068.01 8,480.20 690,822.11
32 07/11/02 8,480.20 690,822.11 6,188.52 2,293.38 8,480.20 688,328.73
33 08/11/02 8,480.20 688,328.73 6,371.82 2,108.38 8,480.20 686,220.35
34 09/11/02 8,480.20 686,220.35 6,352.30 2,127.90 8,480.20 684,092.46
35 10/11/02 8,480.20 684,092.46 6,128.33 2,351.87 8,480.20 681,740.59
36 11/11/02 8,480.20 681,740.59 6,310.83 2,169.37 8,480.20 679,571.22
37 12/11/02 8,480.20 679,571.22 6,087.83 2,392.37 8,480.20 677,178.85
38 01/11/03 8,480.20 677,178.85 6,268.61 2,211.59 8,480.20 674,967.25
39 02/11/03 8,480.20 674,967.25 6,248.13 2,232.07 8,480.20 672,735.19
40 03/11/03 8,480.20 672,735.19 5,624.81 2,855.39 8,480.20 669,879.80
41 04/11/03 8,480.20 669,879.80 6,201.04 2,279.15 8,480.20 667,600.84
42 05/11/03 8,480.20 667,600.84 5,980.59 2,499.61 8,480.20 665,101.03
43 06/11/03 8,480.20 665,101.03 6,156.80 2,323.40 8,480.20 662,777.83
44 07/11/03 8,480.20 662,777.83 5,937.38 2,542.82 8,480.20 660,234.82
</TABLE>
Unit #5972
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 8,480.20 660,234.82 6,111.78 2,388.44 8,480.20 657,866.37
46 09/11/03 8,480.20 657,866.37 6,089.83 2,390.37 8,480.20 655,4708.01
47 10/11/03 8,480.20 655,476.01 5,871.97 2,608.23 8,480.20 652,887.78
48 11/11/03 8,480.20 652,887.78 6,043.56 2,436.64 8,480.20 650,431.14
49 12/11/03 8,480.20 650,431.14 5,826.78 2,653.42 8,480.20 647,777.72
50 01/11/04 8,480.20 647,777.72 5,996.44 2,483.78 8,480.20 645,293.96
51 02/11/04 8,480.20 645,293.96 5,973.45 2,506.75 8,480.20 642,787.21
52 03/11/04 8,480.20 642,787.21 5,566.36 2,913.84 8,480.20 639,873.37
53 04/11/04 8,480.20 639,873.37 5,923.27 2,566.93 8,480.20 637,316.44
54 05/11/04 8,480.20 637,316.44 5,709.29 2,770.91 8,480.20 634,545.54
55 06/11/04 8,480.20 634,545.54 5,873.95 2,606.26 8,480.20 631,939.29
56 07/11/04 8,480.20 631,939.29 5,661.12 2,819.08 8,480.20 629,120.21
57 08/11/04 8,480.20 629,120.21 5,823.73 2,656.47 8,480.20 626,483.74
58 09/11/04 8,480.20 626,483.74 5,799.14 2,681.06 8,480.20 623,782.68
59 10/11/04 8,480.20 623,782.68 5,588.05 2,892.15 8,480.20 620,890.54
60 11/11/04 8,480.20 620,890.54 5,747.55 2,732.65 8,480.20 618,157.88
61 12/11/04 8,480.20 618,157.88 5,637.86 2,942.54 8,480.20 615,215.35
62 01/11/05 8,480.20 615,215.35 5,695.01 2,785.19 8,480.20 612,430.16
63 02/11/05 8,480.20 612,430.16 5,669.23 2,810.97 8,480.20 609,619.20
64 03/11/05 8,480.20 609,619.20 5,097.09 3,383.11 8,480.20 606,236.09
65 04/11/05 8,480.20 606,236.09 5,611.89 2,868.31 8,480.20 603,367.78
66 05/11/05 8,480.20 603,367.78 5,405.17 3,075.03 8,480.20 600,292.75
67 06/11/05 8,480.20 600,292.75 5,556.88 2,923.32 8,480.20 597,369.43
68 07/11/05 8,480.20 597,369.43 5,351.43 3,128.77 8,480.20 594,240.66
69 08/11/05 8,480.20 594,240.66 5,500.85 2,979.35 8,480.20 591,281.32
70 09/11/05 8,480.20 591,281.32 5,473.27 3,006.93 8,480.20 588,254.39
71 10/11/05 8,480.20 588,254.39 5,269.78 3,210.42 8,480.20 585,043.97
72 11/11/05 8,480.20 585,043.97 5,415.73 3,064.48 8,480.20 581,979.49
73 12/11/05 8,480.20 581,979.49 5,213.57 3,266.83 8,480.20 578,712.85
74 01/11/06 8,480.20 578,712.85 5,357.11 3,123.09 8,480.20 575,589.77
75 02/11/06 8,480.20 575,589.77 5,328.20 3,152.00 8,480.20 572,437.77
76 03/11/06 8,480.20 572,437.77 4,786.22 3,693.98 8,480.20 568,743.79
77 04/11/06 8,480.20 568,743.79 5,264.83 3,215.37 8,480.20 565,528.42
78 05/11/06 8,480.20 565,528.42 5,068.19 3,414.01 8,480.20 562,114.41
79 06/11/06 8,480.20 562,114.41 5,203.46 3,276.74 8,480.20 558,837.87
80 07/11/06 8,480.20 558,837.87 5,006.25 3,473.95 8,480.20 555,363.72
81 08/11/06 8,480.20 555,363.72 5,140.97 3,339.23 8,480.20 552,024.49
82 09/11/06 8,480.20 552,024.49 5,110.06 3,370.14 8,480.20 548,654.35
83 10/11/06 8,480.20 548,654.35 4,915.03 3,565.17 8,480.20 545,069.18
84 11/11/06 8,480.20 545,069.18 5,045.86 4,434.34 8,480.20 541,854.84
85 12/11/06 8,480.20 541,854.84 4,852.32 3,627.88 8,480.20 538,026.97
86 01/11/07 8,480.20 538,026.97 4,960.49 3,499.71 8,480.20 534,527.25
87 02/11/07 8,480.20 534,527.25 4,948.09 3,532.11 8,480.20 530,995.14
88 03/11/07 8,480.20 530,995.14 4,439.71 4,040.49 8,480.20 526,954.85
89 04/11/07 8,480.20 526,954.85 4,877.99 3,602.21 8,480.20 523,352.44
90 05/11/07 8,480.20 523,352.44 4,688.37 3,791.83 8,480.20 519,580.61
91 06/11/07 8,480.20 519,580.61 4,809.54 3,670.66 8,480.20 515,889.95
92 07/11/07 8,480.20 515,889.95 4,621.51 3,858.69 8,480.20 512,031.27
93 08/11/07 8,480.20 512,031.27 4,739.84 3,740.36 8,480.20 508,290.91
94 09/11/07 8,480.20 508,290.91 4,705.22 3,774.98 8,480.20 504,515.93
95 10/11/07 8,480.20 504,515.93 4,519.62 3,960.58 8,480.20 500,655.35
96 11/11/07 8,480.20 500,655.35 4,833.61 3,846.59 8,480.20 496,708.77
97 12/11/07 8,480.20 496,708.77 4,449.68 4,030.52 8,480.20 492,676.25
98 01/11/08 8,480.20 492,676.25 4,560.70 3,919.50 8,480.20 488,758.74
99 02/11/08 8,480.20 488,758.74 4,524.41 3,955.79 8,480.20 484,802.96
100 03/11/08 8,480.20 484,802.96 4,198.28 4,281.94 8,480.20 480,521.02
101 04/11/08 8,480.20 480,521.02 4,448.16 4,032.04 8,480.20 476,488.97
</TABLE>
Unit #5972
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 8,480.20 476,488.97 4,288.55 4,211.65 8,480.20 472,277.32
103 06/11/08 8,480.20 472,277.32 4,371.84 4,108.36 8,480.20 468,168.96
104 07/11/08 8,480.20 468,168.96 4,194.01 4,286.19 8,480.20 463,882.78
105 08/11/08 8,480.20 463,882.78 4,294.14 4,186.06 8,480.20 459,696.71
106 09/11/08 8,480.20 459,696.71 4,255.39 4,224.81 8,480.20 455,471.90
107 10/11/08 8,480.20 455,471.90 4,080.27 4,399.93 8,480.20 451,071.97
108 11/11/08 8,480.20 451,071.97 4,175.55 4,304.65 8,480.20 446,787.32
109 12/11/08 8,480.20 446,787.32 4,002.29 4,477.91 8,480.20 442,289.41
110 01/11/09 8,480.20 442,289.41 4,094.25 4,385.95 8,480.20 437,903.46
111 02/11/09 8,480.20 437,903.46 4,053.65 4,426.55 8,480.20 433,476.91
112 03/11/09 8,480.20 433,476.91 3,624.35 4,855.85 8,480.20 428,621.05
113 04/11/09 8,480.20 428,621.05 3,967.72 4,512.48 8,480.20 424,106.58
114 05/11/09 8,480.20 424,106.58 3,799.31 4,680.89 8,480.20 419,427.68
115 06/11/09 8,480.20 419,427.68 3,882.62 4,597.58 8,480.20 414,830.10
116 07/11/09 8,480.20 414,830.10 3,716.19 4,784.01 8,480.20 410,066.09
117 08/11/09 8,480.20 410,066.09 3,795.96 4,664.24 8,480.20 405,381.85
118 09/11/09 8,480.20 405,381.85 3,752.60 4,727.60 8,480.20 400,654.24
119 10/11/09 8,480.20 400,654.24 3,589.19 4,891.01 8,480.20 395,783.24
120 11/11/09 8,480.20 395,783.24 3,663.56 4,816.64 8,480.20 390,946.60
121 12/11/09 8,480.20 390,946.60 3,502.23 4,977.97 8,480.20 385,968.63
122 01/11/10 8,480.20 385,968.63 3,572.89 4,907.31 8,480.20 381,061.32
123 02/11/10 8,480.20 381,061.32 3,627.48 4,952.74 8,480.20 376,108.58
124 03/11/10 8,480.20 376,108.58 3,144.69 5,335.51 8,480.20 370,773.06
125 04/11/10 8,480.20 370,773.06 3,432.23 5,047.97 8,480.20 365,725.09
126 05/11/10 8,480.20 365,725.09 3,276.29 5,203.91 8,480.20 360,521.18
127 06/11/10 8,480.20 360,521.18 3,337.32 5,142.88 8,480.20 355,378.30
128 07/11/10 8,480.20 355,378.30 3,183.60 5,296.80 8,480.20 350,081.70
129 08/11/10 8,480.20 350,081.70 3,240.69 5,239.51 8,480.20 344,842.19
130 09/11/10 8,480.20 344,842.19 3,192.18 5,288.02 8,480.20 339,554.17
131 10/11/10 8,480.20 339,554.17 3,041.84 5,438.36 8,480.20 334,115.61
132 11/11/10 8,480.20 334,115.61 3,092.69 5,387.31 8,480.20 328,728.50
133 12/11/10 8,480.20 328,728.50 2,944.86 5,535.34 8,480.20 323,193.16
134 01/11/11 8,480.20 323,193.16 2,991.78 5,488.42 8,480.20 317,704.74
135 02/11/11 8,480.20 317,704.74 2,940.98 5,539.22 8,480.20 312,165.52
136 03/11/11 8,480.20 312,165.52 2,610.05 5,870.15 8,480.20 306,295.37
137 04/11/11 8,480.20 306,295.37 2,835.36 5,644.64 8,480.20 300,850.53
138 05/11/11 8,480.20 300,850.53 2,693.33 5,786.67 8,480.20 294,683.66
139 06/11/11 8,480.20 294,683.66 2,729.54 5,750.66 8,480.20 289,112.99
140 07/11/11 8,480.20 289,112.99 2,589.97 5,890.23 8,480.20 283,222.76
141 08/11/11 8,480.20 283,222.76 2,621.78 5,858.42 8,480.20 277,364.34
142 09/11/11 8,480.20 277,364.34 2,567.55 5,912.65 8,480.20 271,451.69
143 10/11/11 8,480.20 271,451.69 2,431.75 6,048.45 8,480.20 265,403.24
144 11/11/11 8,480.20 265,403.24 2,456.82 6,023.38 8,480.20 259,379.86
145 12/11/11 8,480.20 259,379.86 2,323.61 6,156.59 8,480.20 253,223.28
146 01/11/12 8,480.20 253,223.28 2,344.07 6,136.13 8,480.20 247,067.15
147 02/11/12 8,480.20 247,067.15 2,287.27 6,192.93 8,480.20 240,894.22
148 03/11/12 8,480.20 240,894.22 2,066.08 6,394.12 8,480.20 234,500.10
149 04/11/12 8,480.20 234,500.10 2,170.75 6,309.45 8,480.20 228,190.65
150 05/11/12 8,480.20 228,190.65 2,044.21 6,435.99 8,480.20 221,754.66
151 06/11/12 8,480.20 221,754.66 2,052.77 6,427.43 8,480.20 215,327.23
152 07/11/12 8,480.20 215,327.23 1,928.97 8,551.23 8,480.20 208,776.00
153 08/11/12 8,480.20 208,776.00 1,932.63 6,547.57 8,480.20 202,228.43
154 09/11/12 8,480.20 202,228.43 1,872.02 6,606.18 8,480.20 195,620.25
155 10/11/12 8,480.20 195,620.25 1,752.43 6,727.77 8,480.20 188,892.48
156 11/12/11 8,480.20 188,892.48 1,748.57 6,731.63 8,480.20 182,160.85
157 12/11/12 8,480.20 182,160.85 1,631.86 6,848.34 8,480.20 175,312.51
158 01/11/13 8,480.20 175,312.51 1,822.86 6,857.34 8,480.20 188,455.16
</TABLE>
Unit #5972
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
159 02/11/13 8,480.20 188,455.16 1,559.38 6,920.82 8,480.20 161,534.34
160 03/11/13 8,480.20 161,534.34 1,350.61 7,129.59 8,480.20 154,404.75
161 04/11/13 8,480.20 154,404.75 1,429.32 7,050.88 8,480.20 147,353.87
162 05/11/13 8,480.20 147,353.87 1,320.05 7,160.15 8,480.20 140,193.71
163 06/11/13 8,480.20 140,193.71 1,297.77 7,182.43 8,480.20 133,011.28
164 07/11/13 8,480.20 133,011.28 1,191.56 7,288.64 8,480.20 125,722.64
165 08/11/13 8,480.20 125,722.64 1,163.81 7,316.39 8,480.20 118,406.24
166 09/11/13 8,480.20 118,406.24 1,096.08 7,384.12 8,480.20 111,022.12
167 10/11/13 8,480.20 111,022.12 994.57 7,485.63 8,480.20 103,536.50
168 11/11/13 8,480.20 103,536.50 958.43 7,521.77 8,480.20 96,014.73
169 12/11/13 8,480.20 96,014.73 860.13 7,620.07 8,480.20 88,394.86
170 01/11/14 8,480.20 88,394.86 818.26 7,681.94 8,480.20 80,732.72
171 02/11/14 8,480.20 80,732.72 747.34 7,732.86 8,480.20 72,999.86
172 03/11/14 8,480.20 72,999.86 610.36 7,869.84 8,480.20 65,130.02
173 04/11/14 8,480.20 65,130.02 602.91 7,877.29 8,480.20 57,252.73
174 05/11/14 8,480.20 57,252.73 512.89 7,967.31 8,480.20 49,285.42
175 06/11/14 8,480.20 49,285.42 456.23 8,023.97 8,480.20 41,261.45
176 07/11/14 8,480.20 41,261.45 369.63 8,110.57 8,480.20 33,150.88
177 08/11/14 8,480.20 33,150.88 306.88 8,173.32 8,480.20 24,977.56
178 09/11/14 8,480.20 24,977.56 231.22 8,248.98 8,480.20 16,728.58
179 10/11/14 8,480.20 16,728.58 149.86 8,330.34 8,480.20 8,398.24
180 11/11/14 8,480.20 8,398.24 77.74 8,402.46 8,480.20 0.00
</TABLE>
Unit #5972
<PAGE>
EXHIBIT 10.58
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with
the Loan and Security Agreement, dated as of the date hereof (the "Loan
Agreement"), by and between LLO-GAS, INC., a Delaware corporation (the
"Borrower"), and CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company (together with its successors and assigns, "CSFC"). All terms
used herein and not otherwise defined herein shall have the meaning accorded to
such terms in the table set forth below and in the Loan Agreement. This Note is
entitled to the benefits of and is secured by the pledge, liens, security,
title, rights and security interests granted under the Loan Agreement, the
Mortgages and the other Loan Documents, as the same may be amended, supplemented
or renewed, from time to time and evidences a loan (the "Loan") made to Borrower
by CSFC in accordance with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $760,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $3,361.11
- - --------------------------------------------------------------------------------
Stated Payment Amount: $8,593.26
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------
Name: John D. Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-----------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
-----------------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 5191 Rate 10.750%
Loan Amount $ 760,000 Daily interest 0.02986111% Annual Debt Svc $103,119.12
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 3,631.11
0 11/11/99 760,000.00
1 12/11/99 8,593.26 760,000.00 6,808.33 1,784.93 8,593.26 758,215.07
2 01/11/00 8,593.26 758,215.07 7,018.75 1,574.51 8,593.26 756,640.57
