-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UsyfR8io4dO05ngGzFM/p2q8yY6f64+apxXZgFVt23v/yeK47gBY2+1udDTNacfV 23Ib1DZRRa6OJHw2i5HjQA== 0000944209-00-000620.txt : 20000508 0000944209-00-000620.hdr.sgml : 20000508 ACCESSION NUMBER: 0000944209-00-000620 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000414 DATE AS OF CHANGE: 20000505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DISCOVERY INVESTMENTS INC CENTRAL INDEX KEY: 0001083459 STANDARD INDUSTRIAL CLASSIFICATION: 6770 IRS NUMBER: 880409151 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-26175 FILM NUMBER: 602610 BUSINESS ADDRESS: STREET 1: 23805 STEWART RANCH ROAD STREET 2: SUITE 265 CITY: MALIBU STATE: CA ZIP: 90265 BUSINESS PHONE: 3104568494 MAIL ADDRESS: STREET 1: 23805 STEWART RANCH ROAD STREET 2: SUITE 265 CITY: MALIBU STATE: CA ZIP: 90265 10KSB 1 FORM 10-KSB (DEC. 31, 1999) 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 ----------------- [_] 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 --------- DISCOVERY INVESTMENTS, INC. - - -------------------------------------------------------------------------------- (Name of Small Business Issuer in Its Charter) Nevada 88-049151 - - ------------------------------------- -------------------------------------- (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 23805 Stuart Ranch Road, Suite 220, Malibu, CA 90265 - - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (310) 456-8494 - - -------------------------------------------------------------------------------- (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 ------------------- ------------------- __________________________ ___________________________ __________________________ ___________________________ Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par value -------------------------------------------------------------------- (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 __ --- 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 --- DISCOVERY INVESTMENTS, INC. ANNUAL REPORT ON FORM 10-KSB For the Year Ended December 31, 1999 TABLE OF CONTENTS
Page No. -------- PART 1 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
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 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: 2 (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 3 (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 4 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 5 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. 6 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". 7 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. 8 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. 9 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. 10 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 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 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 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 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 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 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 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:
1999 --------------------------------- High Bid Low Bid -------- ------- 1st Quarter................................... $ - $ - 2nd Quarter................................... $ - $ - 3rd Quarter (commencing September 7, 1999).... $ 5.625 $ 5.50 4th Quarter................................... $ 6.00 $ 5.125
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 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 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 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 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: 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
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 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 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 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 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 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 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:
Name Age Position ---- --- -------- John D. Castellucci 56 President/Chief Financial Officer/Secretary/Director
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 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:
SUMMARY COMPENSATION TABLE Annual Compensation ------------------- Name and Principal Position Year Salary Bonus All Other Compensation(1) - - --------------------------- ---- ------ ----- ---------------------- John Castellucci 1999 $34,616 $ - $ - President 1998 $ - $ - $ - (Chief Executive Officer), 1997 $ - $ - $ - Chief Financial Officer and Secretary
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 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:
Number of Shares Percentage of Name and Address of Owner of Common Stock Owned Common Stock Owned - - ------------------------- --------------------- ------------------ 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)
________________ (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 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 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 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 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 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 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 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 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 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 (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 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:
Signature Capacity Date - - --------- -------- ---- /s/ John D. Castellucci President (Principal Executive April 14, 2000 - - ------------------------ Officer), Chief Financial Officer, Secretary and Director
41 DISCOVERY INVESTMENTS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 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
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 DISCOVERY INVESTMENTS, INC. CONSOLIDATED BALANCE SHEET FOR THE YEAR ENDED DECEMBER 31, 1999 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 ============
See accompanying Notes to Consolidated Financial Statements F-2 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 DISCOVERY INVESTMENTS, INC. STATEMENTS OF SHAREHOLDERS' DEFICIENCY FOR THE YEAR ENDED DECEMBER 31, 1999
Common Stock Additional Accumulated ----------------------------- Shares Amount Paid in Capital Deficit Total ----------------------------- ----------------- ------------ ----------- 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) ============ ========== =========== ============= ============
See accompanying Notes to Consolidated Financial Statements F-4 DISCOVERY INVESTMENTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999 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 -
See accompanying Notes to Consolidated Financial Statements F-5 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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. EX-4.1 2 FORM OF COMMON STOCK CERTIFICATE EXHIBIT 4.1 [DECORATIVE FRAME]
[NUMBER] Discovery Investments, Inc. [SHARES] in framed box in framed box 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
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 EX-10.9 3 GUARANTEE, DATED AUGUST 2, 1999 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 1 of 5 (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 2 of 5 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 3 of 5 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 4 of 5 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 5 of 5 EX-10.52 4 PROMISSORY NOTE - $300,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 ------------------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION
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 - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #999
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #999
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #999
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #999 EX-10.53 5 PROMISSORY NOTE - $585,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 -------------------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION
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 - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5234
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5234
