Document:

Exhibit 10.51

 

SECURITY AGREEMENT

 

This Security
Agreement (the “Security Agreement”),
is dated effective as of the 14th day of November 2003 (the “Effective Date”), and is by and between
Schlotzsky’s Franchisor,
LLC, a Delaware limited liability company (the “Debtor”), and John C. Wooley and
Jeffrey J. Wooley (collectively, the “Secured Party”).

 

Section I.               CREATION OF
SECURITY INTEREST

 

The Debtor
hereby grants to the Secured Party a security interest in the Collateral
described in Section II of this Security Agreement to secure
performance and payment of the obligations and indebtedness of the Debtor to
the Secured Party described in Section III of this Security
Agreement (collectively, the “Indebtedness”).

 

Section II.              COLLATERAL

 

In order to
secure the payment when due of any and all Indebtedness, the Debtor hereby
pledges to the Secured Party and grants to the Secured Party a security
interest in and to the following properties (collectively, the “Collateral”):  all of the Debtor’s accounts, contract rights and general
intangibles (including without limitation payment intangibles), and all
proceeds thereof, whether cash, deposit accounts, investment securities,
general or payment intangibles, or otherwise; provided, however, that there is
expressly excluded from the Collateral hereunder that property which has
previously been pledged to area developers under area developer agreements and
any amounts designated as advertising contributions under franchise agreements.

 

Section III.             PAYMENT
OBLIGATIONS OF THE DEBTOR

 

1.             The Debtor shall pay
to the Secured Party any sum or sums due or which may become due pursuant to
that certain Promissory Note dated of even date herewith in the original
principal sum or $2,500,000.00, executed by the Debtor and payable to the order
of the Secured Party, including any renewals, extensions or rearrangements
thereof (the “Note”), in
accordance with the terms of such Note and the terms of this Security Agreement
as well as all other indebtedness now due and owing the said Secured Party
hereunder or under any other document executed in connection with or as
security for the Note.

 

2.             All obligations of
any one or more of the Debtor, Schlotzsky’s, Inc. a Texas corporation
(“Schlotzsky’s”) and Schlotzsky’s NAMF Funding, LLC, a Delaware limited
liability company (“NAMF”), to either or both of the Secured Party arising by
way of subrogation, contribution, or otherwise in connection with any guaranty
by either or both of the Secured Party of any indebtedness or obligation of any
one or more of the Debtor, Schlotzsky’s and NAMF.  For purposes of this paragraph, the pledging of collateral shall
operate and be construed as a “guaranty”.

 

3.             The Debtor shall
account fully and faithfully to the Secured Party for proceeds from disposition
of the Collateral in any manner and shall pay or turn over promptly in cash,
negotiable instruments, drafts, assigned accounts or chattel paper all the
proceeds from each sale to be applied to the Debtor’s Indebtedness to the
Secured Party, subject if other than cash, to final payment or collection.  Application of such proceeds to Indebtedness
of the Debtor shall be in the sole discretion of the Secured Party, provided
such application of proceeds is made by the Secured Party in a reasonable
manner.

 

1

 

4.             The Debtor shall pay
to the Secured Party on demand all expenses and expenditures, including
reasonable attorney’s fees and other legal expenses incurred or paid by the
Secured Party in connection with the origination of the loans evidenced by the
Note and/or in exercising or protecting its interests, rights and remedies
under this Security Agreement, plus interest thereon at the rate of interest
provided for matured, unpaid amounts under the Note (the “Default Rate”).

 

5.             The Debtor shall pay
immediately, without notice, the entire unpaid Indebtedness of the Debtor to
the Secured Party whether created or incurred pursuant to this Security
Agreement or otherwise, upon the occurrence of an Event of Default under Section V
of this Security Agreement.

 

Section IV.             THE DEBTOR’S
REPRESENTATION, WARRANTIES AND AGREEMENTS

 

1.             All information
supplied and statements made by the Debtor in any financial, credit or
accounting statement or application for credit prior to, contemporaneously with
or subsequent to the execution of this Security Agreement are and shall be
true, correct, complete, valid and genuine.