3 02/11/00 8,593.26 756,640.57 7,004.18 1,589.06 8,593.26 755,051.49
4 03/11/00 8,593.26 755,051.49 6,538.54 2,054.72 8,593.26 752,996.76
5 04/11/00 8,593.26 752,996.76 6,970.45 1,622.81 8,593.26 751,373.95
6 05/11/00 8,593.26 751,373.95 6,731.06 1,882.20 8,593.26 749,511.75
7 06/11/00 8,593.26 749,511.75 6,938.19 1,655.07 8,593.26 747,856.68
8 07/11/00 8,593.26 747,856.68 6,699.55 1,893.71 8,593.26 745,962.97
9 08/11/00 8,593.26 745,962.97 6,905.34 1,687.92 8,593.26 744,275.05
10 09/11/00 8,593.26 744,275.05 6,889.71 1,703.55 8,593.26 742,571.50
11 10/11/00 8,593.26 742,571.50 6,652.20 1,941.08 8,593.26 740,630.44
12 11/11/00 8,593.26 740,630.44 6,855.97 1,737.29 8,593.26 738,893.16
13 12/11/00 8,593.26 738,893.16 6,619.25 1,974.01 8,593.26 736,919.15
14 01/11/01 8,593.26 736,919.15 6,821.62 1,771.64 8,593.26 735,147.51
15 02/11/01 8,593.26 735,147.51 6,805.22 1,788.04 8,593.26 733,359.47
16 03/11/01 8,593.26 733,359.47 6,131.70 2,461.56 8,593.26 730,897.91
17 04/11/01 8,593.26 730,897.91 6,765.88 1,827.38 8,593.26 729,070.53
18 05/11/01 8,593.26 729,070.53 6,531.26 2,062.00 8,593.26 727.008.53
19 06/11/01 8,593.26 727.008.53 6,729.88 1,863.38 8,593.26 725,145.14
20 07/11/01 8,593.26 725,145.14 6,496.09 2,097.17 8,593.26 723,047.98
21 08/11/01 8,593.26 723,047.98 6,693.21 1,900.05 8,593.26 721,147.93
22 09/11/01 8,593.26 721,147.93 6,675.83 1,917.83 8,593.26 719,230.30
23 10/11/01 8,593.26 719,230.30 6,443.10 2,150.16 8,593.26 717,080.14
24 11/11/01 8,593.26 717,080.14 6,637.97 1,955.29 8,593.26 715,124.85
25 12/11/01 8,593.26 715,124.85 6,406.33 2,186.93 8,593.26 712,937.92
26 01/11/02 8,593.26 712,937.92 6,599.63 1,993.63 8,593.26 710,944.29
27 02/11/02 8,593.26 710,944.29 6,581.17 2,012.09 8,593.26 708,932.20
28 03/11/02 8,593.26 708,932.20 5,927.48 2,665.80 8,593.26 708,288.40
29 04/11/02 8,593.26 708,288.40 6,537.87 2,055.39 8,593.26 704,211.01
30 05/11/02 8,593.26 704,211.01 6,308.58 2,287.70 8,593.26 701,928.31
31 06/11/02 8,593.26 701,928.31 6,497.69 2,095.57 8,593.26 699,830.74
32 07/11/02 8,593.26 699,830.74 6,269.32 2,323.94 8,593.26 697,506.79
33 08/11/02 8,593.26 697,506.79 6,458.78 2,136.48 8,593.26 695,370.32
34 09/11/02 8,593.26 695,370.32 6,437.00 2,156.26 8,593.26 693,214.06
35 10/11/02 8,593.26 693,214.06 6,210.04 2,383.22 8,593.26 590.830.84
36 11/11/02 8,593.26 590.830.84 6,394.98 2,198.28 8,593.26 688,832.57
37 12/11/02 8,593.26 688,832.57 6,169.00 2,424.26 8,593.26 686,208.31
38 01/11/03 8,593.26 686,208.31 6,352.19 2,241.07 8,593.26 683,967.24
39 02/11/03 8,593.26 683,967.24 6,331.45 2,261.81 8,593.26 681,706.43
40 03/11/03 8,593.26 681,706.43 5,699.81 2,893.45 8,593.26 678,811.98
41 04/11/03 8,593.26 678,811.98 6,283.72 2,309.54 8,593.26 676,502.44
42 05/11/03 8,593.26 676,502.44 6,060.33 2,532.93 8,593.26 673,969.52
43 06/11/03 8,593.26 673,969.52 6,238.90 2,354.38 8,593.26 671,615.16
44 07/11/03 8,593.26 671,615.16 8,018.55 2,576.71 8,593.26 669,038.45
</TABLE>
Unit #5191
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 8,593.26 669,038.45 6,193.25 2,400.01 8,593.26 666,638.44
46 09/11/03 8,593.26 666,638.44 6,171.04 2,422.22 8,593.26 664,216.22
47 10/11/03 8,593.26 664,216.22 5,950.27 2,642.99 8,593.26 661,573.28
48 11/11/03 8,593.26 661,573.28 6,124.15 2,469.11 8,593.26 659,104.11
49 12/11/03 8,593.26 659,104.11 5,904.47 2,688.79 8,593.26 658,415.33
50 01/11/04 8,593.26 658,415.33 6.076.40 2,516.86 8,593.26 653,898.47
51 02/11/04 8,593.26 653,898.47 6,053.10 2,540.16 8,593.26 651,358.31
52 03/11/04 8,593.26 651,358.31 5,640.58 2,952.68 8,593.26 648,405.63
53 04/11/04 8,593.26 648,405.63 6,002.25 2,591.01 8,593.26 645,814.63
54 05/11/04 8,593.26 645,814.63 5,785.42 2,607.84 8,593.26 643,006.79
55 06/11/04 8,593.26 643,006.79 5,952.28 2,640.98 8,593.26 640,365.81
56 07/11/04 8,593.26 640,365.81 5,736.61 2,858.65 8,593.26 637,509.16
57 08/11/04 8,593.26 637,509.16 5,901.39 2,691.87 8,593.26 634,817.29
58 09/11/04 8,593.26 634,817.29 5,876.47 2,716.79 8,593.26 632,100.49
59 10/11/04 8,593.26 632,100.49 5,862.57 2,830.59 8,593.26 629,169.80
60 11/11/04 8,593.26 629,169.80 5,824.19 2,769.07 8,593.26 626,400.73
61 12/11/04 8,593.26 626,400.73 5,611.51 2,951.75 8,593.26 623,418.98
62 01/11/05 8,593.26 623,418.98 5,770.95 2,822.31 8,593.26 620,596.67
63 02/11/05 8,593.26 620,596.67 5,744.83 2,848.43 8,593.26 617,748.24
64 03/11/05 8,593.26 617,748.24 5,165.06 3,428.20 8,593.26 614,320.04
65 04/11/05 8,593.26 614,320.04 5,686.73 2,906.53 8,593.26 611,413.51
66 05/11/05 8,593.26 611,413.51 5,477.25 3,118.01 8,593.26 608,297.49
67 06/11/05 8,593.26 608,297.49 5,630.98 2,962.28 8,593.26 605,335.21
68 07/11/05 8,593.26 605,335.21 5,422.79 3,170.47 8,593.26 602,164.75
69 08/11/05 8,593.26 602,164.75 5,574.21 3,019.05 8,593.26 599,145.89
70 09/11/05 8,593.26 599,145.89 5,546.26 3,047.00 8,593.26 596,098.69
71 10/11/05 8,593.26 596,098.69 5,340.05 3,253.21 8,593.26 592,845.48
72 11/11/05 8,593.26 592,845.48 5,487.94 3,105.32 8,593.26 589,740.16
73 12/11/05 8,593.26 589,740.16 5,283.09 3,310.17 8,593.26 586,429.99
74 01/11/06 8,593.26 586,429.99 5,428.55 3,164.71 8,593.26 583,265.28
75 02/11/06 8,593.26 583,265.28 5,399.25 3,194.01 8,593.26 580,071.27
76 03/11/06 8,593.26 580,071.27 4,850.04 3,743.22 8,593.26 576,328.05
77 04/11/06 8,593.26 576,328.05 5,335.04 3,258.22 8,593.26 573,069.83
78 05/11/06 8,593.26 573,069.83 5,133.75 3,459.51 8,593.26 569,610.32
79 06/11/06 8,593.26 569,610.32 5,272.85 3,320.41 8,593.26 566,289.91
80 07/11/06 8,593.26 566,289.91 5,073.01 3,520.25 8,593.26 582,789.66
81 08/11/06 8,593.26 582,789.66 5,209.53 3,383.73 8,593.26 559,385.93
82 09/11/06 8,593.26 559,385.93 5,178.20 3,415.06 8,593.26 555,970.88
83 10/11/06 8,593.26 555,970.88 4,980.57 3,612.69 8,593.26 552,358.19
84 11/11/06 8,593.26 552,358.19 5,113.15 3,480.11 8,593.26 548,878.06
85 12/11/06 8,593.26 548,878.06 4,917.03 3,676.23 8,593.26 545,201.85
86 01/11/07 8,593.26 545,201.85 5,046.90 3,545.36 8,593.26 541,655.49
87 02/11/07 8,593.26 541,655.49 5,014.07 3,579.19 8,593.26 538,076.31
88 03/11/07 8,593.26 538,076.31 4,496.92 4,094.34 8,593.26 533,981.96
89 04/11/07 8,593.26 533,981.96 4,943.04 3,650.22 8,593.26 530,331.75
90 05/11/07 8,593.26 530,331.75 4,750.89 3,342.37 8,593.26 526,489.37
91 06/11/07 8,593.26 526,489.37 4,873.68 3,719.58 8,593.26 522,769.80
92 07/11/07 8,593.26 522,769.80 4,683.15 3,910.11 8,593.26 518,859.68
93 08/11/07 8,593.26 518,859.68 4,803.06 3,790.20 8,593.26 515,069.48
94 09/11/07 8,593.26 515,069.48 4,767.97 3,825.29 8,593.26 511,244.19
95 10/11/07 8,593.26 511,244.19 4,579.90 4,013.35 8,593.26 507,230.82
96 11/11/07 8,593.26 507,230.82 4,695.41 3,897.85 8,593.26 503,332.97
97 12/11/07 8,593.26 503,332.97 4,509.02 4,084.24 8,593.26 499,248.74
98 01/11/08 8,593.26 499,248.74 4,621.52 3,971.74 8,593.26 495,276.99
99 02/11/08 8,593.26 495,276.99 4,584.75 4,008.51 8,593.26 491,288.48
100 03/11/08 8,593.26 491,288.48 4,254.25 4,339.01 8,593.26 486,929.47
101 04/11/08 8,593.26 486,929.47 4,507.48 4,085.78 8,593.26 482,843.69
</TABLE>
Unit #5191
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 8,593.26 482,843.69 4,325.47 4,267.79 8,593.26 478,575.91
103 06/11/08 8,593.26 478,575.91 4,430.15 4,163.11 8,593.26 474,412.80
104 07/11/08 8,593.26 474,412.80 4,249.95 4,343.31 8,593.26 470,069.49
105 08/11/08 8,593.26 470,069.49 4,351.41 4,241.85 8,593.26 485,827.63
106 09/11/08 8,593.26 485,827.63 4,312.14 4,281.12 8,593.26 461,546.51
107 10/11/08 8,593.26 461,546.51 4,134.69 4,458.57 8,593.26 457,087.94
108 11/11/08 8,593.26 457,087.94 4,231.24 4,362.02 8,593.26 452,725.92
109 12/11/08 8,593.26 452,725.92 4,055.67 4,537.59 8,593.26 448,188.33
110 01/11/09 8,593.26 448,188.33 4,148.85 4,444.41 8,593.26 443,743.92
111 02/11/09 8,593.26 443,743.92 4,107.71 4,485.55 8,593.26 439,258.38
112 03/11/09 8,593.26 439,258.38 3,672.69 4,920.57 8,593.26 434,337.80
113 04/11/09 8,593.26 434,337.80 4,020.64 4,572.62 8,593.26 429,765.18
114 05/11/09 8,593.26 429,765.18 3,849.98 4,743.28 8,593.26 425,021.90
115 06/11/09 8,593.26 425,021.90 3,934.40 4,858.86 8,593.26 420,363.05
116 07/11/09 8,593.26 420,363.05 3,765.75 4,827.51 8,593.26 415,535.54
117 08/11/09 8,593.26 415,535.54 3,846.59 4,746.57 8,593.26 410,788.87
118 09/11/09 8,593.26 410,788.87 3,802.65 4,790.61 8,593.26 406,998.26
119 10/11/09 8,593.26 406,998.26 3,637.07 4,956.19 8,593.26 401,042.07
120 11/11/09 8,593.26 401,042.07 3,712.42 4,880.84 8,593.26 396,161.23
121 12/11/09 8,593.26 396,161.23 3,548.94 5,044.32 8,593.26 391,116.92
122 01/11/10 8,593.26 391,116.92 3,620.55 4,972.71 8,593.26 386,144.20
123 02/11/10 8,593.26 386,144.20 3,574.52 5,018.74 8,593.26 381,125.45
124 03/11/10 8,593.26 381,125.45 3,186.63 5,408.83 8,593.26 375,718.83
125 04/11/10 8,593.26 375,718.83 3,478.01 5,115.25 8,593.26 370,803.58
126 05/11/10 8,593.26 370,803.58 3,319.99 5,273.27 8,593.26 365,330.31
127 06/11/10 8,593.26 365,330.31 3,381.84 5,211.42 8,593.26 360,118.89
128 07/11/10 8,593.26 360,118.89 3,226.07 5,367.19 8,593.26 354,751.70
129 08/11/10 8,593.26 354,751.70 3,283.92 5,309.34 8,593.26 349,442.35
</TABLE>
Unit #5191
<PAGE>
EXHIBIT 10.59
CONVENIENCE STORE FINANCE COMPANY, LLC
CSFC 1999 LOAN PROGRAM
CSFC Loan # 250
SECURED PROMISSORY NOTE
This secured promissory note (this "Note") is made in connection with
the Loan and Security Agreement, dated as of the date hereof (the "Loan
Agreement"), by and between LLO-GAS, INC., a Delaware corporation (the
"Borrower"), and CONVENIENCE STORE FINANCE COMPANY, LLC, a Delaware limited
liability company (together with its successors and assigns, "CSFC"). All terms
used herein and not otherwise defined herein shall have the meaning accorded to
such terms in the table set forth below and in the Loan Agreement. This Note is
entitled to the benefits of and is secured by the pledge, liens, security,
title, rights and security interests granted under the Loan Agreement, the
Mortgages and the other Loan Documents, as the same may be amended, supplemented
or renewed, from time to time and evidences a loan (the "Loan") made to Borrower
by CSFC in accordance with the Loan Agreement.
- - --------------------------------------------------------------------------------
Date of Note: October 26, 1999
- - --------------------------------------------------------------------------------
Borrower: LLO-GAS, INC.,
a Delaware corporation
- - --------------------------------------------------------------------------------
Principal Amount: $700,000.00
- - --------------------------------------------------------------------------------
First Payment Date: December 11, 1999
- - --------------------------------------------------------------------------------
Interest Rate: 10.75% per annum
- - --------------------------------------------------------------------------------
Funding Date Payment: $3,344.44
- - --------------------------------------------------------------------------------
Stated Payment Amount: $7,914.85
- - --------------------------------------------------------------------------------
Lockout Period: A period commencing on the Date of Note
and ending on the third anniversary of
the first Payment Date
- - --------------------------------------------------------------------------------
Amortization Period: A period of 180 months commencing on the
eleventh day of the month following the
Date of Note (or on the Date of Note if
such date is the eleventh day of a
month).
- - --------------------------------------------------------------------------------
Maturity Date: November 11, 2014
- - --------------------------------------------------------------------------------
Defeasance Period A period (i) commencing on the earlier
of (x) the third anniversary of the
first Payment Date and (y) two years
after the securitization of the Loan by
CSFC, and (ii) ending on the Maturity
Date
- - --------------------------------------------------------------------------------
<PAGE>
1. Payments of Principal. Borrower hereby promises to pay to the order of
---------------------
CSFC the Principal Amount outstanding under this Note (x) in monthly
installments from the date of the First Payment Date through the Maturity Date,
(y) at the option of Borrower, in full but not in part as permitted under the
Defeasance Option specified in Section 4 hereof, and (z) in full either at such
time as this Note is accelerated under Section 5 hereof or matures under Section
3 hereof.