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5234 EX-10.54 6 PROMISSORY NOTE - $1,230,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 --------------------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION
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 - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5045
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5045
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5045
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5045 EX-10.55 7 PROMISSORY NOTE - $975,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 ------------------------------ SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION
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 - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #609
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #609
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #609
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #609 EX-10.56 8 PROMISSORY NOTE - $2,500,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 ------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION
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 - - ------ ---- -------- ----------- -------- --------- ---------- ------------- 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
Unit #81633
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ---------- ------------- 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
Unit #81633
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ---------- ------------- 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
Unit #81633
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ---------- ------------- 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
Unit #81633 EX-10.57 9 PROMISSORY NOTE - $750,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 ---------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION 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
Unit #5972
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5972
Payment Monthly Beg. Period Total Ending period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5972
Payment Monthly Beg. Period Total Ending period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5972 EX-10.58 10 PROMISSORY NOTE - $760,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 ----------------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION 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 - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #5191
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- -------- ----------- 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
Unit #5191
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- -------- ----------- 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
Unit #5191 EX-10.59 11 PROMISSORY NOTE - $700,000.00 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 - - -------------------------------------------------------------------------------- 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 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 (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 (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 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 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 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 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 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 any claim that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum. 11 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 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 ----------------------------- SCHEDULE 3.a.i SECURED PROMISSORY NOTE OF LLO-GAS, INC. PAYMENT AND AMORTIZATION
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 - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #712
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #712
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #712
Payment Monthly Beg. Period Total Ending Period Period Date Debt Svc Loan Amount Interest Principal Payment Loan Amount - - ------ ---- -------- ----------- -------- --------- ------- ----------- 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
Unit #712 EX-10.69 12 NOTE FOR $300,000 DATED 10/28/99 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 EX-10.70 13 NOTE FOR $300,000 DATED 10/28/99 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 EX-10.71 14 STRAIGHT NOTE FOR $200,000 DATED 11/23/99 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 EX-10.72 15 PROMISSORY NOTE FOR $150,000 - 12/16/99 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 EX-10.74 16 MEMORANDUM OF UNDERSTANDING 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 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- 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- 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- EX-10.75 17 PROMISSORY NOTE DATED MARCH 23, 2000 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 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 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 -------------------------------- EXHIBIT A: PAYMENT PLAN
Month Principle Interest Rate Interest Principal Payment # Payment Balance - - ----- --------- ------------- -------- --------- --------- -------- ------- 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
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
EX-10.76 18 LOAN AGREEMENT DATED MARCH 23, 2000 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 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 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 -------------------------------------- EX-10.78 19 EMPLOYMENT CONTRACT - JAMES MANDICH 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- 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- - 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- 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- 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 $175,000.00, plus the CPI increase from the beginning of the third year of employment under this Agreement to the fourth year of this Agreement (the first year of the 3-year option). The same increase shall apply to the second and third years of the 3-year option period. -5- Salary Continuation During Disability Section 4.02. If Employee for any reason whatsoever becomes permanently disabled so that he is unable to perform the duties prescribed herein, Employer agrees to pay Employee 50 percent of Employee's annual salary, payable in the same manner as provided for the payment of salary herein, for the remainder of the employment term provided for herein. Tax Withholding Section 4.03. Employer shall have the right to deduct or withhold from the compensation due to Employee hereunder any and all sums required for Federal Income and Social Security taxes and all state or local taxes now applicable or that way be enacted and become applicable in the future. Repayment of Disallowed Salary Section 4.04. In the event that any portion of the compensation paid by Employer to Employee is disallowed as an income tax deduction on an income tax return of Employer, Employee agrees to immediately repay to Employer the full amount of that portion. ARTICLE 5. EMPLOYEE INCENTIVES Cash Bonus Eased on Profitability Section 5.01.(a) In any employment year in which the net profits of Employer equal or exceed the base year (July 1, 199$ 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- 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- 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- 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- 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- 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- 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- 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- 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- EX-10.86 20 NOTE DATED JULY 19, 1999 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. 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. EX-21 21 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT ------------------------------ Name of Entity State of Incorporation -------------- ---------------------- LLO-Gas, Inc. Delaware Truck Stop No. 1, LLC California EX-27 22 FINANCIAL DATA SCHEDULE
5 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. 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 0 0 334,075 0 455,476 120,569 8,562,085 0 10,598,588 1,526,365 0 0 0 14,000 (45,059) 10,598,588 3,680,003 3,680,003 3,149,535 4,073,282 87,780 0 0 (481,059) 0 (481,059) 0 0 0 (481,059) (0.16) (0.16)
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