 

2.             Except for those in
favor of the Secured Party, no Financing Statement covering the Collateral or
its proceeds is on file in any public office; and, except for the security
interests in favor of the Secured Party; there is no lien, security interest or
encumbrance in or on the Collateral.

 

3.             Until the occurrence
of an Event of Default or any event or condition which, but for the giving of
notice or passage of time, or both, would constitute an Event of Default
(“Potential Default”), the Debtor may use the Collateral in any lawful manner
not inconsistent with this Security Agreement or with the terms or conditions
of any policy of insurance thereon and except for accounts and contract rights
may also sell the Collateral in the ordinary course of business.  The Secured Party’s security interest shall
attach to all proceeds of sales and other dispositions of the Collateral.

 

4.             At the request of the
Secured Party after the occurrence of an Event of Default Potential Default,
the Debtor will maintain a special bank account with a bank designated by the
Secured Party, over which the Secured Party shall have the sole power of
withdrawal.  Upon the Secured Party’s
demand, the Debtor will deposit upon receipt all checks, drafts, cash and other
payments pursuant to the Debtor’s contract rights, or in payment or on account
of the Debtor’s accounts.  At least once
a week, the Secured Party will apply the whole or part of the funds on deposit
in the special account against the principal or interest or both of the
Indebtedness.  The Secured Party may
determine the order and method of such application.  Any portion of funds on deposit in the special account which the
Secured Party elects to not so apply may be paid over by the Secured Party to
the Debtor.

 

5.             The Debtor shall, at
its own expense, do, make, procure, execute and deliver all acts, things,
writings and assurances as the Secured Party may at any time request to
protect, assure or enforce its interests, rights and remedies created by,
provided in or emanating from this Security Agreement.

 

2

 

6.             The Debtor shall not
sell, lend, rent, lease or otherwise dispose of the Collateral or any interest
therein except as authorized in this Security Agreement or in writing by the
Secured Party, and the Debtor shall keep the Collateral, including the proceeds
thereof, free from unpaid charges, including taxes, and from liens,
encumbrances and security interests other than that of the Secured Party.

 

7.             The Debtor shall sign
and execute alone or with the Secured Party any Financing Statement or other
document or procure any document and pay all connected costs, necessary to
protect the security interest under this Security Agreement against the rights
or interests of third persons.

 

8.             The Debtor is the
owner of the Collateral free of all liens, claims and encumbrances, except
those in favor of the Secured Party.

 

Section V.              EVENTS OF DEFAULT

 

The Debtor
shall be in default under this Security Agreement upon the happening of any
condition or event set forth below (herein called an “Event of Default”):

 

1.             The failure of any of
Indebtedness secured by this Security Agreement to be paid when due and the
continuance of such failure beyond any applicable period of grace and/or notice
and cure.

 

2.             Default by the Debtor
and/or Schlotzsky’s, as the case may be, in punctual performance of any of the
obligations, covenants, terms or provisions contained or referred to in this
Security Agreement or in any note or other document performance of which is
secured hereby, and the continuance of such default beyond any applicable
period of grace and/or notice and cure.

 

3.             Any warranty,
representation or statement contained in this Security Agreement or made or
furnished to the Secured Party by or on behalf of the Debtor in connection with
this Security Agreement or to induce the Secured Party to make a loan to the
Debtor proves to have been false in any respect when made or furnished.

 

4.             The Debtor’s
dissolution, termination of existence, insolvency or business failure; the
appointment of a receiver of all or any part of the property of the Debtor; an
assignment for the benefit of creditors by the Debtor; the calling of a meeting
of creditors of the Debtor; or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against the Debtor or any guarantor, surety
or endorser for the Debtor.

 

Section VI.             SECURED PARTY’S
RIGHTS AND REMEDIES

 

A.            Rights Exclusive of
Default

 

1.             This Security
Agreement, the Secured Party’s rights hereunder or the Indebtedness hereby
secured may be assigned from time to time, and in any such case the Assignee
shall be entitled to all of the rights, privileges and remedies granted in this
Security Agreement to the Secured Party, and the Debtor will assert no claims
or defenses it may have against the Secured Party against the Assignee, except
those granted in this Security Agreement.