2. Interest. Interest will accrue and be charged on the Principal Amount
--------
outstanding, from time to time (i) except as provided in clause (ii), at the
Interest Rate, and (ii) upon and during the continuation of an Event of Default,
at a rate per annum equal to the sum of (x) the Interest Rate plus (y) 500 basis
points ("Default Rate"). Borrower promises to pay interest to the order of CSFC
in arrears on each Payment Date (as defined below) except as provided in Section
3.a.ii hereof. All calculations of interest shall be computed on the basis of a
360-day year and charged on the basis of actual days elapsed for any whole or
partial month in which interest is being calculated ("Actual/360"). Borrower
acknowledges that interest calculated on an Actual/360 basis exceeds interest
which is calculated on a basis of a 360-day year consisting of 12 months of 30
days each ("30/360") and, therefore, a greater portion of each monthly
installment of principal and interest will be applied to interest using the
Actual/360 basis than would be the case if interest accrued on a 30/360 basis.
In no event shall Borrower's interest payment obligations or the amounts of
interest payable, contracted for, charged or received under or in connection
with this Note exceed the limitations set forth in Section 8 hereof.
3. Form, Place and Timing of Payments. Borrower agrees to make all
----------------------------------
payments, or cause all payments to be made, under this Note to the order of CSFC
in lawful money of the United States of America and in immediately available
funds, at such place or places and by such method or methods (including wire
transfer or bank account debit) as CSFC shall direct.
a. Payment and Amortization Schedule; Maturity.
-------------------------------------------
i. A "Payment and Amortization Schedule" is attached hereto as
Schedule 3.a.i. and made a part hereof, which schedule is calculated based on
- - --------------
amortization of the Principal Amount over the Amortization Period.
ii. On the date of funding, Borrower's Funding Date Payment is
due. The Funding Date Payment equals the amount of the interest payable for the
period from the date of the funding of the Note, through and including the tenth
(10th) day of the month immediately following the month in which funding occurs
(unless funding has occurred on the first day of the month in which case, said
interest is payable under Section 3.a.iii hereof).
iii. Commencing on the First Payment Date, and on the eleventh
(11th) day of each month the reafter (each a "Payment Date"), Borrower agrees to
pay the Stated Payment Amount until the earliest of the acceleration, exercise
of the Defeasance Option or Maturity Date of this Note, as the case may be.
2
<PAGE>
iv. The Principal Amount outstanding on the Maturity Date,
together with any and all accrued and unpaid interest, charges, fees and
expenses, shall be due and payable on the Maturity Date.
b. Timing of Payments. Whenever a payment to be made under this Note
------------------
becomes due and payable on a Saturday or Sunday or on a legal holiday or a date
on which banking institutions located in the State of New York are authorized or
required to close, such payment shall be made on the next succeeding business
day.
c. Late Payment Charge. If CSFC has not received on any Payment
-------------------
Date, on the Maturity Date, or on any other date on which any payment is due
(whether due to acceleration or otherwise) the full amount due on such Payment
Date, Maturity Date or other date, as the case may be, Borrower promises to pay
to the order of CSFC, promptly on demand, a late payment charge in the amount
equal to the product of (x) the difference between (1) the amount due on such
due date and (z) the amount actually received on such due date, and (y) 0.05.
4. Defeasance Option. This Note, and the Obligations outstanding
-----------------
hereunder, may not be prepaid in whole or in part. However, notwithstanding the
foregoing:
I. So long as no Event of Default shall have occurred and be
continuing, at any time during the Defeasance Period, Borrower may cause the
release of the Collateral and the Properties from the lien of the Loan Documents
upon the satisfaction of the following conditions (such release of the lien and
satisfaction of such conditions referred to herein as the "Defeasance Option"):
(i) not less than thirty (30) days and not more than sixty (60) days
prior written notice shall be given to CSFC specifying a Payment Date on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(such Payment Date, the "Release Date");
(ii) all accrued and unpaid interest and all other sums then due under
this Note and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by CSFC or
its agents in connection with such release (including, without limitation,
the fees and expenses incurred by attorneys and accountants in connection
with the review of the proposed Defeasance Collateral and the preparation
of the Defeasance Loan Agreement (as hereinafter defined) and related
documentation and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 4(I), and
all fees, costs and expenses incurred or to be incurred by Lender in the
purchase of such U.S. Obligations and the assumption payments referred to
herein), shall be paid in full on or prior to the Release Date; and
3
<PAGE>
(iii) Borrower shall deliver to CSFC on or prior to the Release Date:
(A) an amount (in immediately available funds) equal to the
remaining principal amount of this Note and the Yield
Maintenance Premium (hereinafter defined), if any, sufficient
to purchase direct, non-callable obligations of the United
States of America (the "Defeasance Collateral") that provide
for payments prior, but as close as possible, to all successive
monthly Payment Dates occurring after the Release Date through
the Maturity Date (and assuming the Loan is paid in full on the
Maturity Date), with each such payment being equal to or
greater than the amount of the corresponding installment of
principal and interest required to be paid under this Note (the
"Defeasance Deposit"). The Defeasance Deposit shall be used to
purchase the Defeasance Collateral. Each instrument evidencing
such Defeasance Collateral shall be duly endorsed by the holder
thereof as directed by CSFC or accompanied by a written
instrument of transfer in form and substance wholly
satisfactory to CSFC (including, without limitation, such
instruments as may be required by the depository institution
holding such securities to effectuate book-entry transfers and
pledges through the book-entry facilities of such institution)
in order to create a first priority security interest therein
in favor of CSFC in conformity with all applicable state and
federal laws governing granting of such security interests;
(B) a pledge and security agreement, in form and substance
satisfactory to CSFC in its sole discretion, creating a first
priority security interest in favor of CSFC in the Defeasance
Deposit and the Defeasance Collateral (the "Defeasance Loan
Agreement"), which Defeasance Loan Agreement shall provide,
among other things, that any excess payments received by CSFC
from the Defeasance Collateral over the amounts payable by
Borrower hereunder shall be refunded to Borrower.
(C) a certificate of Borrower in form and substance satisfactory to
CSFC in its sole discretion certifying that all of the
requirements set forth in this Section 4 have been satisfied;
(D) an opinion of counsel for Borrower in form and substance and
delivered by counsel satisfactory to CSFC in its sole
discretion stating, among other things, that CFSC has a
perfected first priority security interest in the Defeasance
Deposit and the Defeasance Collateral purchased on behalf of
Borrower and that the Defeasance Loan Agreement is enforceable
against Borrower in accordance with its terms;
4
<PAGE>
(E) a certificate from a firm of independent public accountants
acceptable to CSFC certifying that the Defeasance Collateral is
sufficient to satisfy the provisions of Section A above; and
(F) evidence in writing from each Rating Agency (as defined
hereinafter) selected by CSFC to the effect that such release
will not result in a re-qualification, reduction or withdrawal of
any rating in effect immediately prior to such defeasance for any
Securities (as hereinafter defined); and
(G) such other certificates, documents or instruments as CSFC may
reasonably request.
II. Upon compliance with the requirements of this Section 4 and with the
requirements of Section 4 of each of the other Notes, the Collateral and the
Properties shall be released from the lien of the Loan Documents and the
Defeasance Collateral shall constitute the only collateral which shall secure
the Obligations and CSFC will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the lien of CSFC on the
Collateral and the Properties. Borrower, pursuant to the Defeasance Loan
Agreement, shall authorize and direct that the payments received from Defeasance
Collateral be made directly to CSFC and applied to satisfy the Obligations.
III. Upon the release of the Collateral and the Properties and substitution
of the Defeasance Collateral in accordance with this Section 4, Borrower shall,
upon the direction of CSFC, assign all of its Obligations, together with the
Defeasance Collateral, to a successor entity selected by CSFC. The Borrower and
such successor entity shall execute an assignment and assumption agreement in
form and substance satisfactory to CSFC in its sole discretion pursuant to which
the successor entity shall assume the Obligations in their entirety (including,
without limitation, under the Defeasance Loan Agreement). As conditions to the
effectiveness of such assignment and assumption, Borrower shall (i) deliver or
cause to be delivered to CSFC an opinion of counsel to Borrower (satisfactory
to CSFC in its sole discretion) in form and substance satisfactory to CSFC in
its sole discretion with respect to, among other things, the enforceability of
the assignment and assumption agreement, the Obligations and the applicable
agreements, instruments and documents (including, without limitation, the Loan
Documents) against the successor entity and (ii) pay all costs and expenses
incurred by CSFC, its agents and representatives in connection with the
foregoing. Upon the effectiveness of the assignment and assumption, Borrower
shall be relieved of all Obligations other than those specifically intended to
survive the termination, satisfaction or assignment of the Obligations or the
exercise by CSFC of it rights and remedies with respect to the Obligations.
IV. Upon the release of the Collateral and Properties in accordance with
this Section 4, Borrower shall have no further right to prepay this Note
pursuant to the other provisions of this Section 4 or otherwise. In connection
with the conditions set forth in Subsection I(A) above,
5
<PAGE>
Borrower hereby appoints CSFC as its agent and attorney-in-fact for the purpose
of purchasing the Defeasance Collateral with funds provided by the Borrower.
Borrower shall pay any and all expenses incurred in the purchase of the
Defeasance Collateral and any revenue, documentary stamp or intangible taxes or
any other tax or charge due in connection with the transfer of this Note or
otherwise required to accomplish the agreements of this Section 4.
V. For purposes of this Note and the other Loan Documents, the term
"Yield Maintenance Premium" shall mean the amount, if any, which, when added to
the remaining principal amount of the Note, will be sufficient to purchase the
Defeasance Collateral.
5. Acceleration; Expenses. (a) If an Event of Default occurs, the
----------------------
entire Principal Amount may be accelerated by CSFC and CSFC may pursue it
remedies against Borrower and the personal and real property that secures
Borrower's Obligations, including Borrower's obligation to pay the Principal
Amount evidenced by this Note, from time to time and in such order as CSFC shall
determine. If an Event of Default described in Section 6.1.3 of the Loan
Agreement occurs, all Obligations including, without limitation, the entire
Principal Amount, shall be automatically accelerated without presentment,
demand, protest or notice of any kind. Upon acceleration of the Obligations,
Borrower hereby agrees to pay to the order of CSFC on the date of acceleration
an amount equal to (i) the full Principal Amount of this Note which remains
unpaid as of such date, plus (ii) all accrued and unpaid interest thereon and
all other amounts due and owing hereunder (including, without limitation, any
late payment charges) and under the other Loan Documents, plus (iii) all costs
of collection (including, without limitation, reasonable and actual attorneys'
fees and disbursements, whether or not a suit is commenced), which amounts (and
all other amounts which are due and payable by Borrower) shall be added to the
Principal Amount of this Note and will bear interest at the Default Rate, plus
(iv) the Default Repayment Amount (as herein defined).
(b) Simultaneously with each Default Repayment (as hereinafter
defined) occurring prior to the Maturity Date, Borrower shall pay to CSFC an
amount (the "Default Repayment Amount") equal to the greater of: (A) three (3%)
percent of the principal amount of this Note being prepaid; and (B) the present
value of a series of payments each equal to the Payment Differential (as
hereinafter defined) and payable on each Payment Date over the remaining
original term of this Note and on the Maturity Date, discounted at the
Reinvestment Yield (as hereinafter defined) for the number of months remaining
from the date of the Default Repayment (the "Repayment Date") to each such
monthly Payment Date and the Maturity Date. The term "Reinvestment Yield" as
used herein shall be equal to the lesser of (a) the (i) yield on the U.S.
Treasury issue (primary issue) with the same maturity date as the Maturity Date;
or (ii) if no such U.S. Treasury issue is available, then the interpolated yield
on the two U.S. Treasury issues (primary issues) with maturity dates (one prior
to and one following) that are closest to the Maturity Date; or (b) the (i)
yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Obligations, or (ii) if no such U.S. Treasury
issue is available, then the interpolated yield on the two U.S. Treasury issues
(primary issues) with terms (one prior to and one following) that are closest to
the remaining average life of the Obligations, with each
6
<PAGE>
such yield being based on the bid price for such issue as published in The Wall
Street Journal on the date that is 14 days prior to the Repayment Date (or, if
such bid price is not published on that date, the next preceding date on which
such bid price is so published) and converted to a monthly compounded nominal
yield. The term "Payment Differential" as used herein shall be equal to (x) the
Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by
(z) the principal sum being repaid on such Repayment Date after application of
the Monthly Payment (if any) due on the date of the Default Repayment, provided
that the Payment Differential shall in no event be less than zero. In no event,
however, shall CSFC be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.
For purposes of this Note, the term "Default Repayment" shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Mortgage provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
6. WAIVERS AND SPECIAL AGREEMENTS: BORROWER HEREBY MAKES AND
------------------------------
ACKNOWLEDGES THAT IT MAKES ALL OF THE WAIVERS AND SPECIAL AGREEMENTS ("WAIVERS")
SET FORTH IN THIS NOTE KNOWINGLY, INTENTIONALLY, VOLUNTARILY, WITHOUT DURESS,
AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH
ITS ATTORNEY; BORROWER FURTHER ACKNOWLEDGES THAT BORROWER UNDERSTANDS THE RIGHTS
BEING WAIVED AND THAT THE WAIVERS ARE A MATERIAL INDUCEMENT TO CSFC TO MAKE THE
LOAN TO BORROWER; THAT THE TERMS OF THE LOAN ARE FAVORABLE TO BORROWER AND THAT
CSFC WOULD NOT HAVE MADE THE LOAN ON SUCH TERMS WITHOUT SUCH WAIVERS. Borrower
and any and all obligors, sureties, guarantors and endorsers of this Note and
all other parties now or hereafter liable hereon jointly and severally
("Obligors"): (i) acknowledge that the transaction of which this Note is a part
is part of a commercial transaction; (ii) waive any and all (from time to time)
(a) rights to notice and hearing under any state or federal law with respect to
any prejudgment remedy which the CSFC may desire to use, from time to time, and
(b) grace, diligence, demand, presentment for payment, protest, notice of any
kind (including notice to sureties, disclosure of facts which materially
increase risks, notice of protest, acceptance, liability suit, demand, or
action, dishonor, payment or nonpayment, protest, intention to accelerate or
acceleration, extension or renewal), surety defenses of any kind (including
defenses relating to impairment of recourse, release or modification of
underlying obligation, extension of time, impairment of collateral,
nondisclosure), rights of appraisal of security or collateral for any obligation
or guaranteed obligation and diligence in collecting and bringing suit against
any party; (iii) agree (a) to all extensions of any obligation or guaranteed
obligations (including rescheduling and recalculation of amortization), in whole
or in part, from time to time, or any partial payments, with or without notice,
before or after maturity, (b) to any one or more
7
<PAGE>
substitutions, exchanges or releases of any or all security, now or hereafter
given for any obligation, (c) to any and all releases, from time to time, of any
and all parties primarily, secondarily or otherwise liable for any obligation or
guaranteed obligation, (d) that it is not (and at no time will be) necessary for
CSFC, or any other holder, transferee, obligee or beneficiary of any note or
obligation or guaranteed obligation (or any interest therein) (collectively,
"Obligee"), in order to enforce such note or obligation, to first institute or
exhaust such Person's remedies against any borrower or other Person or against
any collateral or other security for such note or obligation, and (e) any delay
in exercising, failure to exercise, or non-exercise (or partial exercise), from
time to time, by CSFC or any other Obligee of any obligation or guaranteed
obligation of any rights or remedies (or to insist upon strict performance) in
any one or more instances shall not constitute a waiver thereof (or preclude
full exercise or insistence upon strict performance thereof) in that or any
other instance, and any single exercise of any such Person's right or remedies
in any one or more instances shall not preclude full exercise in any other
instance; and (iv) waives and agrees not to assert any right of set off and any
claim (as defined in U.S.C. Section 101), including, without limitation, any
claim of subrogation, reimbursement, exoneration, contribution or
indemnification that Borrower or any other Obligor may now or hereafter have
against Borrower or any other Obligor or any security held by or available to
CSFC or any other Obligee.
7. WAIVER OF TRIAL BY JURY AND APPRAISAL RIGHT. BORROWER HEREBY
-------------------------------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND CSFC BY ITS ACCEPTANCE OF THE NOTE
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 OTHERWISE
RELATING TO THIS NOTE. BORROWER HEREBY FURTHER WAIVES ANY AND ALL RIGHTS
BORROWER MAY NOW OR HEREAFTER HAVE TO AN APPRAISAL OF ANY SECURITY OR COLLATERAL
FOR BORROWER'S OBLIGATIONS HEREUNDER.
8. LIMITATION ON INTEREST. NOTWITHSTANDING ANY OTHER PROVISION HEREOF,
----------------------
IN NO EVENT SHALL THE AMOUNT OR RATE OF INTEREST (INCLUDING TO THE EXTENT
APPLICABLE ANY DEFAULT RATE INTEREST OR LATE PAYMENT CHARGES) PAYABLE,
CONTRACTED FOR, CHARGED OR RECEIVED UNDER OR IN CONNECTION WITH THIS NOTE, FROM
TIME TO TIME OR FOR WHATEVER REASON, EXCEED THE MAXIMUM RATE OR AMOUNT, IF ANY,
SPECIFIED BY APPLICABLE LAW. If from any circumstance whatsoever fulfillment of
any provision hereof or of such other Loan Documents or other documents or
obligations at the time performance of such provision shall be due shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
---- -----
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstance CSFC shall ever receive an amount deemed interest
by applicable law which shall exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the Principal
Amount owing hereunder or on account of any other principal indebtedness of the
Borrower to CSFC, and not to payment of interest or if such excessive interest
exceeds the unpaid balance of the Principal Amount and
8
<PAGE>
such other indebtedness, or if CSFC is prohibited by applicable law from
applying such excessive interest to the reduction of the Principal Amount or on
account of any other indebtedness, the excess shall be refunded to Borrower. All
sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the indebtedness of the Borrower to CSFC shall, to the extent
permitted by applicable law, be amortized prorated, allocated and spread
throughout the full term of such indebtedness until payment in full so that the
actual rate of interest on account of such indebtedness is uniform though the
term hereof. The terms and provisions of this Section shall control and
supersede every other provision of all agreements between the Borrower and CSFC
and all obligations of Borrower to CSFC.
9. Application; Calculations of Amounts Due. Timely payments of the
----------------------------------------
Stated Payment Amount shall be applied first to accrued and unpaid interest,
then to the outstanding Principal Amount. All calculations and applications of
amounts due on any date, whether by acceleration or otherwise, will be made by
CSFC (or its agent or representative) and Borrower agrees that all such
calculations and applications will be conclusive and binding absent manifest
error.
10. Sale or Participation of Loan. CSFC and any successor may, at any
-----------------------------
time, sell, transfer, or assign this Note, the Loan Agreement, the Mortgages,
and the other Loan Documents, and any or all servicing rights with respect
thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the "Securities"). CSFC may
forward to each purchaser, transferee, assignee, servicer, participant, investor
in such Securities or any rating agency (a "Rating Agency") rating such
Securities (all of the foregoing entities collectively referred to as an
"Investor") and each prospective Investor, all documents, financial and other
information which CSFC now has or may hereafter acquire relating to (a) the
Loan; (b) the Business and the Properties and their operation (including,
without limitation, copies of all leases, subleases or any other agreements
concerning the operation, use and occupancy of the Business and the Properties);
and/or (c) any party connected with the Loan (including, without limitation,
Borrower, any partner or member of Borrower, any constituent partner or member
of Borrower, and any guarantor). In connection with such Securities, Borrower
further agrees that the Loan Documents shall be sufficient evidence of the
obligations of Borrower to each Investor, and Borrower shall, within fifteen
(15) days after request by CSFC, deliver an estoppel certificate verifying for
the benefit of CSFC and any other party designated by CSFC the status and the
terms and provisions of the Loan in form and substance acceptable to CSFC, and
enter into such amendments or modifications to the Loan Documents as may be
reasonably required in order to facilitate the Securities without impairing
Borrower's rights or increasing Borrower's obligations. The representations,
warranties, obligations, covenants, and indemnity obligations of Borrower under
the Loan Documents shall also benefit and apply with respect to any purchaser,
transferee, assignee, participant, servicer or investor.
11. Miscellaneous. This Note and the rights and obligations under this
-------------
Note are not assignable or delegable, directly or indirectly, in whole or in
part, by Borrower, except as
9
<PAGE>
provided in the Mortgage. This Note shall be binding upon Borrower, its
successors and, without limiting the preceding sentence, assigns. For all
payments to be made and obligations to be performed under this Note, Borrower
agrees to perform strictly in accordance with the terms of this Note and time is
of the essence. Whenever possible, this Note and each provision hereof, 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 be held
invalid and unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provisions hereof, and
any determination that the application of any provision hereof 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. All rights and remedies provided
in this Note, the Loan Agreement, the Mortgages, and any other Loan Document or
any law shall be available to CSFC and shall be cumulative. THIS NOTE CONTAINS
WAIVERS OF VARIOUS RIGHTS AND DEFENSES, INCLUDING (WITHOUT LIMITATION) WAIVERS
OF RIGHTS OF JURY TRIAL AND APPRAISAL AS SET FORTH IN SECTION 7 HEREOF. THIS
DOCUMENT IS EXECUTED UNDER SEAL AND INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT.
12. Governing Law. This Note was accepted by CSFC in the state of New
-------------
York and the proceeds of this Note were disbursed from the state of New York,
which state the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby. Accordingly, in all respects,
including, without limiting the generality of the foregoing, matters of
constructions, validity, enforceability and performance, this Note, the Loan
Agreement, the Mortgages and the other Loan Documents and the obligations
arising hereunder and thereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in such state and any applicable law of the United States of
America, except that at all times the provisions for the enforcement of CSFC's
rights to foreclose granted under the Mortgages securing this Note and the
creation, perfection and enforcement of the security interests created pursuant
thereto and pursuant to the other Loan Documents shall be governed by and
construed according to the law of the state where each applicable Property is
located. Except as provided in the immediately preceding sentences, Borrower
hereby unconditionally and irrevocably waives, to the fullest extent permitted
by law, any claim to assert that the law of any jurisdiction other than New York
governs the Mortgages, this Note, the Loan Agreement and the other Loan
Documents.
13. Consent to Jurisdiction. Borrower irrevocably submits to the
-----------------------
jurisdiction of: (a) any state or federal court sitting in the State of New
York over any suit, action, or proceeding arising out of or relating to this
Note or the Loan evidenced hereby; and (b) any state court sitting in the
county of the state where the applicable Property is located over any suit,
action, or proceeding, brought by CSFC to exercise its rights to foreclose under
the Mortgages or any action brought by CSFC to enforce its rights with respect
to the Collateral. Borrower irrevocably waives, to the fullest extent permitted
by law, any objection that Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and
10
<PAGE>
any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
11
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on the first date set forth above.
BORROWER:
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
----------------------
Name: John Castellucci
Title: President
Address: 23805 Stuart Ranch Road, Suite 265
Malibu, CA 90265
12
<PAGE>
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
:ss.:
COUNTY OF Los Angeles )
On October 25, 1999, before me, Notary Public, personally appeared
John Castellucci, known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
/s/ Esmeralda A. Castellanos
-----------------------------
Notary Public
Notarial Seal
My Commission Expires:
6-19-2000
-----------------------------
<PAGE>
SCHEDULE 3.a.i
SECURED PROMISSORY NOTE
OF
LLO-GAS, INC.
PAYMENT AND AMORTIZATION
<TABLE>
<CAPTION>
DEAL NAME LLO-Gas, Inc. Spread 450 Rate Lock 10/25/1999
Loan Number 250 15yr Tsy 6.250% Actual/360 Y
Unit Number 712 Rate 10.750%
Loan Amount $ 700,000 Daily interest 0.02986111% Annual Debt Svc $ 94,976.18
Term (yrs) 15.00
Amortization Schedule Avg Lf (yrs) 9.49
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stub Interest Period (10/26/99 - 11/10/99) 3,344.44
0 11/11/99 700,000.00
1 12/11/99 7,914.85 700,000.00 6,270.83 1,644.02 7,914.85 698,355.98
2 01/11/00 7,914.85 698,355.98 6,464.64 1,450.21 7,914.85 696,905.78
3 02/11/00 7,914.85 696,905.78 6,451.22 1,483.63 7,914.85 695,442.14
4 03/11/00 7,914.85 695,442.14 6,022.34 1,892.51 7,914.85 593,549.83
5 04/11/00 7,914.85 593,549.83 6,420.15 1,494.70 7,914.85 692,054.93
6 05/11/00 7,914.85 692,054.93 6,199.66 1,715.19 7,914.85 690,339.74
7 06/11/00 7,914.85 690,339.74 6,390.44 1,524.41 7,914.85 688,815.33
8 07/11/00 7,914.85 688,815.33 6,170.64 1,744.21 7,914.85 687,071.11
9 08/11/00 7,914.85 687,071.11 6,360.18 1,554.67 7,914.85 685,516.44
10 09/11/00 7,914.85 685,516.44 6,345.79 1,569.06 7,914.85 683,947.38
11 10/11/00 7,914.85 683,947.38 6,127.03 1,787.82 7,914.85 682,159.56
12 11/11/00 7,914.85 682,159.56 6,314.71 1,600.14 7,914.85 580,559.42
13 12/11/00 7,914.85 580,559.42 6,096.66 1,818.17 7,914.85 678,741.25
14 01/11/01 7,914.85 678,741.25 6,283.07 1,631.78 7,914.85 677,109.47
15 02/11/01 7,914.85 677,109.47 6,267.96 1,646.89 7,914.85 675,462.58
16 03/11/01 7,914.85 675,462.58 5,647.62 2,267.23 7,914.85 673,195.35
17 04/11/01 7,914.85 673,195.35 6,231.73 1,683.12 7,914.85 671,512.23
18 05/11/01 7,914.85 671,512.23 6,015.63 1,899.22 7,914.85 669,613.01
19 06/11/01 7,914.85 669,613.01 6,198.57 1,715.26 7,914.85 667,896.74
20 07/11/01 7,914.85 667,896.73 5,983.24 1,931.61 7,914.85 665,965.13
21 08/11/01 7,914.85 665,965.13 6,164.80 1,750.05 7,914.85 664,215.08
22 09/11/01 7,914.85 664,215.08 6,148.60 1,766.25 7,914.85 662,448.83
23 10/11/01 7,914.85 662,448.83 5,934.44 1,980.41 7,914.85 660,488.42
24 11/11/01 7,914.85 660,488.42 6,113.92 1,800.93 7,914.85 658,667.49
25 12/11/01 7,914.85 658,667.49 5,900.58 2,014.29 7,914.85 856,653.20
26 01/11/02 7,914.85 856,653.20 6,078.60 1,836.25 7,914.85 654,818.95
27 02/11/02 7,914.85 654,818.95 6,061.80 1,853.25 7,914.85 652,963.71
28 03/11/02 7,914.85 652,963.71 5,459.50 2,455.35 7,914.85 650,508.38
29 04/11/02 7,914.85 650,508.38 6,021.72 1,893.13 7,914.85 648,615.23
30 05/11/02 7,914.85 648,615.23 5,810.51 2,104.34 7,914.85 648,510.69
31 06/11/02 7,914.85 648,510.69 5,984.72 1,930.13 7,914.85 644,580.75
32 07/11/02 7,914.85 644,580.75 5,774.37 2,140.48 7,914.85 642,440.27
33 08/11/02 7,914.85 642,440.27 5,947.03 1,967.82 7,914.85 640,472.45
34 09/11/02 7,914.85 640,472.45 5,928.82 1,986.03 7,914.85 638,486.43
35 10/11/02 7,914.85 638,486.43 5,719.77 2,195.08 7,914.85 636,291.35
36 11/11/02 7,914.85 636,291.35 5,890.11 2,024.74 7,914.85 634,268.61
37 12/11/02 7,914.85 634,268.61 5,681.97 2,232.88 7,914.85 832,033.74
38 01/11/03 7,914.85 832,033.74 5,850.70 2,064.15 7,914.85 629,969.59
39 02/11/03 7,914.85 629,969.59 5,831.59 2,083.28 7,914.85 627,888.33
40 03/11/03 7,914.85 627,888.33 5,249.83 2,665.02 7,914.85 625,221.31
41 04/11/03 7,914.85 625,221.31 4,787.64 2,127.21 7,914.85 623,094.10
42 05/11/03 7,914.85 623,094.10 5,581.88 2,332.97 7,914.85 620,781.13
43 06/11/03 7,914.85 620,781.13 5,745.35 2,168.50 7,914.85 618,592.63
44 07/11/03 7,914.85 618,592.63 5,541.56 2,373.29 7,914.85 616,219.34
</TABLE>
Unit #712
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
45 08/11/03 7,914.85 616,219.34 5,704.31 2,210.54 7,914.85 614,008.80
46 09/11/03 7,914.85 614,008.80 5,683.85 2,231.00 7,914.85 611,777.80
47 10/11/03 7,914.85 611,777.80 5,480.51 2,434.34 7,914.85 609,343.46
48 11/11/03 7,914.85 609,343.46 5,640.66 2,274.19 7,914.85 607,069.26
49 12/11/03 7,914.85 607,069.26 5,438.33 2,476.52 7,914.85 804,592.74
50 01/11/04 7,914.85 804,592.74 5,596.68 2,318.17 7,914.85 802,274.57
51 02/11/04 7,914.85 802,274.57 5,575.22 2,339.63 7,914.85 599,934.95
52 03/11/04 7,914.85 599,934.95 5,195.27 2,719.58 7,914.85 597,215.37
53 04/11/04 7,914.85 597,215.37 5,528.39 2,386.46 7,914.85 594,828.91
54 05/11/04 7,914.85 594,828.91 5,328.68 2,588.17 7,914.85 592,242.73
55 06/11/04 7,914.85 592,242.73 5,482.36 2,432.49 7,914.85 589,810.24
56 07/11/04 7,914.85 589,810.24 5,283.72 2,631.13 7,914.85 587,179.11
57 08/11/04 7,914.85 587,179.11 5,435.48 2,479.37 7,914.85 584,699.74
58 09/11/04 7,914.85 584,699.74 5,412.53 2,502.32 7,914.85 582,197.42
59 10/11/04 7,914.85 582,197.42 5,215.52 2,899.33 7,914.85 579,498.09
60 11/11/04 7,914.85 579,498.09 5,364.38 2,550.47 7,914.85 578,947.62
61 12/11/04 7,914.85 578,947.62 5,188.49 2,748.36 7,914.85 574,201.28
62 01/11/05 7,914.85 574,201.28 5,315.35 2,599.50 7,914.85 571,601.76
63 02/11/05 7,914.85 571,601.76 5,291.29 2,623.58 7,914.85 568,978.20
64 03/11/05 7,914.85 568,978.20 4,757.29 3,157.56 7,914.85 565,820.64
65 04/11/05 7,914.85 565,820.64 5,237.77 2,577.08 7,914.85 583,143.58
66 05/11/05 7,914.85 583,143.58 5,044.83 2,870.02 7,914.85 580,273.64
67 06/11/05 7,914.85 580,273.64 5,186.42 2,728.43 7,914.85 557,545.11
68 07/11/05 7,914.85 557,545.11 4,994.67 2,920.18 7,914.85 554,624.93
69 08/11/05 7,914.85 554,624.93 5,134.19 2,780.72 7,914.85 551,644.21
70 09/11/05 7,914.85 551,644.21 5,108.39 2,806.48 7,914.85 549,037.75
71 10/11/05 7,914.85 549,037.75 4,918.46 2,996.39 7,914.85 548,041.37
72 11/11/05 7,914.85 548,041.37 5,054.67 2,880.18 7,914.85 543,181.19
73 12/11/05 7,914.85 543,181.19 4,886.00 3,048.85 7,914.85 540,132.34
74 01/11/06 7,914.85 540,132.34 4,999.98 2,914.57 7,914.85 537,217.47
75 02/11/06 7,914.85 537,217.47 4,972.99 2,941.86 7,914.85 534,275.61
76 03/11/06 7,914.85 534,275.61 4,457.14 3,447.71 7,914.85 530,827.90
77 04/11/06 7,914.85 530,827.90 4,913.84 3,001.01 7,914.85 527,826.89
78 05/11/06 7,914.85 527,826.89 4,728.45 3,186.40 7,914.85 524,840.49
79 06/11/06 7,914.85 524,840.49 4,858.57 3,058.28 7,914.85 521,582.21
80 07/11/06 7,914.85 521,582.21 4,672.51 3,242.34 7,914.85 518,339.86
81 08/11/06 7,914.85 518,339.86 4,798.24 3,118.61 7,914.85 515,223.26
82 09/11/06 7,914.85 515,223.26 4,789.39 3,145.48 7,914.85 512,077.80
83 10/11/06 7,914.85 512,077.80 4,587.36 3,327.49 7,914.85 508,750.31
84 11/11/06 7,914.85 508,750.31 4,709.47 3,205.38 7,914.85 505,544.94
85 12/11/06 7,914.85 505,544.94 4,528.84 3,386.01 7,914.85 502,158.93
86 01/11/07 7,914.85 502,158.93 4,648.56 3,266.39 7,914.85 498,892.54
87 02/11/07 7,914.85 498,892.54 4,618.22 3,298.83 7,914.85 495,595.91
88 03/11/07 7,914.85 495,595.91 4,143.73 3,771.12 7,914.85 491,824.79
89 04/11/07 7,914.85 491,824.79 4,552.79 3,362.08 7,914.85 488,462.73