 

3

 

2.             The Secured Party may
execute, sign, endorse, transfer or deliver in the name of the Debtor, notes,
checks, drafts or other instruments for the payment of money and receipts,
certificates of origin, applications for certificates of title or any other
documents, necessary to evidence, perfect or realize upon the security interest
and obligations created by this Security Agreement.

 

B.            Rights in Event of
Default

 

1.             Upon the occurrence
of an Event of Default, and at any time thereafter the Secured Party may
declare all obligations secured hereby immediately due and payable and shall
have the rights and remedies of a Secured Party under the Texas Business and
Commerce Code, including without limitation thereto, the right to sell, lease
or otherwise dispose of any or all of the Collateral and the right to take
possession of the Collateral.  Unless
the Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, the Secured Party will send the
Debtor reasonable notice of the time and place of any public sale thereof or of
the time after which any private sale or other disposition thereof is to be
made.  The requirement of sending reasonable
notice shall be met if such notice is mailed, postage prepaid, to the Debtor at
203 Colorado, Austin, Texas  78703, Attention:  Chief
Financial Officer (with a required copy to General Counsel at the same address)
at least ten (10) days before the time of the sale or disposition.  Expenses of retaking, holding, preparing for
sale, selling or the like shall include the Secured Party’s reasonable
attorney’s fees and legal expenses, and the Debtor agrees to pay such expenses,
plus interest thereon at the Default Rate. 
The Debtor shall remain liable for any deficiency.

 

2.             The Secured Party may
remedy any default and may waive any default without waiving any other prior or
subsequent default.

 

3.             The Secured Party may
notify the account debtors or obligors of any accounts, chattel paper,
negotiable instruments or other evidences of indebtedness remitted by the
Debtor to the Secured Party as proceeds to pay the Secured Party directly.

 

4.             The Secured Party may
demand, sue for, collect or make any compromise or settlement with reference to
the Collateral as the Secured Party, in its sole discretion, chooses.

 

5.             The remedies of the
Secured Party hereunder are cumulative, and the exercise of any one or more of
the remedies provided for herein shall not be construed as a waiver of any of
the other remedies of the Secured Party.

 

Section VI.             ADDITIONAL
AGREEMENTS

 

1.              The term “Debtor” as
used in this instrument shall be construed as singular or plural to correspond
with the number of persons executing this instrument as the Debtor.  The pronouns used in this instrument are in
the masculine gender but shall be construed as feminine or neuter as occasion
may require.  “Secured Party” and
“Debtor”, as used in this instrument, include the heirs, executors or administrators,
successors, representatives, receivers, trustees and assigns of those parties.

 

2.             If more than one
person executes this instrument as the Debtor, their obligations under this
instrument shall be joint and several.

 

4

 

3.             The section headings
appearing in this instrument have been inserted for convenience only and shall
be given no substantive meaning or significance whatever in construing the
terms and provisions of this instrument. 
Terms used in this instrument which are defined in the Texas Uniform
Commercial Code are used with the meanings as therein defined.

 

4.             The law governing
this secured transaction shall be that of the State of Texas in force at the
date of this instrument.

 

5.             All property acquired
by the Debtor after the date hereof, which by the terms hereof is required or
intended to be subjected to the lien of this Security Agreement, shall,
immediately upon the acquisition thereof and without further mortgage,
conveyance or assignment, become subject to the lien of this Security Agreement
as fully as though now owned by the Debtor and specifically described
herein.  Nevertheless, the Debtor will
do all such further acts and execute, acknowledge and deliver all such further
conveyances, mortgages, financing statements and assurances as the Secured
Party shall reasonably require for accomplishing the purposes of this Security
Agreement.

 

6.             Actions hereunder by
the Secured Party shall require the unanimous approval of all the persons comprising
the “Secured Party” hereunder.

 

EXECUTED to be
EFFECTIVE AS OF, but not necessarily on, the Effective Date.