90 05/11/07 7,914.85 488,462.73 4,375.81 3,539.04 7,914.85 484,923.70
91 06/11/07 7,914.85 484,923.70 4,488.91 3,425.94 7,914.85 481,497.76
92 07/11/07 7,914.85 481,497.76 4,313,42 3,601.43 7,914.85 477,896.32
93 08/11/07 7,914.85 477,896.32 4,423.86 3,490.99 7,914.85 474,405.33
94 09/11/07 7,914.85 474,405.33 4,391.54 3,523.31 7,914.85 470,882.03
95 10/11/07 7,914.85 470,882.03 4,218.32 3,696.53 7,914.85 467,185.50
96 11/11/07 7,914.85 467,185.50 4,324.71 3,590.14 7,914.85 463,595.36
97 12/11/07 7,914.85 463,595.36 4,153.04 3,781.81 7,914.85 459,833.55
98 01/11/08 7,914.85 459,833.55 4,256.65 3,658.20 7,914.85 458,175.35
99 02/11/08 7,914.85 458,175.35 4,222.79 3,592.06 7,914.85 452,483.29
100 03/11/08 7,914.85 452,483.29 3,918.38 3,996.47 7,914.85 448,488.82
101 04/11/08 7,914.85 448,488.82 4,151.62 3,783.23 7,914.85 444,723.59
</TABLE>
Unit #712
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
102 05/11/08 7,914.85 444,723.59 3,983.98 3,930.87 7,914.85 440,792.72
103 06/11/08 7,914.85 440,792.72 4,080.39 3,834.46 7,914.85 438,958.26
104 07/11/08 7,914.85 438,958.26 3,914.42 4,000.43 7,914.85 432,957.83
105 08/11/08 7,914.85 432,957.83 4,007.87 3,906.98 7,914.85 429,050.85
106 09/11/08 7,914.85 429,050.85 3,971.70 3,943.15 7,914.85 425,107.70
107 10/11/08 7,914.85 425,107.70 3,808.20 4,106.59 7,914.85 421,011.11
108 11/11/08 7,914.85 421,011.11 3,897.18 4,017.67 7,914.85 416,963.44
109 12/11/08 7,914.85 416,963.44 3,735.48 4,179.37 7,914.85 412,804.07
110 01/11/09 7,914.85 412,804.07 3,821.30 4,093.55 7,914.85 406,710.52
111 02/11/09 7,914.85 406,710.52 3,783.41 4,131.44 7,914.85 404,579.08
112 03/11/09 7,914.85 404,579.08 3,382.73 4,532.12 7,914.85 400,046.96
113 04/11/09 7,914.85 400,046.96 3,703.21 4,211.64 7,914.85 395,835.32
114 05/11/09 7,914.85 395,835.32 3,546.02 4,368.83 7,914.85 391,486.50
115 06/11/09 7,914.85 391,486.50 3,623.78 4,291.07 7,914.85 387,175.43
116 07/11/09 7,914.85 387,175.43 3,488.45 4,446.40 7,914.85 382,729.03
117 08/11/09 7,914.85 382,729.03 3,542.90 4,371.95 7,914.85 378,357.08
118 09/11/09 7,914.85 378,357.08 3,502.43 4,412.42 7,914.85 373,944.66
119 10/11/09 7,914.85 373,944.66 3,349.92 4,564.93 7,914.85 369,379.73
120 11/11/09 7,914.85 369,379.73 3,419.33 4,495.52 7,914.85 364,884.21
121 12/11/09 7,914.85 364,884.21 3,268.75 4,545.10 7,914.85 360,238.11
122 01/11/10 7,914.85 360,238.11 3,334.70 4,580.15 7,914.85 355,657.97
123 02/11/10 7,914.85 355,657.97 3,292.31 4,622.54 7,914.85 351,035.42
124 03/11/10 7,914.85 351,035.42 2,935.05 4,979.60 7,914.85 348,055.62
125 04/11/10 7,914.85 348,055.62 3,203.42 4,711.43 7,914.85 341,344.19
126 05/11/10 7,914.85 341,344.19 3,057.88 4,856.97 7,914.85 336,487.21
127 06/11/10 7,914.85 336,487.21 3,114.84 4,800.01 7,914.85 331,687.21
128 07/11/10 7,914.85 331,687.21 2,971.36 4,943.49 7,914.85 326,743.72
129 08/11/10 7,914.85 326,743.72 3,024.85 4,890.20 7,914.85 321,853.52
130 09/11/10 7,914.85 321,853.52 2,979.38 4,935.47 7,914.85 316,918.05
131 10/11/10 7,914.85 316,918.05 2,839.05 5,075.79 7,914.85 311,842.26
132 11/11/10 7,914.85 311,842.26 2,886.71 5,028.14 7,914.85 306,814.11
133 12/11/10 7,914.85 306,814.11 2,748.54 5,166.31 7,914.85 301,847.81
134 01/11/11 7,914.85 301,847.81 2,792.34 5,122.51 7,914.85 296,525.29
135 02/11/11 7,914.85 296,525.29 2,744.82 5,169.93 7,914.85 291,355.36
136 03/11/11 7,914.85 291,355.36 2,436.05 5,478.80 7,914.85 285,876.57
137 04/11/11 7,914.85 285,876.57 2,646.34 5,288.51 7,914.85 280,608.06
138 05/11/11 7,914.85 280,608.06 2,513.78 5,401.07 7,914.85 275,206.99
139 06/11/11 7,914.85 275,206.99 2,547.58 5,367.27 7,914.85 269,839.72
140 07/11/11 7,914.85 269,839.72 2,417.31 5,497.54 7,914.85 264,342.18
141 08/11/11 7,914.85 264,342.18 2,447.00 5,487.85 7,914.85 258,874.33
142 09/11/11 7,914.85 258,874.33 2,396.39 5,518.46 7,914.85 253,355.87
143 10/11/11 7,914.85 253,355.87 2,269.65 5,645.20 7,914.85 247,710.55
144 11/11/11 7,914.85 247,710.55 2,293.04 5,621.81 7,914.85 242,088.86
145 12/11/11 7,914.85 242,088.86 2,168.71 5,746.14 7,914.85 236,342.72
146 01/11/12 7,914.85 236,342.72 2,187.61 5,727.04 7,914.85 230,615.68
147 02/11/12 7,914.85 230,615.68 2,134.80 5,780.05 7,914.85 224,835.63
148 03/11/12 7,914.85 224,835.63 1,947.01 5,957.84 7,914.85 218,867.79
149 04/11/12 7,914.85 218,867.79 2,028.05 5,888.80 7,914.85 212,978.99
150 05/11/12 7,914.85 212,978.99 1,907.94 6,006.91 7,914.85 206,972.07
151 06/11/12 7,914.85 206,972.07 1,915.93 5,998.92 7,914.85 200,973.15
152 07/11/12 7,914.85 200,973.15 1,800.38 6,114.47 7,914.85 194,858.69
153 08/11/12 7,914.85 194,858.69 1,803.80 6,111.05 7,914.85 188,747.83
154 09/11/12 7,914.85 188,747.83 1,747.23 6,157.82 7,914.85 182,580.01
155 10/11/12 7,914.85 182,580.01 1,635.61 6,279.24 7,914.85 176,300.77
156 11/12/11 7,914.85 176,300.77 1,632.01 6,282.84 7,914.85 170,017.93
157 12/11/12 7,914.85 170,017.93 1,523.08 6,391.77 7,914.85 163,625.15
158 01/11/13 7,914.85 163,625.15 1,514.55 6,500.17 7,914.85 157,225.98
</TABLE>
Unit #712
<PAGE>
<TABLE>
<CAPTION>
Payment Monthly Beg. Period Total Ending Period
Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount
- - ------ ---- -------- ----------- -------- --------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
159 02/11/13 7,914.85 157,225.98 1,455.43 6,459.42 7,914.85 150,766.57
160 03/11/13 7,914.85 150,766.57 1,260.58 6,654.27 7,914.85 144,112.29
161 04/11/13 7,914.85 144,112.29 1,334.04 6,580.81 7,914.85 137,531.48
162 05/11/13 7,914.85 137,531.48 1,232.05 6,682.80 7,914.85 130,848.69
163 06/11/13 7,914.85 130,848.69 1,211.26 6,703.59 7,914.85 124,145.09
164 07/11/13 7,914.85 124,145.09 1,112.13 6,802.72 7,914.85 117,342.38
165 08/11/13 7,914.85 117,342.38 1,086.23 6,826.62 7,914.85 110,513.78
166 09/11/13 7,914.85 110,513.78 1,023.02 6,891.63 7,914.85 103,821.93
167 10/11/13 7,914.85 103,821.93 928.28 6,986.57 7,914.85 96,635.38
168 11/11/13 7,914.85 96,635.38 894.55 7,020.30 7,914.85 89,615.06
169 12/11/13 7,914.85 89,615.06 802.80 7,112.05 7,914.85 82,503.01
170 01/11/14 7,914.85 82,503.01 783.73 7,151.12 7,914.85 75,351.88
171 02/11/14 7,914.85 75,351.88 697.53 7,217.32 7,914.85 68,134.56
172 03/11/14 7,914.85 68,134.56 569.68 7,345.17 7,914.85 60,789.39
173 04/11/14 7,914.85 60,789.39 582.72 7,362.13 7,914.85 53,437.27
174 05/11/14 7,914.85 53,437.27 478.71 7,436.14 7,914.85 46,001.13
175 06/11/14 7,914.85 46,001.13 425.83 7,489.02 7,914.85 38,512.11
176 07/11/14 7,914.85 38,512.11 345.00 7,569.85 7,914.85 30,942.26
177 08/11/14 7,914.85 30,942.26 286.43 7,628.42 7,914.85 23,313.84
178 09/11/14 7,914.85 23,313.84 215.81 7,699.04 7,914.85 15,614.81
179 10/11/14 7,914.85 15,614.81 139.88 7,774.97 7,914.85 7,839.84
180 11/11/14 7,914.85 7,839.84 72.57 7,842.28 7,914.85 0.00
</TABLE>
Unit #712
<PAGE>
EXHIBIT 10.69
Surrendered to SBS Trust Deed Network with request for reconveyance.
STRAIGHT NOTE
(This Note contains an acceleration clause.)
$200,000.00 Orange, California November 23, 1999
Upon demand after date, for value received, I/We, the undersigned, jointly and
severally, promise to pay to TIME OUT, LLC, or order, at such place as
designated by beneficiary the sum of TWO HUNDRED THOUSAND AND NO/100 ___________
Dollars, with interest from ____________ until paid, at the rate of 8.00% per
cent, per annum, payable monthly installments of $10,000.00, plus interest, or
more, commencing on the _____ day of December, 1999 and continuing monthly
thereafter until on or before the _____ day of May, 2000, at which time the
entire unpaid principal balance plus accrued interest, if any, shall become
immediately due and payable.
If the trustor shall sell, convey or alienate said property, or any part
thereof, or any interest therein, or shall be divested of his title or any
interest therein any manner or way, whether voluntarily or involuntarily,
without the written consent of the beneficiary being first had and obtained,
beneficiary shall have the right, at its option, except as prohibited by law, to
declare any indebtedness or obligations secured hereby, irrespective of the
maturity date specified in any note evidencing the same, immediately due and
payable.
Should interest not be so paid, it shall thereafter bear like interest as the
principal, but such unpaid interest so compounded shall not exceed an amount
equal to simple interest on the unpaid principal at the maximum rate permitted
by law. Should default be made in the payment of any installment of interest
when due, then the whole sum of principal and interest shall become immediately
due and payable at the option of the holder of this note. Should suit be
commenced to collect this note or any portion thereof, such sum as the Court may
deem reasonable shall be added hereto as attorney's fees. Principal and
interest payable in lawful money of the United States of America. This note is
secured by a certain DEED OF TRUST to SBS TRUST DEED NETWORK, a California
corporation, as TRUSTEE and a Letter of Credit from Capstone Capital, LLC, to
guarantee monthly installments and balloon payment.
LLO-Gas, Inc.
By: /s/ John Castellucci By: /s/ John Castellucci
---------------------------------- ---------------------------------
John Castellucci, CEO/Chairman John Castellucci, Personally
S.B.S. TRUST DEED
-----------------
N E T W O R K
<PAGE>
EXHIBIT 10.70
Surrendered to SBS Trust Deed Network with request for reconveyance.
STRAIGHT NOTE
$300,000.00 Orange, California October 28, 1999
Upon demand after Due date, for value received, I, the undersigned, promise to
pay to TIME OUT, L.L.C., or order, at such place as designated by beneficiary
the sum of THREE HUNDRED THOUSAND AND NO/100 Dollars, with interest from January
12, 2000 until paid, at the rate of 8% per cent per annum, payable INTEREST
ONLY, or more, in monthly installments of $2,000.00, or more, commencing
February 12, 2000, and continuing monthly thereafter until on or before January
12, 2001, at which time the entire unpaid principal balance plus accrued
interest, if any, shall become immediately due and payable.
[JC]
Should interest not be so paid, it shall thereafter bear like interest as the
principal, but such unpaid interest so compounded shall not exceed an amount
equal to simple interest on the unpaid principal at the maximum rate permitted
by law. Should default be made in the payment of any installment of interest
when due, then the whole sum of principal and interest shall become immediately
due and payable at the option of the holder of this note. Should suit be
commenced to collect this note or any portion thereof, such sum as the Court may
deem reasonable shall be added hereto as attorney's fees. Principal and
interest payable in lawful money of the United States of America. This note is
secured by a certain DEED OF TRUST to SBS TRUST DEED NETWORK, a California
corporation, as TRUSTEE.
LLO-Gas, Inc., a Delaware corp.
By: /s/ John Castellucci
-----------------------------------
John Castellucci, CEO/Chairman
S.B.S. TRUST DEED
-----------------
N E T W O R K
<PAGE>
Exhibit 10.71
Surrendered to SBS Trust Deed Network with request for reconveyance.
STRAIGHT NOTE
(This Note contains an acceleration clause.)
$200,000.00 Orange, California November 23, 1999
Upon demand after date, for value received, I/We, the undersigned, jointly and
severally, promise to pay to TIME OUT, LLC, or order, at such place as
designated by beneficiary the sum of TWO HUNDRED THOUSAND AND NO/100
_____________ Dollars, with interest from _________ until paid, at the rate of
8.00% per cent, per annum, payable monthly installments of $10,000.00, plus
interest, or more, commencing on the _____ day of December, 1999 and continuing
monthly thereafter until on or before the _____ day of May, 2000, at which time
the entire unpaid principal balance plus accrued interest, if any, shall become
immediately due and payable.
If the trustor shall sell, convey or alienate said property, or any part
thereof, or any interest therein, or shall be divested of his title or any
interest therein any manner or way, whether voluntarily or involuntarily,
without the written consent of the beneficiary being first had and obtained,
beneficiary shall have the right, at its option, except as prohibited by law, to
declare any indebtedness or obligations secured hereby, irrespective of the
maturity date specified in any note evidencing the same, immediately due and
payable.
Should interest not be so paid, it shall thereafter bear like interest as the
principal, but such unpaid interest so compounded shall not exceed an amount
equal to simple interest on the unpaid principal at the maximum rate permitted
by law. Should default be made in the payment of any installment of interest
when due, then the whole sum of principal and interest shall become immediately
due and payable at the option of the holder of this note. Should suit be
commenced to collect this note or any portion thereof, such sum as the Court may
deem reasonable shall be added hereto as attorney's fees. Principal and
interest payable in lawful money of the United States of America. This note is
secured by a certain DEED OF TRUST to SBS TRUST DEED NETWORK, a California
corporation, as TRUSTEE and a Letter of Credit from Capstone Capital, LLC, to
guarantee monthly installments and balloon payment.
LLO-Gas, Inc.
By: /s/ John Castellucci By: /s/ John Castellucci
--------------------------------- ------------------------------
John Castellucci, CEO/Chairman John Castellucci, Personally
S.B.S. TRUST DEED
-----------------
N E T W O R K
<PAGE>
EXHIBIT 10.72
PROMISSORY NOTE
---------------
December 16, 1999 $150,000.00
For value received, LLO-GAS, INC., a Delaware corporation, and JOHN D.
CASTELLUCCI, hereinafter collectively referred to as "Makers," promise to pay to
Mehdi Mastaedi or his successors and assigns, herein referred to as "Holder" the
sum of $150,000.00 together with interest at the rate Nine percent (9%), with
the entire sum due and payable, including principal and accrued but unpaid
interest, on February 16, 2000.
In the event of default, the entire amount of principal and unpaid
interest shall be become immediately due and payable. Default shall include,
but not be limited to, the failure of Makers to pay interest or principal when
due, the occurrence of an event which causes a material adverse change in the
Makers' financial conditions, or the filing by or against the Makers of a
petition under the provisions of any bankruptcy or insolvency law.
If this Note is not paid when due, or upon demand in the event of
default, the Makers promise to pay all costs and expenses of collection
including reasonable attorneys' fees incurred by the Holder hereof on account of
such collection, whether or not suit is filed.
Dated: December 16, 1999 LLO-FAS, INC., a Delaware corporation
By: /s/ John D. Castellucci
-------------------------------------
John D. Castellucci, President
By: /s/ John D. Castellucci
-------------------------------------
John D. Castellucci, individually
<PAGE>
Exhibit 10.74
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") is intended to document the
agreements reached between LLO-Gas, Inc., a Delaware corporation ("LLO-Gas"),
and Atlantic Richfield Company, a Delaware corporation ("ARCO"), with respect to
the subject matter hereof.
1. LLO-Gas owes money to ARCO arising from ARCO's sale and delivery
of gasoline to LLO-Gas for which LLO-Gas has not yet paid. The present balance
owed by LLO-Gas to ARCO for gasoline purchases is $398,310.86 (the "Delinquent
Amount").
2. Payment by LLO-Gas to ARCO of the Delinquent Amount was and is
secured by that certain Irrevocable Letter of Credit issued by Sterling National
Bank, dated October 22,1999, in the original, principal amount of Four Hundred
Fifty Thousand Dollars ($450,000.00) and bearing No. SLC100002 (the "Letter of
Credit"). The remaining principal balance which ARCO is entitled to draw on the
Letter of Credit is Three Hundred Twenty-Two Thousand, One Hundred Fifteen
Dollars and Eighty-One Cents ($322,115.81).
3. Although ARCO is fully and immediately entitled to do so, LLO-Gas
has requested that ARCO not draw down all or any portion of the Letter of Credit
to collect the Delinquent Amount. LLO-Gas has advised ARCO that such a draw
down of the Letter of Credit would cause LLO-Gas to default on other
obligations, including obligations to Capstone Capital LLC, which threaten the
continued operation of LLO-Gas.
4. As a material inducement to cause ARCO to forbear from immediately
drawing down the Letter of Credit in the full amount of the Delinquent Amount,
LLO-Gas agrees to take all of the following steps:
(a) On or before March 23rd, 2000 at 12:00 p.m., Pacific
Standard Time, LLO-Gas will execute a separate Promissory Note (the "Note") in
the original, principal
<PAGE>
amount of the Delinquent Amount. Under the terms of the Note, LLO-Gas shall make
weekly payments of principal and interest of Four Thousand Dollars ($4,000.00)
to ARCO until May 8, 2002, on which date the entire remaining principal balance
of the Note, all accrued and unpaid interest thereon and any and all other sums
owed to ARCO thereunder shall be all due and payable.
(b) The Letter of Credit shall be maintained in full force and
effect for the benefit of ARCO with a face amount at no time less than
$322,115.81, and on or before March 29, 2000 at 12:00 p.m., Pacific Standard
Time, the Letter of Credit shall be amended to (i) extend its term to July 31,
2002, and (ii) provide that the Letter of Credit shall not expire, be canceled
or otherwise terminated without thirty (60) days prior written notice to ARCO
and ARCO's consent. The Letter of Credit shall be amended to include assurance
that ARCO may draw down the Letter of Credit in the event bankruptcy could
potentially impact repayment of the Promissory Note, consistent with paragraph 5
of this MOU. Documentation confirming this shall be provided to ARCO on or
before March 31, 2000 at 12:00 p.m., Pacific Standard Time.
(c) Until otherwise determined by ARCO, in the sole and absolute
discretion of ARCO, all purchases and payments made by LLO-Gas from ARCO,
including but not limited to royalty payments, gasoline and other product
purchases, loan payments and other payments and purchases of every kind
whatsoever, shall be made on a wire transfer basis.
5. In reliance upon the foregoing agreements and representations of
LLO-Gas, and as an accommodation to LLO-Gas, ARCO agrees not immediately to draw
down all or any portion of the Letter of Credit; provided, however, that if LLO-
Gas fails for any reason whatsoever to make any payment when due under the terms
of the Note or otherwise commits an Event of Default under the Note, or if LLO-
Gas breaches or defaults for any reason whatsoever with respect to any term,
covenant, condition, agreement or provision of this MOU,
-2-
<PAGE>
then ARCO shall immediately and without notice to LLO-Gas draw down the Letter
of Credit in an amount equal to the entire outstanding balance of the Delinquent
Amount, including but not limited to all principal, interest and other charges
due, owing and unpaid to ARCO under the Note. In the event that at any time
prior to repayment in full of the entire Delinquent Amount, LLO-Gas has filed a
petition for relief or an involuntary petition has been filed against LLO-Gas
pursuant to the Unites States Bankruptcy Code or similar law or an assignment
for the benefit of creditors has been filed by LLO-Gas or has been filed against
LLO-Gas, then ARCO shall have the immediate right (but not the obligation)
without notice to or consent by LLO-Gas of any kind whatsoever, to draw down the
Letter of Credit in the full amount of all payments which were made by LLO-Gas
to ARCO or otherwise due and owing to ARCO, under the Promissory Note during the
90 days prior to the filing of such bankruptcy or assignment for the benefit of
creditors ("preference payments"). Upon ARCO's receipt of payment under the
Letter of Credit, ARCO will remit the preference payments to the estate of LLO-
Gas.
6. Given LLO-Gas's representations that it will be unable to continue
operations without additional credit from ARCO, ARCO will extend to LLO-Gas a
line of credit in the maximum principal amount of $300,000.00 (the "Line of
Credit"). The Line of Credit will be available to LLO-Gas for the purchase of
gasoline only and will be immediately secured, in part, by a $150,000.00 letter
of credit ("New Letter of Credit") naming ARCO as the beneficiary. The New
Letter of Credit shall be issued by a financial institution entirely acceptable
to ARCO on terms and conditions entirely acceptable to ARCO, in its sole
discretion. The Line of Credit will be evidenced by a promissory note and will
mature on September 22, 2000, at which time LLO-Gas will pay in full all sums
outstanding with respect to the Line of Credit. The New Letter of Credit shall
remain in effect until December 29, 2000, and will secure in all respects the
obligations of LLO-Gas to ARCO under the promissory note evidencing
-3-
<PAGE>
the Line of Credit. In the event LLO-Gas has filed a petition for relief or an
involuntary petition has been filed against LLO-Gas pursuant to the United
States Bankruptcy Code or similar law or an assignment for the benefit of
creditors has been filed by LLO-Gas or has been filed against LLO-Gas, ARCO may
draw down the New Letter of Credit in the full amount of any payments made to
ARCO in repayment of the Line of Credit which are, or could be deemed,
preference payments subject to return to the bankrupt estate. Upon payment under
the New Letter of Credit, ARCO will remit the preference payments to the estate
of LLO-Gas.
This Memorandum of Understanding, and the contemporaneously executed
$398,310.86 Promissory Note, supersede both the prior Memorandum of
Understanding and the Promissory Note executed on March 10, 2000 by LLO-Gas,
neither of which are in effect.
AGREED on the date set forth below.
DATED: March 23, 2000. ATLANTIC RICHFIELD COMPANY
By /s/ Mark E. Daggett
----------------------------------------
Mark Daggett
Manager, Credit & Accounts Receivable
ARCO Products Company
DATED: March 23, 2000. LLO-GAS, INC.
By /s/ John Castellucci
----------------------------------------
John Castellucci
Authorized Signatory
LLO-Gas, Inc.
-4-
<PAGE>
EXHIBIT 10.75
PROMISSORY NOTE
$398,310.86 March 23, 2000
Los Angeles, California
FOR VALUE RECEIVED, LLO-Gas, Inc., a Delaware corporation (hereinafter
referred to as "Debtor"), with a place of business at 23805 Stuart Ranch Rd.
265, Malibu, CA 90265, promises to pay to the order of Atlantic Richfield
Company, a Delaware corporation (hereinafter referred to as "ARCO"), with a
place of business at 333 South Hope Street, Los Angeles, CA 90071, at the
previously-described business address or at such other place or places as ARCO
may from time to time designate, the principal sum of Three Hundred and Ninety-
Eight Thousand, Three Hundred Ten Dollars and Eighty-Six Cents ($398,310.86)
with interest thereon at the rate of Ten Percent (10%) per annum or the maximum
rate permitted by law, to be paid in lawful money of the United States of
America as follows:
Commencing on March 29th, 2000 (the "Payment Commencement Date"), and
continuing thereafter on the Wednesday of each and every calendar week following
the Payment Commencement Date, Debtor shall make equal amortized payments of
principal and interest to ARCO in the weekly amount of Four Thousand Dollars
($4,000.00), in accordance with and as more specifically set forth in the
Schedule "A" attached hereto and made a part hereof. The maturity date of this
Promissory Note, on which date all principal, interest and other sums of every
kind payable hereunder shall be all due and owing, is May 8, 2002 (the "Maturity
Date").
The unpaid principal sum and, if permitted by applicable law, any accrued
interest, shall bear interest from the date the same became due, whether by
acceleration or otherwise, at the rate of Ten Percent (10%) per annum or the
maximum rate permitted by law. In the event that the rate for the determination
of any interest paid by Debtor on this Promissory Note is determined to be in
excess of the maximum legal rate of interest applicable to this Promissory Note,
then that portion of the interest payment representing an amount in excess of
the maximum legal rate shall be deemed a payment of principal and applied
against the principal of this Promissory Note. For purposes of clarification,
Debtor and ARCO specifically intend for the immediately foregoing sentence to
limit the rate of interest in effect under this Promissory Note to the maximum
lawful rate.
Any payment made hereon shall be applied first to accrued and unpaid fees
and charges owing under this Promissory Note, including but not limited to any
Late Fees due and owing hereunder, then to interest accrued and unpaid on the
outstanding principal balance to the date such payment is made, and the balance
shall be applied to principal. Interest on this Promissory Note shall be
calculated on the actual number of days in the period for which interest is
being determined and on the basis of a year containing 360 days.
If any payment due under this Note is not received by ARCO on the due date
thereof, then in addition to the other remedies conferred upon ARCO in this
Note, in the MOU (defined below) or otherwise at law or in equity, a late charge
("Late Charge") of five percent (5%) of the amount due and unpaid will be added
to the delinquent amount to compensate ARCO for the
<PAGE>
expenses incurred in handling the delinquent amount. DEBTOR AGREES THAT IT WOULD
BE EXTREMELY DIFFICULT AND IMPRACTICAL TO FIX ARCO'S ACTUAL DAMAGES IN THE EVENT
OF A DELINQUENT PAYMENT AND THAT THE LATE CHARGE IS A REASONABLE ESTIMATE OF
ARCO'S ACTUAL DAMAGES IN SUCH EVENT. The Late Charge shall be due and payable
without prejudice to the right of ARCO to collect any other amounts provided to
be paid under this Note or to declare an event of default or exercise any other
remedy hereunder or under the MOU or otherwise at law or in equity.
Time is of the essence hereof. Any of the following events shall be an
"Event of Default" under this Promissory Note: (1) default by Debtor in the
payment of any weekly installment on or before the date due, as shown on
Schedule "A;" (2) default by Debtor in payment of the entire outstanding balance
of principal, interest and other charges due hereunder on or before the Maturity
Date; (3) breach by Debtor of any term, covenant, condition, agreement,
representation, or warranty set forth herein or in that certain Memorandum of
Understanding between Debtor and ARCO dated March 23, 2000 (the "MOU"); (4) any
occurrence having a material adverse effect on that certain Irrevocable Letter
of Credit issued by Sterling National Bank dated October 22, 1999, as amended to
comply with the MOU (the "Letter of Credit"), including but not limited to any
cancellation, expiration or withdrawal thereof, or any reduction in the amount
of the Letter of Credit below $322,115.81. Upon the occurrence of an Event of
Default hereunder, then at the option of ARCO, the entire balance of principal
together with all accrued and unpaid interest thereon and any and all other
charges due to ARCO hereunder shall immediately become due and payable without
notice or demand. No delay or failure by ARCO in the exercise of any right or
remedy provided for hereunder shall be deemed a waiver of such right by ARCO,
and no exercise of any right or remedy shall be deemed a waiver of any other
right or remedy which ARCO has or may have hereunder, under the MOU, at law or
in equity.
Should it become necessary for ARCO to employ counsel to collect or enforce
this Promissory Note or to protect the security for the same, Debtor agrees to
pay, to the extent permitted by applicable law, all costs, charges,
disbursements and reasonable attorneys' fees incurred by ARCO in collecting or
enforcing payment thereof or in protecting the same. There is no pre-payment
penalty or premium for early payment of this Promissory Note; provided, however,
that there shall be no reamortization of the installments due hereunder in
connection with any prepayment.
Debtor and all persons liable hereon or liable for the payment of this
Promissory Note waive presentment for payment, demand, protest, and notice of
demand, protest and non-payment, and consent to any and all renewals, extensions
or modifications which might be made by ARCO as to the time of payment of this
Promissory Note from time to time, and further agree that the security for this
Promissory Note or any portion thereof may from time to time be modified or
released in whole or in part without affecting the liability of any party liable
for the payment of this Promissory Note. Debtor and all persons liable hereon
or liable for the payment of this Promissory Note also hereby waive (i) the
right, if any, to the benefit of, or to direct the application of, any security
hypothecated to ARCO until all indebtedness of Debtor to ARCO, however arising,
shall have been paid, and (ii) the right to require ARCO to proceed against
Debtor, or to pursue any other right, recourse or remedy in ARCO's power.
Debtor agrees that, to the extent that it makes payments to ARCO under this
Promissory
<PAGE>
Note, or ARCO receives under this Promissory Note any payments, which payments
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or otherwise required to be repaid to either Debtor or,
as the case may be, its debtor-in-possession, estate, trustee, receiver or any
other party, for any reason, including, without limitation, under any bankruptcy
law, state or federal law, common law or equitable cause, then to the extent of
such payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by such amount shall be reinstated and continued in full
force and effect as of the date such initial payment, reduction or satisfaction
occurred.
Each individual signing this Promissory Note on behalf of Debtor represents
and warrants that he is duly authorized to execute and deliver this Promissory
Note on behalf of Debtor.
This Promissory Note shall in all respects be governed by and construed in
accordance with the internal laws of the State of California, including all
matters or construction, validity and performance. Debtor consents to the
jurisdiction of the courts of the State of California.
This Promissory Note supersedes the previous Promissory Note executed by
LLO-Gas on March 10, which is not in effect.