 

	
  DEBTOR:

  	
   

  	
  SECURED
  PARTY:

  
	
   

  	
   

  	
   

  
	
  Schlotzsky’s
  Franchisor, LLC,

  	
   

  	
   

  
	
  a Delaware
  limited liability company

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joyce V. Cates

  	
   

  	
              /s/
  John C. Wooley

  	
   

  	 

	
   

  	
  Joyce V. Cates,

  	
  John C.
  Wooley

  	 

	
   

  	
  Senior Vice President

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
             /s/
  Jeffrey J. Wooley

  	
   

  	 

	
   

  	
   

  	
  Jeffrey J.
  Wooley

  	 

								

 

5Exhibit 10.10

EXHIBIT 10.10

                    MAGNETIC RESONANCE THERAPY (BAHAMAS) LTD.

AGREEMENT ("Agreement"), made and entered into as of the 26th day of August,
2003, in duplicate originals by and between JACOBSON RESONANCE ENTERPRISES,
INC., a Nevada corporation authorized to do business in the State of Florida,
having an office and place of business at 8200 Jog Road, Suite 100, Boynton
Beach, Florida 33437 (" Jacobsen"); and CSB5 Management Company Limited. (a
Bahamian Registered company) having its registered office on Collins Avenue in
the city of Nassau New Providence Bahamas , ("CSB5"), hereinafter collective
referred to as 'the parties'.

WHEREAS, the parties are desirous of entering into a joint venture for the
purpose of the use in the Bahamas of the proprietary magnetic resonance
technology, known as Jacobson Resonance, by means of technologies and device(s)
known as "Jacobson Resonators", "Jacobson Resonance Technology" and or "Magnetic
Resonance Therapy" (the "Jacobson Resonance Technologies"), which therapy has
applications in : Healthcare, Medicine, Veterinary Medicine, Pharmaceutical,
Food and Beverage, Construction, Agriculture and the Environment ; AND,

WHEREAS, the parties consider that a joint venture is feasible to promote the
use of the above technology in particular as it applies to the treatment of
chronic and intractable pain due to medical conditions AND

WHEREAS, CSB5 is in control of a facility suitable for the treatment of Humans
in The Clinical setting in the Bahamas AND,

WHEREAS the parties agree to use their best efforts to distribute, market, and
promote The Magnetic Resonance Therapy in the Territory in keeping with their
joint venture agreement,

NOW, THEREFORE, in consideration of the mutual covenants set forth, the parties
do hereby respectfully grant, agree and covenant this agreement as follows:

1.       DEFINITIONS.
1. Territory: The Bahamas.

2. Technologies: The Jacobson Resonance Technologies, devices and applications
for the treatment of human patients and clients as an adjunct therapy to
mainstream medicine. The licensed technology also includes ongoing training in
the "know how" of treating humans in the reduction of chronic and acute pain and
provides for the treatment of a wide variety of diseases, illnesses, infirmities
and syndromes. Also included is ongoing training in the "know how" for the
"leisure" aspect of human treatment that broadly is defined as "relaxation and
rejuvenation."

2. JOINT VENTURE That the parties shall form a company known as Magnetic
Resonance Therapy (Bahamas) Limited, 72 Collins Avenue, P.O. Box N-4296, Nassau,
Bahamas, in accordance with Bahamian law, which company will be the vehicle
whereby the technologies shall be administered in the territory.

The shareholdings will be:
         Shareholder         %      # Ordinary Shares
         Jacobson 40%               2,000
         CSB5              60%              3,000

3. TERM. The initial term of this Agreement is one (1) year. If at the end of
six (6) months , the shareholders determine that the business is not financially
viable, and has not developed as anticipated, the costs borne by each
shareholder shall remain with that shareholder and Jacobson shall be entitled to
repurchase from Magnetic Resonance Therapy (Bahamas) Limited the five resonators
comprising Jacobson's contribution (referred to below) at a price equal to fifty
(50%) percent of the import value of said resonators.

Once the business has sufficient financial resources to repay the shareholder(s)
expenses, these costs will be reimbursed. o Jacobson will be responsible for the
salary costs of the personnel and for contribution of five resonators o CSB5
will be responsible for utilities and rent

If the business is successful, the profits or losses will be shared equally
(50:50) between the shareholders.