IN WITNESS WHEREOF, this Promissory Note is executed as of this 23 day of
March, 2000.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------------
Its: President
--------------------------------
<PAGE>
EXHIBIT A: PAYMENT PLAN
<TABLE>
<CAPTION>
Month Principle Interest Rate Interest Principal Payment # Payment Balance
- - ----- --------- ------------- -------- --------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
03/29/00 398,310.86 10.000% 775.14 3,224.86 1 4,000.00 395,086.00
04/05/00 395,086.00 10.000% 768.86 3,231.14 2 4,000.00 391,854.86
04/12/00 391,854.88 10.000% 762.58 3,237.42 3 4,000.00 388,617.44
04/19/00 388,617.44 10.000% 756.28 3,243.72 4 4,000.00 385,373.71
04/26/00 385,373.71 10.000% 749.96 3,250.04 5 4,000.00 382,123.68
05/03/00 382,123.68 10.000% 743.64 3,256.36 6 4,000.00 378,867.31
05/10/00 378,867.31 10.000% 737.30 3,262.70 7 4,000.00 375,604.61
05/17/00 375,604.61 10.000% 730.95 3,269.05 8 4,000.00 372,335.56
05/24/00 372,335.56 10.000% 724.59 3,275.41 9 4,000.00 389,060.15
05/31/00 369,060.15 10.000% 718.22 3,281.78 10 4,000.00 365,778.37
06/07/00 365,778.37 10.000% 711.83 3,288.17 11 4,000.00 362,490.20
06/14/00 362,490.20 10.000% 705.43 3,294.57 12 4,000.00 359,195.63
06/21/00 359,195.63 10.000% 699.02 3,300.98 13 4,000.00 355,894.65
06/28/00 355,894.65 10.000% 692.59 3,307.41 14 4,000.00 352,587.24
07/05/00 352,587.24 10.000% 686.16 3,313.84 15 4,000.00 349,273.40
07/12/00 349,273.40 10.000% 679.71 3,320.29 16 4,000.00 345,953.11
07/19/00 345,953.11 10.000% 673.25 3,326.75 17 4,000.00 342,626.35
07/26/00 342,626.35 10.000% 666.77 3,333.23 18 4,000.00 339,293.13
08/02/00 339,293.13 10.000% 660.29 3,339.71 19 4,000.00 335,953.41
08/09/00 335,953.41 10.000% 653.79 3,346.21 20 4,000.00 332,607.20
08/16/00 332,607.20 10.000% 647.28 3,352.72 21 4,000.00 329,254.48
08/23/00 329,254.48 10.000% 640.75 3,359.25 22 4,000.00 325,895.23
08/30/00 325,895.23 10.000% 634.21 3,365.79 23 4,000.00 322,529.44
09/06/00 322,529.44 10.000% 627.66 3,372.34 24 4,000.00 319,157.11
09/13/00 319,157.11 10.000% 621.10 3,378.90 25 4,000.00 315,778.21
09/20/00 315,778.21 10.000% 614.53 3,385.47 26 4,000.00 312,392.73
09/27/00 312,392.73 10.000% 607.94 3,392.06 27 4,000.00 309,000.67
10/04/00 309,000.67 10.000% 601.34 3,398.66 28 4,000.00 305,602.00
10/11/00 305,602.00 10.000% 594.72 3,405.28 29 4,000.00 302,196.72
10/18/00 302,196.72 10.000% 588.09 3,411.91 30 4,000.00 298,784.82
10/25/00 298,784.82 10.000% 581.45 3,418.55 31 4,000.00 295,366.27
11/01/00 295,366.27 10.000% 574.80 3,425.20 32 4,000.00 291,941.08
11/08/00 291,941.08 10.000% 568.14 3,431.86 33 4,000.00 288,509.21
11/15/00 288,509.21 10.000% 561.46 3,438.54 34 4,000.00 285,070.67
11/21/00 285,070.67 10.000% 554.77 3,445.23 35 4,000.00 281,625.44
11/29/00 281,625.44 10.000% 548.06 3,451.94 36 4,000.00 278,173.50
12/06/00 278,173.50 10.000% 541.34 3,458.66 37 4,000.00 274,714.84
12/13/00 274,714.84 10.000% 534.61 3,465.39 38 4,000.00 271,249.46
12/20/00 271,249.46 10.000% 527.87 3,472.13 39 4,000.00 267,777.32
12/27/00 267,777.32 10.000% 521.11 3,478.89 40 4,000.00 264,298.44
01/03/01 264,298.44 10.000% 514.34 3,485.66 41 4,000.00 280,812.78
01/10/01 260,812.78 10.000% 507.56 3,492.44 42 4,000.00 257,320.34
01/17/01 257,320.34 10.000% 500.76 3,499.24 43 4,000.00 253,821.10
01/24/01 253,821.10 10.000% 493.95 3,506.05 44 4,000.00 250,315.05
01/31/01 250,315.05 10.000% 487.13 3,512.87 45 4,000.00 246,802.18
02/07/01 246,802.18 10.000% 480.29 3,519.71 46 4,000.00 243,282.48
02/14/01 243,282.48 10.000% 473.44 3,526.56 47 4,000.00 239,755.92
02/21/01 239,755.92 10.000% 466.58 3,533.42 48 4,000.00 236,222.50
02/28/01 236,222.50 10.000% 459.70 3,540.30 49 4,000.00 232,682.20
03/07/01 232,682.20 10.000% 452.81 3,547.19 50 4,000.00 229,135.02
03/14/01 229,135.02 10.000% 445.91 3,554.09 51 4,000.00 225,580.93
03/21/01 225,580.93 10.000% 439.00 3,561.00 52 4,000.00 222,019.93
03/28/01 222,019.93 10.000% 432.07 3,567.93 53 4,000.00 218,451.99
04/04/01 218,451.99 10.000% 425.12 3,574.88 54 4,000.00 214,877.11
04/11/01 214,877.11 10.000% 418.16 3,581.84 55 4,000.00 211,295.28
04/18/01 211,295.28 10.000% 411.19 3,588.81 56 4,000.00 207,706.47
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
04/25/01 207,706.47 10.000% 404.21 3,595.79 57 4,000.00 204,110.68
05/02/01 204,110.68 10.000% 397.21 3,602.79 58 4,000.00 200,507.90
05/09/01 200,507.90 10.000% 390.20 3,609.80 59 4,000.00 196,898.10
05/16/01 196,898.10 10.000% 383.18 3,616.82 60 4,000.00 193,281.27
05/23/01 193,281.27 10.000% 376.14 3,623.86 61 4,000.00 189,657.41
05/30/01 189,657.41 10.000% 369.09 3,630.91 62 4,000.00 186,026.50
06/06/01 186,026.50 10.000% 362.02 3,637.98 63 4,000.00 182,388.52
06/13/01 182,388.52 10.000% 354.94 3,645.06 64 4,000.00 178,743.46
06/20/01 178,743.46 10.000% 347.85 3,652.15 65 4,000.00 175,091.30
06/27/01 175,091.30 10.000% 340.74 3,659.26 66 4,000.00 171,432.04
07/04/01 171,432.04 10.000% 333.62 3,666.38 67 4,000.00 167,765.66
07/11/01 167,765.66 10.000% 326.48 3,673.52 68 4,000.00 164,092.14
07/18/01 164,092.14 10.000% 319.33 3,680.67 69 4,000.00 160,411.48
07/25/01 160,411.48 10.000% 312.17 3,687.83 70 4,000.00 156,723.65
08/01/01 156,723.65 10.000% 304.99 3,695.01 71 4,000.00 153,028.64
08/08/01 153,028.64 10.000% 297.80 3,702.20 72 4,000.00 149,326.45
08/15/01 149,326.45 10.000% 290.60 3,709.40 73 4,000.00 145,617.05
08/22/01 145,617.05 10.000% 283.38 3,716.62 74 4,000.00 141,900.43
08/29/01 141,900.43 10.000% 276.15 3,723.85 75 4,000.00 138,176.57
09/05/01 138,176.57 10.000% 268.90 3,731.10 76 4,000.00 134,445.48
09/12/01 134,445.48 10.000% 261.64 3,738.36 77 4,000.00 130,707.11
09/19/01 130,707.11 10.000% 254.36 3,745.65 78 4,000.00 126,961.48
09/26/01 126,961.48 10.000% 247.08 3,752.92 79 4,000.00 123,208.55
10/03/01 123,208.55 10.000% 239.77 3,760.23 80 4,000.00 119,448.33
10/10/01 119,448.33 10.000% 232.45 3,767.55 81 4,000.00 115,680.78
10/17/01 115,680.78 10.000% 225.12 3,774.88 82 4,000.00 111,905.90
10/24/01 111,905.90 10.000% 217.78 3,782.22 83 4,000.00 108.123.68
10/31/01 108,123.68 10.000% 210.42 3,789.58 84 4,000.00 104,334.10
11/07/01 104,334.10 10.000% 203.04 3,796.96 85 4,000.00 100,537.14
11/14/01 100,537.14 10.000% 195.65 3,804.35 86 4,000.00 96,732.79
11/21/01 96,732.79 10.000% 188.25 3,811.75 87 4,000.00 92,921.04
11/28/01 92,921.04 10.000% 180.83 3,819.17 88 4,000.00 89,101.87
12/05/01 89,101.87 10.000% 173.40 3,826.60 89 4,000.00 85,275.27
12/12/01 85,275.27 10.000% 165.95 3,834.05 90 4,000.00 81,441.22
12/19/01 81,441.22 10.000% 158.49 3,841.51 91 4,000.00 77,599.71
12/26/01 77,599.71 10.000% 151.01 3,848.99 92 4,000.00 73,750.72
01/02/02 73,750.72 10.000% 143.52 3,856.48 93 4,000.00 69,894.24
01/09/02 69,894.24 10.000% 136.02 3,863.98 94 4,000.00 66,030.26
01/16/02 66,030.26 10.000% 128.50 3,871.50 95 4,000.00 62,158.76
01/23/02 62,158.76 10.000% 120.97 3,879.03 96 4,000.00 58,279.73
01/30/02 58,279.73 10.000% 113.42 3,886.68 97 4,000.00 54,393.14
02/06/02 54,393.14 10.000% 105.85 3,894.15 98 4,000.00 50,499.00
02/13/02 50,499.00 10.000% 98.27 3,901.73 99 4,000.00 46,597.27
02/20/02 46,597.27 10.000% 90.68 3,909.32 100 4,000.00 42,687.95
02/27/02 42,687.95 10.000% 83.07 3,916.93 101 4,000.00 38,771.03
03/06/02 38,771.03 10.000% 75.45 3,924.55 102 4,000.00 34,846.48
03/13/02 34,846.48 10.000% 67.81 3,932.19 103 4,000.00 30,914.29
03/20/02 30,914.29 10.000% 60.16 3,939.84 104 4,000.00 26,974.45
03/27/02 26,974.45 10.000% 52.49 3,947.51 105 4,000.00 23,026.95
04/03/02 23,026.95 10.000% 44.81 3,955.19 106 4,000.00 19,071.76
04/10/02 19,071.76 10.000% 37.11 3,962.89 107 4,000.00 15,108.87
04/17/02 15,108.87 10.000% 29.40 3,970.60 108 4,000.00 11,138.27
04/24/02 11,138.27 10.000% 21.68 3,978.32 109 4,000.00 7,159.95
05/01/02 7,159.95 10.000% 13.93 3,986.07 110 4,000.00 3,173.88
05/08/02 3,173.88 10.000% 6.18 3,173.88 111 3,180.06 0.00
</TABLE>
<PAGE>
Exhibit 10.76
LOAN AGREEMENT AND PROMISSORY NOTE
FOR LINE OF CREDIT
March 23, 2000
Los Angeles, California
Upon the written request of LLO-Gas, Inc., a Delaware corporation
(hereinafter referred to as "Debtor"), with a place of business at 23805 Stuart
Ranch Rd. 265, Malibu, CA 90265, Atlantic Richfield Company, a Delaware
corporation (hereinafter referred to as "ARCO"), with a place of business at 333
South Hope Street, Los Angeles, CA 90071, may, in its sole and absolute
discretion, and subject to Debtor's full compliance with the specific terms and
conditions set forth herein, make advances to Debtor ("Revolving Advances") in
an aggregate amount up to, but in any event not greater than, $300,000 (the
"Maximum Revolving Loan Amount"). These Revolving Advances shall be used by
Debtor for the purpose of purchasing gasoline and other product from ARCO,
making royalty payments to ARCO, and for no other purposes whatsoever. ARCO
shall not charge interest on the Revolving Advances made to Debtor, except as
specifically set forth herein. Debtor shall pay to ARCO all charges for
returned items and all other bank charges incurred by ARCO, as well as ARCO's
standard wire transfer charges for each wire transfer made under this Promissory
Note For Line of Credit (this "Promissory Note").
In consideration of and as a material inducement for ARCO to enter into
this Promissory Note, Debtor agrees to obtain a $150,000.00 Letter of Credit
("New Letter of Credit") naming ARCO as the beneficiary. The New Letter of
Credit shall be issued by a financial institution entirely acceptable to ARCO on
terms and conditions entirely acceptable to ARCO, in its sole discretion. The
New Letter of Credit shall remain in effect until December 29, 2000, and will
secure in all respects the obligations of Debtor to ARCO under this Promissory
Note to the full extent of the New Letter of Credit.
The maturity date of this Promissory Note, on which date all principal and
other sums of every kind payable hereunder shall be all due and owing, is
September 22, 2000 (the "Maturity Date"). Debtor shall not request of or
receive from ARCO any further Revolving Advances on or after the Maturity Date
irrespective of whether the entire Maximum Revolving Loan Amount has been
disbursed hereunder prior to the Maturity Date.
If repayment of the amounts due and owing under this Promissory Note is not
received by ARCO on or before the Maturity Date, then in addition to the other
remedies conferred upon ARCO in this Promissory Note, in the MOU, the Promissory
Note with a face amount of Three Hundred and Ninety-Eight Thousand, Three
Hundred Ten Dollars and Eighty-Six Cents ($398,310.86), the Letter of Credit,
the New Letter of Credit, or otherwise at law or in equity, debtor will pay ten
percent (10%) per annum, or the maximum rate of interest permitted by law on any
sums remaining due after the maturity date.
Any of the following events shall be an "Event of Default" under this
Promissory Note: (1) default by Debtor in payment of the entire outstanding
balance of principal and other charges due hereunder on or before the Maturity
Date; (2) breach by Debtor of any term, covenant, condition, agreement,
representation, or warranty set forth herein or in that certain
<PAGE>
Memorandum of Understanding between Debtor and ARCO dated March 23, 2000 (the
"MOU") or in that certain Promissory Note, of even date herewith, given by
Debtor to ARCO in the original, principal amount of $398,310.86 (the "Delinquent
Amount Note"); (3) any occurrence having a material adverse effect on that
certain Irrevocable Letter of Credit issued by Sterling National Bank dated
October 22, 1999, and bearing No. SLC 100002 securing the Delinquent Amount
Note, as amended to comply with the MOU (the "Letter of Credit"), including but
not limited to, any cancellation, expiration or withdrawal thereof, or any
reduction in the amount of the Letter of Credit below $322,115.81; (4) any
occurrence having a material adverse effect on the New Letter of Credit,
including, but not limited to, any cancellation, expiration or withdrawal
thereof, or any reduction in the total principal amount available under the New
Letter of Credit below $150,000. Upon the occurrence of an Event of Default
hereunder, then at the option of ARCO, all Revolving Advances made by ARCO to
Debtor which remain outstanding and unpaid shall immediately become due and
payable without notice or demand. No delay or failure by ARCO in the exercise of
any right or remedy provided for hereunder shall be deemed a waiver of such
right by ARCO, and no exercise of any right or remedy shall be deemed a waiver
of any other right or remedy which ARCO has or may have hereunder, under the
MOU, the Delinquent Amount Note, the Letter of Credit, the New Letter of Credit,
at law or in equity.
Upon the occurrence of any Event of Default, ARCO, without notice or
demand, shall have no further obligation of any kind to make Revolving Advances
to Debtor under this Promissory Note or any other agreement between Debtor and
ARCO. The foregoing shall in no way affect, limit, or waive ARCO's sole and
absolute discretion in making or declining to make Revolving Advances under this
Note.
Should it become necessary for ARCO to employ counsel to collect or enforce
this Promissory Note, or to protect the security for the same, Debtor agrees to
pay, to the extent permitted by applicable law, all costs, charges,
disbursements and reasonable attorneys' fees incurred by ARCO in collecting or
enforcing payment thereof or in protecting the same. There is no pre-payment
penalty or premium for early payment of this Promissory Note.
Debtor and all persons liable for the payment of this Promissory Note waive
presentment for payment, demand, protest, and notice of demand, protest and non-
payment, and consent to any and all renewals, extensions or modifications which
might be made by ARCO as to the time of payment of this Promissory Note from
time to time, and further agree that the security for this Promissory Note or
any portion thereof may from time to time be modified or released in whole or in
part without affecting the liability of any party liable for the payment of this
Promissory Note. Debtor and all persons liable hereon or liable for the payment
of this Promissory Note also hereby waive (i) the right, if any, to the benefit
of, or to direct the application of, any security hypothecated to ARCO until all
indebtedness of Debtor to ARCO, however arising, shall have been paid, and (ii)
the right to require ARCO to proceed against Debtor, or to pursue any other
right, recourse or remedy in ARCO's power.
Debtor agrees that, to the extent that ARCO receives any payments under
this Promissory Note, which payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or otherwise
required to be repaid to either Debtor or, as the case may be, Debtor's debtor-
in-possession, estate, trustee, receiver or any other party, for any
<PAGE>
reason, including, without limitation, under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of such payment
or repayment, the portion of Debtor's obligation hereunder which has been paid,
reduced or satisfied by the amount which ARCO was required to disgorge shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred. Further, in the event Debtor has
filed a petition for relief or an involuntary petition has been filed against
Debtor pursuant to the United States Bankruptcy Code or similar law or an
assignment for the benefit of creditors has been filed by Debtor or has been
filed against Debtor, ARCO may draw down the New Letter of Credit in the full
amount of any payments made to ARCO in repayment of this Promissory Note which
are, or could be deemed, preference payments subject to return to the bankruptcy
estate. Upon payment under the New Letter of Credit, ARCO will remit the
preference payments to the estate of Debtor.
Each individual signing this Promissory Note on behalf of Debtor represents
and warrants that he is duly authorized to execute and deliver this Promissory
Note on behalf of Debtor.
This Promissory Note shall in all respects be governed by and construed in
accordance with the internal laws of the State of California, including all
matters or construction, validity and performance. Debtor consents to the
jurisdiction of the courts of the State of California.
IN WITNESS WHEREOF, this Promissory Note is executed as of this 23 day of
March, 2000.
LLO-GAS, INC.,
a Delaware corporation
By: /s/ John Castellucci
---------------------------------------
Its: President
--------------------------------------
<PAGE>
EXHIBIT 10.78
EMPLOYMENT CONTRACT FOR SENIOR EXECUTIVE
LLO GAS INC., A Delaware corporation, located at 23805 Stuart Ranch Road,
Malibu, California, 90265, hereinafter referred to as the Employer, and JAMES
MANDICH, 1079 Deep Wood Drive, Westlake Village, CA 91362-4216, hereinafter
referred to as the Employee, in consideration of the mutual promises made
herein, agree as follows:
ARTICLE I. TERM OF EMPLOYMENT
Specified Term
Section 1.01. The employer hereby employs Employee and Employee hereby
accepts employment with Employer for a period of 3 years, beginning on August 1,
1999.
Earlier Termination
Section 1.02. This agreement may be terminated earlier as hereinafter
provided.
Future Employment Option
Section 1.03. Employee is granted an option to renew this Agreement for 3
years. Said renewal shall be delivered in writing to Employer at least 6 months
before the end of the first 3 years of the Agreement.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
Title and Description of Duties
Section 2.01. Employee shall serve as Executive Vice President of LLO GAS
INC. In that capacity. Employer shall do and perform all services, acts, or
things necessary or advisable to fulfill the duties of a corporate officer as
set forth below. However, Employee shall at all times be subject
-1-
<PAGE>
to the direction of the President, and to the policies established by the Board
of Directors, of Employer.