4. QUALITY CONTROL, STANDARDS, AND OWNERSHIP. 1. Quality Control: Jacobsen shall
provide the appropriately trained personnel to install and operate the equipment
and shall be responsible for all aspect of the quality control of the use of the
product, including full responsibility for compliance with U.S. Food and Drug
Administration laws and regulations. CSB5 shall be responsible for compliance
with all the relevant standards necessary for the use of the products in the
territory. 2. The failure to adhere to the foregoing requirements shall be
grounds for the immediate termination of this Agreement. 3. Use of Technologies:
The parties agree not to market, sell, distribute or otherwise use, manufacture,
modify the use and applications of the Technologies in any manner whatsoever
without first obtaining all the required permits, licenses, approvals and
consent as may be required by the laws of any jurisdiction in which the
Technologies will be sold, distributed, marketed, and/or manufactured. 4. The
parties agree that the technology shall not be utilized until or unless all
required certificates of building standards and code approvals as required in
the Territory, as well as any other relevant standards imposed by governmental
authorities in the Territory have been met, and that in the event that this
cannot be achieved the venture will be terminated without prejudice to any
party. 5. Ownership: If a shareholder wishes to dispose of all or part of their
equity, then the other shareholder(s) must be given the right of first refusal
to acquire the shares. If a purchase price for the equity can not be mutually
agreed upon, then a firm of accountants will be retained by Magnetic Resonance
Therapy (Bahamas) Limited to perform a valuation of the business. If the
Jacobson equity are purchased by CSB5, then Magnetic Resonance Therapy (Bahamas)
Limited will pay Jacobson a usage royalty fee at a rate of sixteen (16%) percent
of the gross revenue. If Jacobson is itself sold to a third party, and the
shareholding of Jacobson in Magnetic Resonance Therapy (Bahamas) Limited is
sold, then the Jacobson usage royalty fee would be substantially less than the
sixteen (16%) percent of gross revenue (ie eight percent [8%]).

5. CONFIDENTIAL INFORMATION. 5.1 The parties agree to absolute confidentiality
as regards Jacobsen's trade secrets, private or secret processions, methods,
protocols, resonance equipment, and ideas, as they exist from time to time, as
well as other corporate information concerning Jacobson Resonance Technologies..

5.2 Exclusions: Confidential information does not include the following: (a)
information which is public and has been released by Jacobsen; (b) information
in the public domain; (c) information disclosed by a third party who was free to
disclose it. (d) disclosure of information through no wrongful act of Magnetic
Resonance Therapy (Bahamas) Limited.

6. Restriction: During the term of this Agreement, and for a period of two (2)
years following completion of all services rendered under this agreement
Magnetic Resonance Therapy (Bahamas) Limited agrees that it will not, directly
or indirectly, either for itself or on behalf of any third party, develop,
engineer, manufacture, produce or consult to do any of the foregoing, relating
to any device employing magnetic technology, whose purpose is the direct or
indirect competition with Jacobsen.

7.ADVERTISING AND ADVERTISING MATERIALS. 1. Advertising Approval: Magnetic
Resonance Therapy (Bahamas) Limited shall obtain approval from Jacobson of all
copy of any and all materials to be used in connection with the marketing and
distribution of the Technologies which approval shall be obtained at least 30
days in advance of any publication or distribution for review.

8.ADMINISTRATION. 1. The shareholders agree that the CSB5 shall provide the
administrative systems necessary to the operation of the venture, including
accounting, invoicing and payroll, with the parties bearing equal share in the
venture,s costs, as well as in its profits. 2. Jacobsen shall be free to utilize
and or dispose of its portion of the profits as it sees fit. 3. Jacobsen shall
possess the right to review any and all books and records pertaining to the use
of the Technologies.

9.Technologies Liability Insurance: Magnetic Resonance Therapy (Bahamas) Limited
shall procure and maintain at its own expense in full force and effect at all
times during which the Technologies are utilized in the territory coverage via a
responsible insurance carrier, a products liability insurance policy with
respect to the Technologies with a limit of liability of not less than
B$1,000,000.00.

10.BOOKS, RECORDS & STATEMENTS Books, Records & Statements: CSB5 shall provide
an appropriate software package able to maintain complete and accurate books of
account, records and statements.

11. INDEMNITY 1 Indemnity: Magnetic Resonance Therapy (Bahamas) Limited agree to
hold each shareholder harmless and to indemnify each shareholder against any and
all losses, liability, damages and expenses (including reasonable attorney's
fees, costs and expenses through appeal) incurred by the use of the Technologies
in the business. 2.The provisions of this paragraph and Licensee's obligations
hereunder shall survive the expiration or termination of this Agreement.

12. Breach of Material Condition: If any of the parties fail to perform any of
the material terms, conditions, agreements or covenants in this Agreement on its
part to be performed (hereinafter referred to as "Other Default") and other
default is not curable, or if such default is curable but continues uncured for
a period of sixty (60) days after notice thereof has been given to the
defaulting party in writing by the other party or all reasonable steps necessary
to cure such other default have not been taken by the defaulting party within
sixty (60) days after notice thereof has been given to the defaulting party in
writing by the other party or all reasonable steps necessary to cure such other
default have not been taken by the defaulting party within sixty (60) day
period, the other party at its sole election may terminate this Agreement
forthwith by written notice.

13. Bankruptcy, Insolvency and Related Occurrences: In the event that Magnetic
Resonance Therapy (Bahamas) Limited files a petition in bankruptcy: - the net
realisable assets will be divided equally between the shareholders.

In the event that Magnetic Resonance Therapy (Bahamas) Limited is adjudicated as
bankrupt or files a petition or otherwise seeks relief under or pursuant to any
bankruptcy, insolvency or reorganization statute or proceeding or if a petition
in bankruptcy is filed against it, which is not vacated within sixty (60) days,
or it becomes insolvent or makes an assignment for the benefit of its creditors
or a custodian receiver or trustee is appointed for it or a substantial portion
of its business assets, which is not discharged within sixty (60) days: - the
net shortfall will be divided equally between the shareholders, and the
contribution made accordingly from each shareholder.

14. NOTICES Notice Requirements: All reports, approvals, requests, demands, and
notices (collectively "notices") required or permitted by this Agreement to be
given to a shareholder shall be in writing and shall be deemed to be duly given
if personally delivered or if sent (by facsimile or overnight courier) to the
party concerned at its address set forth in this Section.

Jacobson Resonance Enterprises, Inc.
8200 Jog Road, Suite #100
Boynton Beach, FL 33437

CSB5 Management Company Limited
72 Collins Avenue, P. O. Box N-4296
Nassau, Bahamas

15. RESOLUTION OF DISPUTES 1. Jurisdiction: The PARTIES HEREBY irrevocably
submit to the personal jurisdiction of the Commonwealth of The Bahamas in any
action or proceeding arising out of or relating to this Agreement. In any court
proceeding, the Courts shall have exclusive jurisdiction over the subject matter
of this Agreement. 2. Waiver of Immunity: To the extent that either party has or
hereafter may acquire any immunity from jurisdiction of any court or from legal
process with respect to itself or its property, the parties irrevocably waive
such immunity with respect to their respective obligations under this Agreement.

16. GOVERNING LAW Governing Law Entire Agreement: This Agreement shall be
construed and interpreted in accordance with the laws of the Commonwealth of The
Bahamas; contains the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior oral
and written understandings and agreements. This Agreement may not be modified,
amended, discharged or terminated orally except by a written notification signed
by the party against whom the modification, discharge or termination is sought
to be enforced.

17. Severability: If any provision or any portion of any provision of this
Agreement shall be held to be void or unenforceable, the remaining provisions of
this Agreement and the remaining portion of any provision held void or
unenforceable in part shall continue in full force and effect.

IN WITNESS THEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

                          JACOBSON RESONANCE ENTERPRISES, INC.

                           /s/  Harvey Grossman
                           --------------------------
                                Harvey Grossman, President & Chief Operating Officer

                           CSB5 Management Company Ltd.
                           /s/ Conville Brown
                           ------------------
                               Conville S. Brown, President

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