Principal Function - Responsible for marketing and sales
operations/activities of the Company in regard to service stations,
am/pm's, truck stops or related wholesale activities. This would
include responsibility for personnel, pricing, marketing strategy,
sales promotion and acquisitions.
Primary Duties -
- Develop and implement a business plan for retail locations to
increase operating sales and profits from current levels to
mutually agreed sales and profit objectives. The plan would
include strategies for pricing, marketing and sales promotion.
- Provide supervision for all employees. Responsible for the hiring
and training of employees and the development of an employee
performance incentive program.
- Assist in the acquisition and negotiation of additional retail
locations.
- Develop a business plan to permit, build and operate the initial
truck stop site. Formulate plans to acquire or build additional
truck stop locations that conform to the Company's financial and
marketing criteria.
- Coordinate the integration of the financial reporting systems to
central accounting.
- Establish administrative policies, procedures and controls.
-2-
<PAGE>
- Develop any potential wholesale business opportunities that fit
into the Company's objectives and strategies.
Loyal and Conscientious Performance of Duties
Section 2.02. Employee agrees that, to the best of his ability and
experience, he will at all times loyally and conscientiously perform all of the
duties and obligations required of him either expressly or implicitly by the
terms of this agreement.
Devotion of Time to Employer's Business
Section 2.03. Employee shall devote as much of his productive time,
ability, and attention to the business of Employer during the term of this
contract as necessary to fulfill the above duties as set forth in Section 2.01.
Competitive Activities
Section 2.04. During the term of this contract Employee shall not,
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of Employer.
Uniqueness of Employer's Services
Section 2.05. Employee hereby represents and agrees that the services to
be performed under the terms of this contract are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in an
action at law. Employee therefore expressly agrees that Employer, in addition
to any other rights or remedies which Employer play possess, shall be entitled
to injunctive and other equitable relief to prevent or remedy a breach of this
contract by Employee.
-3-
<PAGE>
Indemnification for Negligence or Misconduct
Section 2.06. Employee shall indemnify and hold Employer harmless from all
liability for loss, damage, or injury to persons or property resulting from the
negligence or misconduct of Employee.
Trade Secrets
Section 2.07.(a) The parties acknowledge and agree that during the term of
this agreement and in the course of the discharge of his duties hereunder,
Employee shall have access to and become acquainted with information concerning
the operation of Employer, including without limitation, financial, personnel,
sales, planning, and other information that is owned by Employer and regularly
used in the operation of Employer's business and that this information
constitutes Employer's trade secrets.
(b) Employee agrees that he shall not disclose any such trade
secrets, directly or indirectly, to any other person or use them in any way,
either during the term of this agreement or at any other time thereafter, except
as is required in the course of his employment with Employer.
(c) Employee further agrees that all files, records, documents,
equipment, and similar items relating to Employer's business, whether prepared
by Employee or others, are and shall remain exclusively the property of Employer
and that they shall be removed from the premises of Employer only with the
express prior consent of Employer's President.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
General Description
Section 3.01. Employer shall provide Employee with the compensation,
incentives, benefits, and business expense reimbursement specified elsewhere in
this agreement:
-4-
<PAGE>
Office and Staff
Section 3.02. Employer shall provide Employee with a private office,
stenographic help, office equipment and supplies, and other facilities and
services, suitable to Employee's position and adequate for the performance of
his duties.
Indemnification of Losses of Employee
Section 3.03. Employer shall indemnify Employee for all losses sustained
by Employee in direct consequence of the discharge of his duties on Employer's
behalf.
ARTICLE 4. COMPENSATION OF EMPLOYEE
Annual Salary
Section 4.01.(a) As compensation for the services to be rendered by
Employee hereunder, Employer shall pay Employee an annual salary at the rate per
annum as follows:
Base: Year 1 - $100,000.00 (Payments to begin October 1, 1999 with
the full year compensation of $100,000.00 to be paid over 10
month period, October, 1999 to July, 2000).
Year 2 - $150,000.00
Year 3 - $175,000.00
(b) Employee's annual salary upon exercise and consent to the option
set forth in Section 1.03 shall be $175,000.00, plus the CPI increase from the
beginning of the third year of employment under this Agreement to the fourth
year of this Agreement (the first year of the 3-year option). The same increase
shall apply to the second and third years of the 3-year option period.
-5-
<PAGE>
Salary Continuation During Disability
Section 4.02. If Employee for any reason whatsoever becomes permanently
disabled so that he is unable to perform the duties prescribed herein, Employer
agrees to pay Employee 50 percent of Employee's annual salary, payable in the
same manner as provided for the payment of salary herein, for the remainder of
the employment term provided for herein.
Tax Withholding
Section 4.03. Employer shall have the right to deduct or withhold from the
compensation due to Employee hereunder any and all sums required for Federal
Income and Social Security taxes and all state or local taxes now applicable or
that way be enacted and become applicable in the future.
Repayment of Disallowed Salary
Section 4.04. In the event that any portion of the compensation paid by
Employer to Employee is disallowed as an income tax deduction on an income tax
return of Employer, Employee agrees to immediately repay to Employer the full
amount of that portion.
ARTICLE 5. EMPLOYEE INCENTIVES
Cash Bonus Eased on Profitability
Section 5.01.(a) In any employment year in which the net profits of
Employer equal or exceed the base year (July 1, 199$ through June 30, 1999),
Employee shall receive a bonus (profit sharing) - Retail - 10% of incremental
operating profit above base year; Truck Stop - 5% of operating profit; and
Wholesale - 10% of operating profit, for his services in addition to any other
compensation which he is entitled to receive hereunder. This bonus shall be
paid within two and
-6-
<PAGE>
one-half months after the close of Employee's employment year, but only if
Employee's services hereunder have not been terminated prior to the end of that
employment.
(b) For the purposes of this provision, the net profits of Employer
are defined as net income after expenses but before taxes as determined by the
firm of certified public accountants retained by Employer in accordance with
sound accounting principles and consistent with the prior accounting practices
of Employer.
Stock Option
Section 5.02.(a) As additional compensation, Employer hereby grants to
Employee the option to receive stock in Employer in lieu of profit sharing in
such amounts and in such manner as Employer and Employee agree. This option may
be exercised in whole or in part. Employee shall not have any of the rights of,
nor be treated as, a shareholder with respect to the shares subject to this
option until he has exercised the option and has become the shareholder of
record of those shares.
(b) This option may only be exercised by Employee during the term of
his employment hereunder. However, in the event that the employment term is
terminated by Employer for reasons other than cause, Employee shall retain the
right to exercise any unused portion of the option until August 1, 2005.
ARTICLE 6. EMPLOYEE BENEFITS
Annual Vacation
Section 6.01. Employee shall be entitled to 3 weeks vacation time each
year with pay. Employee may be absent from his employment for vacation only at
such times as Employer's President shall determine from time to time. In the
event that Employee is unable for any reason to take the total amount of
vacation time authorized herein during any year, he way accrue that time
-7-
<PAGE>
and add it to vacation time for any following year or many instead receive a
cash payment in an amount equal to the amount of annual salary attributable to
that period of time.
Illness
Section 6.02. Upon completion of three months in the service of Employer,
Employee shall be entitled to 10 days per year as sick leave with full pay.
Sick leave may be accumulated up a total of 50 days.
Automobile Allowance
Section 6.03. During the term of employment hereunder, Employee shall be
entitled to the full income mileage allowance for the use of his own automobile
in Employer's business. Said allowance shall be paid to Employee at the same
time as reimbursable expenses under Section 7.01 of this agreement.
Group Life Insurance
Section 6.04. Employer agrees to include Employee under Employer's group
term life insurance coverage in an amount equal to two (2) times Employee's
gross annual salary. Said insurance shall be established by November 1, 1999.
Group Medical Insurance
Section 6.05. Employer agrees to include Employee under Employer's group
medical insurance coverage.
Dental Coverage
Section 6.06. The Employer agrees to provide Employee with dental coverage
during the employment term by obtaining dental insurance covering Employee or by
directly paying all dental costs incurred by Employee. Said coverage shall be
established by February, 2000.
-8-
<PAGE>
ARTICLE 7. BUSINESS EXPENSES
Business Expenses
Section 7.01.(a) Employer shall promptly reimburse Employee for all
reasonable business expenses incurred by Employee in promoting the business of
Employer, including expenditure for entertainment, gifts, and travel.
(b) Each such expenditure shall be reimbursable only if it is of a
nature qualifying it as a proper deduction on the federal and state income tax
return of Employer.
(c) Each such expenditure shall be reimbursable only if Employee
furnishes to Employer adequate records and other documentary evidence required
by federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of that expenditure as an income tax
deduction.
Repayment by Employee of Disallowed Business Expenses
Section 7.02. In the event that any expenses paid for Employee or any
reimbursement of expenses paid to Employee shall, on audit or other examination
of Employer's income tax returns, be determined not to be allowable deductions
from Employer's gross income, and in the further event that any such
determination is acceded to by the Employer or made final by the appropriate
federal or state taxing authority or a final judgment of a court of competent
jurisdiction, and no appeal is taken from the judgment or the applicable period
for filing notice of appeal has expired, Employee shall repay to Employer the
amount of the disallowed expenses.
-9-
<PAGE>
ARTICLE 8. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 8.01.(a) Employer reserves the right to terminate this agreement
if employee (1) wilfully breaches or habitually neglects the duties which he is
required to perform under the terms of this agreement, or (2) commits acts of
dishonesty, fraud, misrepresentation, or other acts of moral turpitude, that
would prevent the effective performance of his duties.
(b) Employer may at its option terminate this agreement for the
reasons stated inn this section by giving written notice of termination to
Employee without prejudice to any other remedy to which Employer may be entitled
either at law, in equity, or under this agreement.
(c) The notice of termination required by this section shall specify
the ground for the termination and shall be supported by a statement of all
relevant facts.
(d) Termination under thus section shall be considered "for cause"
for the purposes of this agreement.
Termination Without Cause
Section 8.02.(a) This agreement shall be terminated upon the death of
Employee.
(b) Employer reserves the right to terminate this agreement not less
than 3 months after Employee suffers any physical or mental disability that
would prevent the performance of his duties under this agreement. Such a
termination shall be effected by giving 10 days' written notice of termination
to Employee.
(c) Termination under this section shall not be considered "for
cause" for the purposes of this agreement.
-10-
<PAGE>
Effect of Merger, Transfer of Assets, or Dissolution
Section 8.03.(a) This agreement shall not be terminated by any voluntary
or involuntary dissolution of Employer resulting from either a merger or
consolidation in which Employer is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of
Employer.
(b) In the event of any such merger or consolidation or transfer of
assets, Employer's rights, benefits, and obligations hereunder shall be assigned
to the surviving oar resulting corporation or the transferee of Employer's
assets.
Termination by Employee
Section 8.04. Employee may terminate his obligations under this agreement
by giving Employer at least 3 months notice in advance or tendering to Employer
a total amount aggregating 3 months of his annual salary.
Effect on Compensation
Section 8.05. In the event that this agreement is terminated prior to the
completion of the term of employment specified herein, Employee shall be
entitled to the compensation earned by and vested in him prior to the date of
termination as provided for in this agreement, computed pro rata up to and
including that date. Employee shall be entitled to no further compensation as
of the date of termination.
-11-
<PAGE>
ARTICLE 9. GENERAL PROVISIONS
Notices
Section 9.01. Any notices to be given by either party to the other shall
be in writing and may be transmitted either by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this agreement, but each party may change that address
by written notice in accordance with this section. Notices delivered personally
shall be deemed communicated as of the date of actual receipt; mailed notices
shall be deemed communicated as of the date of mailing.
Arbitration
Section 9.02.(a) Any controversy between Employer and Employee involving
the construction or application of any of the terms, provisions, or conditions
of this agreement shall on the written request of either party served on the
other be submitted to arbitration. Arbitration shall comply with and be
governed by the provisions of the California Arbitration Act.
(b) Employed and Employee shall each appoint one person to hear and
determine the dispute. If the two persons so appointed are unable to agree,
then those persons shall 1 select a third impartial arbitrator whose decision
shall be final and conclusive upon both parties.
(c) The cost of arbitration shall be borne by the losing party or in
such proportions as the arbitrators decide.
-12-
<PAGE>
Attorneys' Fees and Costs
Section 9.03. If any legal action is necessary to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements in addition to any other
relief to which that party may be entitled. This provision shall be construed
as applicable to the entire contract.
Entire Agreement
Section 9.04. This agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Employee by Employer, and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promises not contained in this
agreement shall be valid or binding.
Modifications
Section 9.05. Any modification of this agreement will be effective only if
it is in writing signed by the party to be charged.
Effect of Waiver
Section 9.06. The failure of either party to insist on strict compliance
with any of the terms, covenants, or conditions of this agreement by the other
party shall not be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or any
other times.
-13-
<PAGE>
Partial Invalidity
Section 9.07. If any provision in this agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
Law Governing Agreement
Section 9.09. If Employee dies prior to the expiration of the term of his
employment, any stuns that may be due him from Employer under this agreement as
of the date of death shall be paid to Employee's Trustee.
Executed on September 15, at Malibu, California.
------------ ------
EMPLOYER:
LLO GAS INC.
By: /s/ John Castellucci
---------------------------------------
President
By: /s/ John Castellucci
---------------------------------------
Secretary
EMPLOYEE:
/s/ James Mandich
- - ------------------------------------------
JAMES MANDICH
-14-
<PAGE>
EXHIBIT 10.86
LLO-GAS, INC./JOHN CASTELLUCCI
NOTE
----
$150,000 Malibu, California
July 19, 1999
FOR VALUE RECEIVED, LLO-GAS, INC. and JOHN CASTELLUCCI (hereinafter
individually and collectively the "Undersigned") promises to pay to INTERLOCHEN
ENTERPRISES, INC., c/o Ronald J. Stauber, Inc. - Trust Account - at 1880 Century
Park East, Suite 300, Los Angeles, California 90067, or at such place as the
holder hereof may from time to time designate, in writing, the principal sum of
One Hundred Fifty Thousand ($150,000) Dollars, lawful money of the United States
of America, together with interest at the rate of Eight (8%) Percent.
The Note is all due and payable on July 18, 2000.
All unpaid interest shall be due on January 1, 2000 and, thereafter,
payable monthly commencing on January 18, 2000 and on the 18th day of each and
every month thereafter.
The Undersigned hereby waives presentment, demand for payment, notices of
dishonor, protest and notice of protest, and any or all other notices or demands
in connection with this note. Any failure of Alexander to exercise any right
thereunder shall not be construed as a waiver of the rights to exercise the same
or any other right at any time and from time to time thereafter.
The Undersigned hereby consents to the jurisdiction of any state or federal
court within the State of California having jurisdiction for all purposes in
connection with any action or proceeding commenced between the parties hereto,
the subject matter of which relates to any controversy or claim arising out of,
under, or relating to this note or the breach thereof.
The Undersigned hereby agrees to pay all costs of collection incurred by
INTERLOCHEN ENTERPRISES, INC. in connection with this note including, without
limitation, attorneys fees for both outside and employed counsel, and that
INTERLOCHEN ENTERPRISES, INC. may collect all such costs of collection as part
of the liabilities.
Any notice to the Undersigned shall be sufficiently served for all purposes
if placed in the mail addressed to, or left upon the premises at, the address
set forth below.
If any term or provision of this note or the application thereof to any
person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this note or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each
1.
<PAGE>
such term and provision of this note shall be valid and be enforced to the
fullest extent permitted by law.
No waiver of any breach or any provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof, or of any other provision
herein contained. No waiver shall be effective unless given in writing by a
person duly authorized. This note may not be modified, changed, supplemented or
terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by his agent duly authorized in
writing or as otherwise expressly permitted herein. No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.
IN WITNESS WHEREOF, the parties hereto have executed as of the 19th day of
July, 1999.
LLO-GAS, INC.
By: /s/ John Castellucci
-------------------------------
John Castellucci, President
/s/ John Castellucci
----------------------------------
JOHN CASTELLUCCI, Individually
2.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
------------------------------
Name of Entity State of Incorporation
-------------- ----------------------
LLO-Gas, Inc. Delaware
Truck Stop No. 1, LLC California
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 334,075
<ALLOWANCES> 0
<INVENTORY> 455,476
<CURRENT-ASSETS> 120,569
<PP&E> 8,562,085
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,598,588
<CURRENT-LIABILITIES> 1,526,365
<BONDS> 0
0
0
<COMMON> 14,000
<OTHER-SE> (45,059)
<TOTAL-LIABILITY-AND-EQUITY> 10,598,588
<SALES> 3,680,003
<TOTAL-REVENUES> 3,680,003
<CGS> 3,149,535
<TOTAL-COSTS> 4,073,282
<OTHER-EXPENSES> 87,780
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (481,059)
<INCOME-TAX> 0
<INCOME-CONTINUING> (481,059)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (481,059)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
